March 9, 1953

LIB
CCF

Clarence Gillis

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

Mr. Gillis:

Plus this 7 per cent they are asking for now. The hon. member for Macleod indicated four increases which totalled 85 per cent, and this 7 per cent will bring it to 92 per cent. I think there has to be an end to this passing on to the consumer of all the costs of industry and railroads and so forth, expecting him to just take it lying down.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

If there is to be an end, can the hon. member suggest how that end is going to be reached?

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CCF

Clarence Gillis

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

Mr. Gillis:

I say the minister has a motion on the order paper to set up a committee to examine the accounts of the Canadian National. The officials of the railroads could be brought before that committee. The committee could examine the accounts and find out whether this increase is justified, and we could ask for a stay of execution of this judgment until the committee had a chance to make that examination.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

The committee has certain rights and powers as set out in the motion now on the order paper, that is to deal with the accounts and the budget of the Canadian National Railways, T.C.A. and so forth. It has no right to deal with freight

Freight Rates

rates. A tribunal has been established to deal with freight rates, the board of transport commissioners. Parliament has determined that. Back in the time of confederation freight rates were dealt with by a committee, but that right was taken away and given to the board of transport commissioners.

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CCF

Clarence Gillis

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

Mr. Gillis:

I am not suggesting that we should deal with freight rates at all. The basis of the application of the railways is that this increase in freight rates is required to meet their wage bills. I am not suggesting that we should deal with freight rates in the committee. I am suggesting that the minister ask the board of transport commissioners not to put this increase into effect until the committee has had a chance to examine the accounts of the Canadian National Railways; to do its ordinary job.

After that examination has been made we may find out that the Canadian National Railways and the Canadian Pacific do not require this increase in order to meet their wage bills and other commitments. The committee will be merely doing its job in getting evidence as to whether or not this increase is necessary, without interfering with freight rates at all. I think that is a reasonable request. The committee could be set up tomorrow if the minister so desired, and we could have Mr. Gordon come here.

This is an election year. If the Conservatives were planning the strategy of the election I do not think they could do any better than some of these bodies that are working behind you. In the last few months a number of bad issues have been raised by creatures of the government. I think what I am asking the minister to do is quite reasonable. This committee has a function to perform, to find out whether the money is being spent wisely.

I do not believe that the wage bill is a problem at all. As far as the Canadian National is concerned, I believe they have wasted a lot of money in the dieselization of the line east of Montreal without waiting to see whether the coal-burning turbine engine would be better. According to the information I have received from men who have looked at that engine, in a few months time it is going to make the diesel obsolete. I think we were reasonable last year when we asked Mr. Gordon to delay the installations on the eastern end of the line. That should have been done, but it was not.

I am not asking the minister to give the committee the right to handle freight rates, but I think it is reasonable to ask that the committee be set up as soon as possible and that there should be an extension of the date when this increase becomes applicable so the

[Mr. Chevrier.'J

committee may determine whether this increase is justified at this time.

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PC

Alfred Johnson Brooks

Progressive Conservative

Mr. A. J. Brooks (Royal):

Mr. Speaker, I am not going to make any extensive remarks on freight rates. I have spoken on the subject before; but I felt that I should say a few words today for fear the house might think that my own province was not protesting this increase.

As the hon. member who has just taken his seat has said, to go into the history of freight rates in Canada would take a very long time. I think all members know the great problem that freight rates have been for the maritime provinces since the very first day they entered confederation. As a matter of fact freight rates were one of the problems which were supposed to be solved after we entered confederation, and the inducement held out to us to enter confederation was that the problem would be solved. Needless to say, it has not yet been solved.

I feel that the burden of increases in freight rates will bear more heavily on the maritime provinces than any other part of Canada, and I say that on the basis of facts that we know. So far as Ontario and Quebec are concerned, when railway freight rates are increased then freight can be and is carried by trucks. Short hauls are involved, and trucks can carry the freight if the people believe that railway freight rates have been increased too much. The minister has just told us that in western Canada, for instance, there has been no increase as far as grain is concerned. We all know that grain for export constitutes 75 or 80 per cent of the freight carried in western Canada; but I did not hear the minister say that potatoes or any of the other products of the maritime provinces would be treated in the same manner. It is for this reason that I claim that the increase in freight rates is going to bear more unjustly on the freight shippers of the maritime provinces than on shippers of freight in any other part of Canada.

As I said at the outset, one could discuss this problem at great length, but it is not my intention to make a prolonged speech this afternoon. Nevertheless I feel the time is coming when the problem will have to be solved in some other way than the almost annual increases in freight rates that have been put into effect in recent years under one excuse or another. If freight rates continue to increase, it is going to mean that certain sections of Canada are not going to be able to trade in any way at all in the central markets of the country. As my desk-mate, the hon. member for Cumberland (Mr. MARCH 9, 1953

Black) says, the increases are pyramided. As was brought out this afternoon, freight rates have been increased 92 per cent in the last few years, and if they are increased again it will not be an increase of 7 per cent on 100 per cent but 7 per cent on 185 per cent. So far as the trade of this country is concerned, this is a state of affairs which I do not think can go on very much longer.

