March 9, 1953

FREIGHT RATES

CCF

Major James William Coldwell

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

Mr. M. J. Coldwell (Rosetown-Biggar):

Mr. Speaker, I do not want to delay the business of the house, but had there been an opportunity I would have moved an amendment this afternoon with regard to the announcement made today concerning freight rates. I want to say something on behalf of my constituents particularly who are affected, as are other people who live in the more remote parts of Canada, by this recent announcement of a flat increase in rates to the extent of 7 per cent.

There have been a number of increases in freight rates in recent days. When I raised the matter on the orders of the day today the minister objected or said that this increase was due largely to the recent increases in the wages of the employees of the railway companies. I do not believe that any member of this house desires that the railways should be operated at the expense of any single group in the country, whether they be the people who operate the railways or those who produce the heavy commodities that have to be carried from one end of this' country to the other. The cost of living has gone up and wages have been increased in all fields. The application for increased wages arose out of the economic circumstances in which many of our railway workers found themselves.

Freight Rates

Moreover, the increase in wages was decided after conciliation and negotiations between the employers and the employees. I want to state emphatically that I do not believe that any group of individuals, whether they are workers in industry or users of a service which is essential to the well-being of the country, should be called upon to bear an undue share of the cost of operating that service.

Our railway system in Canada was designed originally to bind this country together. We are bound together by bands of steel. The probability is that but for these railways there would have been no Canada as we know it today. When the fathers of confederation agreed to the building of the first transcontinental railway and the making of large land grants and the guaranteeing of bonds for a number of years they had in mind the binding together of this country that is now Canada.

Consequently I believe that what we require is not a railway policy such as we have had, but a transportation policy. I believe that the recommendations a few years ago of the Turgeon commission were in most respects quite sound. The report of that Turgeon commission recommended a transportation policy. This would apply to our major transportation facilities. I am not talking about small groups of people who run trucks here or there; I refer to the major transportation systems whether they be air or truck or bus or railway. They should all be integrated so that we might get the maximum service for our people at the minimum cost, particularly in connection with the movement of heavy commodities.

After all we in this country are largely dependent upon the movement of bulky and heavy commodities. Lumber is moved across the country from the Pacific coast or from the interior to points within our own country. Coal is moved over great distances. Oil is moved largely by pipe line, but none the less we are dependent upon the transporting of fuel from one end of this country to the other. Since this is a problem that affects the well-being of the whole of Canada, no particular area or group of people should be placed under a disability.

That was the reason for the subsidy to the maritime provinces in connection with coal and so on. That was the reason why this house accepted the recommendation in the Turgeon report that a subsidy of some $7 million be paid for the maintenance of the lines over that great unproductive area of northern Ontario, between Sudbury and Fort William on the Canadian Pacific, a distance of -I am speaking from memory-about 552

Freight Rates

miles, and a comparable distance on the Canadian National. That carried out only in small part the recommendations of the Turgeon commission which recommended that there should be some attempt at the equalization of freight rates. We have not achieved that equalization. These constant increases in freight rates are not imposed equally on the whole of Canada.

We all know that rates in central Canada are generally lower than they are on the prairies, in British Columbia or indeed in the maritime provinces. That is due of course to the competition from water, from truck and otherwise. That part of Canada reaps the benefit of that competition. Either the whole of Canada should benefit from competition, if it were possible to give that kind of competition in all parts, and it is not, or we should have a national transportation policy that would tend to equalize the burden of transportation over all parts of Canada.

These horizontal increases in rates-you understand that they need not be put into effect in areas where there is competition- tend to make the burden heavier on the prairie provinces, British Columbia and the maritime region. Those of us who come from these areas have brought this matter before the house on a number of occasions. This afternoon I asked the minister to use the power under the Railway Act which permits the government to rescind or suspend the order until organizations or governments in the regions affected have had a further opportunity of making representations to the federal government.

After all, the government has power by statute to rescind or to suspend and also to hear representations from those who feel aggrieved. We have noted that farm prices have been falling in the last few months. During the last week what a strange picture we saw in the transportation of steers from Chicago. It was noted in the papers on Saturday that 30 carloads had been bought by Canadian packers for transportation to Toronto and Montreal for sale as Canadian beef. That indicates that the price of that particular commodity has fallen in the United States. I do not blame the packers because under our system of business, as Mr. McLean once said, they buy in the cheapest market, and at the moment Chicago is the cheapest market. But our cattle raisers and our wheat and grain growers, our farmers, generally, have to transport their commodities hundreds of miles to get them to the markets. Hence anything which tends to increase the rates on bulk commodities is bound to impinge more on people who live in the distant areas than on those who live in the more competitive area of central Canada. I

IMr. Coldwell.l

urge the minister this afternoon to consider representations of this sort. I am not doing so, may I say, on behalf of any particular group in the house but because many of us come from regions where the impact of freight rates is felt very seriously indeed by those who sent us to this parliament. In my opinion the excuse that wages have gone up is not an excuse at all because if the government allows the economy to become more and more inflated then no group, as I have said, should be called upon to bear the burden of that inflation.