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CCF

Hazen Robert Argue

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

Mr. H. R. Argue (Assiniboia):

Mr. Speaker, I should like to associate myself with others who have protested the 7 per cent increase in freight rates that has been allowed by the board of transport commissioners.

The Minister of Transport (Mr. Chevrier) has made the statement that Canadian freight rates compare favourably with those in the United States. He has said that freight rates have gone up 85 per cent, but I want to point out that, with the 7 per cent increase granted today, Canadian freight rates are now 98 per cent higher than they were five years ago, in 1948. One of the reasons why I think members are protesting the 7 per cent increase is the fact that it is not likely to be the last one. If the railway should get the 9 per cent increase in freight rates for which they are now asking it will mean a cumulative increase of 116 per cent in freight rates since April, 1948.

Certainly freight rate increases of that magnitude are going to have most serious effects on the prairies and the maritime provinces. The minister has said there is nothing else that the board of transport commissioners could have done. He said they were faced with an increase in wage rates, and that the board had no alternative under the law in dealing with this case because otherwise its decision would have been referred to the supreme court. I think the minister's statement is not entirely correct.

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LIB
CCF

Hazen Robert Argue

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

Mr. Argue:

Let me point out to the

minister that, so far as the appeal to the supreme court in the 20 per cent case is concerned, the board of transport commissioners had allowed the railways an interim 8 per cent. Then they said that before they finally settled the 20 per cent application they had certain other things they wanted to do, and they wanted to make a certain study. The supreme court ruled that in dealing with any given application the board of transport commissioners had to deal with the whole of it and that they could not deal with it piecemeal and a step at a time. Therefore I say it follows that under the law the board of transport commissioners did not need to grant the 7 per cent. All that the ruling of the supreme court requires the

Freight Rates

board to do is deal with the application for a 7 per cent increase either by granting it in whole or in part or, as the minister has said with reference to some previous application, throwing it out altogether.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

May I interrupt my hon.

friend to say to him that the effect of the supreme court judgment in the case to which I referred earlier and to which he refers is that when there is an increase in wages it follows that there must be a consequent increase in freight rates. That was the effect of the judgment of the Supreme Court of Canada in that earlier case. That is why I stated that if the board had not granted the increase this time an appeal could have been launched, and I am sure that precedent would have been used against the board.

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CCF

Hazen Robert Argue

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

Mr. Argue:

I do not think the minister has refuted what I have said. The board of transport commissioners is required to deal with the application in the light of the increase in wage rates and may consider any other factors that have arisen in the meantime. Certainly the board of transport commissioners was not obliged to grant the whole 7 per cent. They could have granted a part of it. If the board of transport commissioners is required to increase freight rates automatically by the amount of the wage increase, then why have the board of transport commissioners dealt with the matter? You might just as well have a formula and have the increase come into effect automatically.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

It is required, provided it is established by the evidence that there is a necessity for the increase.

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CCF

Hazen Robert Argue

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

Mr. Argue:

That is it, if there is a

necessity for the increase. The board of transport commissioners must take into account the increase in wage rates, the price of materials, the cost of railway operations, changes in the debt position of the railways and any and all other factors that may enter into the making of a decision on the basis of a fair and reasonable rate adjustment. I say that the board did have an alternative, and that they did not give sufficient weight to certain other factors.

I noticed that it was pointed out in evidence given before the board that the Canadian Pacific Railway increased its maintenance expenditure from $48 million to $197 million. Its maintenance costs have increased by four times. Just by mentioning these figures indicating the terrific increase in maintenance costs of the Canadian Pacific in the last few years, I think it is clear that there is something else that enters into the

Freight Rates

$197 million, other than the increase in maintenance costs. Out of that figure which they say is the increase in maintenance costs the railways can do a lot of things that in the final analysis are capital improvements.

Another thing which I feel the board has not dealt with adequately is the fact that the Canadian Pacific has many subsidiary companies in other fields of endeavour that are very profitable indeed. The Canadian Pacific takes this position. It comes before the board of transport commissioners and says, "We want a certain return on our railway operations." Then from time to time the Canadian Pacific wants to take money out of its profits and invest in such things as air lines, trucking organizations, pipe lines and so forth. The Canadian Pacific says to the board of transport commissioners and the freight users in Canada, "You must not consider these other competitive things in which we engage; you must give us a reasonable profit on our railway operations alone." Immediately that is done, then the Canadian Pacific starts competing with itself and reduces the railway profits. As soon as these air lines have been successful in competing with the railroad, or when the trucking business has been successful in taking freight away from the railroad and the Canadian Pacific profits are down, then back they go before the board of transport commissioners requesting another increase in freight rates.