We should see to it that we go back to the original point of view when the railway system of Canada was first visualized by the fathers of confederation, that it should be a means of building up the country in unity, of building up a country which will enjoy in all parts as great a measure of equality as it is possible to give our people. The Turgeon report had equalization in mind. While I say to the minister that we are very grateful for the subsidy of $7 million that was granted for the 552 miles of line on the C.P.R. and a comparable distance on the C.N.R. over the bridge of northern Ontario, yet that has not equalized the situation.

Every time there has been a flat increase in freight rates of a horizontal nature it has borne more heavily on the people who live in the non-competitive areas or, as I prefer to say, the more remote areas of Canada than upon those who live in the more favoured regions of our country.

May I raise one more point. I have followed very carefully the statements of the representatives of the railway companies before the board of transport commissioners and the Turgeon commission. I have not had time to refresh my memory today, and I am drawing upon it without having had that opportunity; but my recollection is that any examination, for example, of the railway that is looked upon as the yardstick, the Canadian Pacific, reveals that the bulk of its profits arise from movements of commodities in and out of the prairie provinces, in and out of the remote areas of Canada. Before this additional increase is granted I think that the government should hear further representations and bring before the house a transportation policy that will be just to all of Canada and that will not mean again, as happened this afternoon, an attempt to place the responsibility of higher freight rates on one group within our country.

I do not think that any one group, whether they be farmers, workers or whatever they are, should be called upon to bear the results of inflated costs of transportation or of any

other service rendered to the people of Canada. As I said at the outset, I do not intend to prolong my contribution to this discussion, but I wanted to rise at the earliest opportunity and once again express the point of view, at least on behalf of the people who sent me here, that the government owes it to our people to recommend to parliament a transportation policy that will equalize the burden of transportation costs and will maintain Canada as a country bound together by these bands of steel without placing a burden upon any particular group in our society.

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PC

James Arthur Ross

Progressive Conservative

Mr. J. A. Ross (Souris):

Mr. Speaker, I wish to say a word in support of the request made by the hon. member for Rosetown-Biggar (Mr. Coldwell) with respect to the granting of increased freight rates. I do not intend to repeat all the very excellent arguments that he has made on behalf of those provinces which are remote from the central part of Canada, but the most unfortunate pyramiding of increases in freight rates that has taken place in the past few years bears very heavily on one section of the country. As was pointed out, in the central provinces transportation is more competitive because of water haul and highway competition which we do not have in the western provinces. I do not think that the fact that the railways may be losing money on passenger traffic is a legitimate excuse for passing along, as the Minister of Transport (Mr. Chevrier) has said, the full increase in wages by increasing freight rates which are continually pyramiding.

He has referred to the maritimes, British Columbia and the prairie provinces. I believe we in the prairie provinces suffer greater discrimination than any other part of Canada through the repeated increases in freight rates. They are most unfair, and especially at this time when agricultural producers are very fearful about their immediate future. That is not to say that they have not had good times, but the increase in costs of production is still continuing while a decrease is taking place in the value of most of their products. Everything which they must purchase from the manufacturers of central Canada to enable them to produce is always plus freight rates. Everything which they sell, whether it be wheat or other agricultural products, is always sold less freight rates. The producer pays the freight on everything he buys and everything he sells. Without repeating the very excellent arguments put forward by the hon. member for Rosetown-Biggar, I want to make a request to the minister that he rescind this order increasing freight rates until such time as briefs can be received from the various provinces which will suffer to the

Freight Rates

greatest extent by reason of the most unfair situation with which they are now faced.

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SC

Ernest George Hansell

Social Credit

Mr. E. G. Hansell (Macleod):

Mr. Speaker,

I do not suppose that I can add very much to what has already been said, but I wish to rise to support the request made by the hon. member for Rosetown-Biggar (Mr. Coldwell).