If the Canadian Pacific were successful in hauling all its passengers by plane instead of on the railroad, and in handling half of its freight by trucks, then the company would be in that much better position because it would be back to get higher freight rates on the traffic that still goes by rail. I say, therefore, that it is not right for the board of transport commissioners to refuse to consider the Canadian Pacific as a corporate entity but instead to divide it into two entities, one the railway operation and the other these subsidiary businesses of the Canadian Pacific.

Of course the public of Canada have a real stake in the Canadian Pacific Railway. Early in the history of this nation 25 million acres of land and $25 million in straight subsidies were granted to the C.P.R. Through government subsidies and railway profits the Canadian Pacific has been able to undertake many other businesses. But when the Canadian Pacific makes a profit on its mining business, its trucking business or its pipe-line business, it goes before the board of transport commissioners and say, "You must not consider in any way these other profits we are making; you have to provide us with

freight rates that will give an adequate return on our rail operations."

I say that until this problem is dealt with we are going to have further increases in freight rates. The thing I am most afraid of is that the board of transport commissioners may give the Canadian Pacific a rate-base formula. If it does that, of course no real control over freight rates will be possible. If the Canadian Pacific should ever be granted the rate base it is now requesting, the result will be disastrous for the prairies and the maritimes.

I say, Mr. Speaker, that the board of transport commissioners has an alternative. The government should not be afraid of subsidizing the railroads if that should be necessary in order to give equitable freight rates to people in all parts of Canada. The government is prepared to build the St. Lawrence seaway which is going to provide lower freight rates for the people in eastern Canada. I do not think the government can fold its arms and allow the board of transport commissioners to go on granting one increase in freight rates after another, without taking into account the very serious economic consequences to the people in the prairie provinces and the maritimes.

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PC

William Joseph Browne

Progressive Conservative

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

I know, Mr. Speaker, that this is probably the only opportunity we shall have in the house to mention freight rates, since the committee that is being appointed will deal with the accounts of the Canadian National Railways. I think today we are under a handicap because even the minister has not read the judgment, so we are more or less talking on the principle of freight rates.

According to the minister, there does not appear to be much we can do about the judgment rendered by the board. I feel that I should, however, on behalf of the people of Newfoundland, make a protest against the freight rates which, even before this judgment, were the subject of complaint.

Before confederation with Canada we were told that the cost of living was going to be brought down. People were not aware that many articles were subsidized, and even railway rates were very low. Now the railway rates are up by 98 per cent, according to the previous speaker, and that is going to have quite an effect upon the cost of living in Newfoundland, which is so far away from its chief source of supply. We have a new industrial program started by the provincial government which necessitates the importation of goods upon which high freight rates are charged. If the manufacturers want to market the goods up here, they have to pay the same high rates going back.

I have in my hand an article dated February 6, 1953, which appeared in the St. John's Daily News, in which examples are given of the effects of these increased rates on the cost of living. For instance onions, an item in general use, cost $2.30 a 50-pound sack in Toronto. In 1949 the freight charge was 48 cents, and today that has gone up to 82 cents. The freight now amounts to 38 per cent of the cost of the onions, and that is an increase in the cost of living. The same thing applies to an article like pork and beans. It must be remembered that these things come from Ontario, which is the chief centre for the manufacture of these canned goods. The freight to St. John's on a case of pork and beans weighing 40 pounds is now 19 per cent instead of 11 i per cent.

There is one other feature about which I think something might be done, and that is in connection with the comparison between water rates and railway rates. The complaint amongst importers in Newfoundland is that when railway rates go up the steamship companies put up their rates as well. This practice has been carried on to such an extent that at the present time it costs only about half as much to bring an article from Liverpool to St. John's, a distance of over 1,800 miles, as it does to bring an article from Montreal to St. John's, a much shorter distance. I believe the minister might make some investigation into these exorbitant charges which the steamship companies seem to be putting on freight coming from Montreal to St. John's. From personal experience I know that the rates from Halifax are up to a similar extent. They charge almost as much to bring certain goods from Halifax to St. John's as they do from Montreal to St. John's.

I can, therefore, only join with members from the maritime provinces in making this protest against the high freight rates which are affecting the cost of living in Newfoundland, just as in the other maritime provinces. This increase will affect us more because the 7 per cent will be on rates which are much higher from the central provinces to Newfoundland than they are to the maritime provinces.

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SC

Charles Edward Johnston

Social Credit

Mr. C. E. Johnston (Bow River):

Mr. Speaker, I do not want to detain the house too long on this matter, but I think it is of sufficient importance that I should say a word or two about it, particularly in view of the fact that it affects those of us who live in western Canada. I am not unmindful of the fact that these increased rates are going to have a serious effect on other parts of Canada as well. The parts of Canada that seem to get off most lightly are Ontario and

Freight Rates

Quebec. That is one of the reasons they were not concerned about presenting their case to the royal commission when it was sitting.

It would not be so bad, Mr. Speaker, if this 7 per cent increase was the only increase. As has been pointed out by other speakers, there have been continuous increases, until we have reached the point where those of us who live in western Canada are feeling the pinch.

Then when this 7 per cent has been settled, as it has been now, there is another 9 per cent pending. As soon as that other 9 per cent is out of the way-and no doubt the railways will have an increase again granted to them-then there will come the question of the increase in freight rates because the St. Lawrence seaway project will have been completed. As the minister pointed out the other day in the railway committee room when the labour advisory council was sitting and discussing the question of railway rates, the competitive area would then be increased and would take in the maritimes. That is going to be all right for the maritimes, Mr. Speaker-and I hope they get some relief from this continual increase in freight rates-but it is again going to put us in western Canada in an extremely bad position because we are going to be included in that area of noncompetitive rates. Hence we are greatly concerned about this matter.

The minister says the proper procedure would be for the provinces to make their presentations when the board of transport commissioners is having its sittings in the various capitals of those provinces. But, Mr. Speaker, that procedure seems to be somewhat useless, because the provinces have continually protested these constant increases in freight rates, and where have we got? On the one occasion the minister pointed out when the board had refused to increase the increase, that was not exactly a refusal. It was merely a postponement until a little later on, and then the increase was granted. So we in the western part of Canada are continually being called upon to pay this additional increase.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I do not want to interrupt

my hon. friend, but may I say that there was a definite application on July 15 for a 7 per cent increase which was dismissed by the board. That was not a suspension or a postponement; it was an actual dismissal.

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SC

Charles Edward Johnston

Social Credit

Mr. Johnston:

I accept what the minister says, Mr. Speaker. But while that application was dismissed, this other application for a 7 per cent increase comes up and they are granted it; and now there is another 9

Freight Rates

per cent increase pending, I think. What is going to be the result? History has proven that eventually the railways will get what they are asking for.

I think the minister is missing the big point in this question which the hon. member for Peace River (Mr. Low) pointed out a moment ago. If the railways need an increase, they need an increase. But surely there are other ways by which they could pare their expenditures. One of the things I am complaining about at this time is this. When the railways are given an increase, why should certain sections of the country bear the main portion of that increase?

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SC
SC

Charles Edward Johnston

Social Credit

Mr. Johnston:

Not so long ago a return

asked for by the hon. member for Battle River (Mr. Fair) was brought down in the house, and it is not the one that was put on the record a moment ago. It is a statement showing freight rates on various commodities from Toronto, Ontario to Winnipeg, Manitoba; Regina, Saskatchewan; Edmonton, Alberta; and Vancouver, British Columbia, in effect on the 1st of February, 1945, 1950 and 1953.

This statement shows that from Toronto, Ontario to Edmonton, Alberta, on boots and shoes, in less than carload lots, the rate was $4.53 in 1945, $5.92 in 1950 and $8.12 in 1953. It is no wonder that out in western Canada we have to pay so much higher prices than are paid down in central Canada. Then in carload lots, minimum weight 20,000 pounds, the rate to Edmonton was $3.03 in 1945; it was $3.98 in 1950, and on February 1, 1953 it is $5.41. It is getting to the point where we cannot afford to ride, we have to walk; and now we are being soaked for the shoes to walk in.

The rates are shown for blankets, but I will not give those. Let me take the rates for nails, iron or steel, they being things which are highly necessary out in the western part of this country. For less than carload lots, the rate to Edmonton was $2.33 in 1945; it was $3.05 in 1950 and is now $4.14. In carload lots, minimum weight

36,000 pounds, to Edmonton the rate in 1945 was $1.98; in 1950 it was $2.59 and in 1953 it is $3.52. On canned goods, less than carload lots, to Edmonton the rate in 1945 was $3.03; in 1950 it was $3.96 and in 1953 it is $5.41. In carloads, minimum weight 24,000 pounds, the rate to Edmonton in 1945 was $1.98; in 1950 it was $2.59 and in 1953, $3.52. Let us take the rate on barbed wire, which is extensively used out in the west. For less than carload lots, the rate in 1945 was $2.33; in 1950 it was $3.05 and in 1953 it is $4.14. On carloads, minimum weight

36,000 pounds, to Edmonton the rate in 1945 was $1.98; in 1950 it was $2.59 and in 1953 it is $3.52.

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March 9, 1953