I do so because some of us have recognized for a good many years that western Canada always gets the raw end of the freight rate deal no matter what happens. It seems as though we in the prairie provinces get it coming and going. I agree with the hon. members who have preceded me that there does not seem to be any very definite policy with respect to freight rates as related to the entire cost of living problem that exists in Canada today.

What I rose particularly to call attention to was a return tabled in the house the other day to certain questions asked by the hon. member for Battle River (Mr. Fair). The answers are very significant. I want to read the questions for the record and give the answers as they were submitted by the Minister of Transport and approved by Mr. Hugh Wardrope, assistant chief commissioner of the board of transport commissioners. The first question is as follows:

Since January 1, 1945, how many increases in freight rates have been granted to the Canadian railroads?

The answer to that question is four. I want you to notice, Mr. Speaker, that that is four increases in six or seven years.

Question No. 2 reads as follows:

What percentage in each case, based upon the January, 1945 rates?

This answer reveals a picture. The first increase was one of 21 per cent; the second increase was 20 per cent; the third increase, 17 per cent; and the fourth increase was 9 per cent. The cumulative increase over the six years rolls up to no less than 85-2 per cent. Now, that is quite an increase in that number of years.

The third question was:

What amount, in dollars, did each such increase amount to?

These answers are revealing. The 21 per cent increase gave the railroads an additional $282 million. The second increase of 20 per cent gave the railroads $197,400,000; and the third increase of 17 per cent gave the railroads $86,700,000. The amount is not given for the last increase of 9 per cent, but I expect we could easily work it out. In any event, the first three increases totalled about $566,100,000. That is over half a billion dollars, and that is a lot of money. This was

Freight Rates

not simply income, but was the result of the increases in freight rates.

The fourth question is:

What provinces have borne the heaviest burden as a result of the increases allowed?

This question was not answered; at least it was answered, with the reply that there was no information available. I believe we are all well aware of the fact that railroads cannot be run on a five and ten-cent basis. Railroading in Canada is big business. The railroads have to watch their finances very carefully. They can go broke just as easily as they can make a profit. Sometimes increases or decreases, either in freight rates or business, can mean the difference between showing a balance or going into the red. Nevertheless, I believe that because it is big business, and because it affects generally the cost of living of our Canadian people, the government should have some policy on that matter. In spite of the fact that we may talk of these as good times, they are not good times when it comes to making your dollar stretch far enough to enable you to live.

As I say, railroading is big business. Because it is big business, I believe the government should have some very definite policy which relates freight rates to the cost of living. These freight rate increases over the past few years amounting to over half a billion dollars must be written into the cost of living of the people of Canada. We in this corner, Mr. Speaker, join with previous' speakers in their request, and we do wish the house would give some consideration to the matter.

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PC

Julian Harcourt Ferguson

Progressive Conservative

Mr. J. H. Ferguson (Simcoe North):

certainly join with the representatives from the various western provinces in saying that for years there has been discrimination against the western provinces with regard to freight rates. We must remember, however, that the Liberal cat has been chasing its tail for the last 17 years in this country. We must remember that we must pay the railroad men adequate compensation for the services they render. These men are receiving less money than their cousins to the south for doing identically the same work year in and year out. When we raise wages we must increase revenues. Freight is the greatest source of revenue which the railroads have, so freight rates must be increased whenever salaries are increased.

This is not the only item in the last 17 years upon which this government has fallen down. They have fallen down on everything they should have done during that time. They know that a shortage of population, through lack of planning, is the cause for the high cost of living to a great extent. They know [Mr. Hansell.l

our people are educated on United States literature turned out by the finest advertising mediums the world can find, depicting life in Florida and California, Cadillac cars and other luxuries that are beyond the reach of Canadians.

Why is this? It is because of the small population. If this government had been on its toes during the last 17 years, it would not have sat back and taken all the credit for the natural prosperity which has come to Canada through the energy of private enterprise and the good Lord's kindness to the Dominion of Canada in placing oil, iron and many other natural resources here. Our immigration policy has been a fallacy. This government has always treated the immigration department as a baby that belongs to the family, but they have put people in charge of that baby who have caused it to almost die from malnutrition year in and year out. They never worked in conjunction with the needs of Canada; there has been no definite planning.

It is plain from one year to the other that the government hopes prosperity will continue so they may go back into power. Today the people of Canada are sick and tired of the bureaucratic control and lack of planning which we have in every single department. Through planning this country should have a terrific growth and a much greater development of natural resources-

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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order. The subject before the house is the recent increase in freight rates. If I allow the hon. member to discuss another subject, then the discussion on freight rates could not be resumed.

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PC

Julian Harcourt Ferguson

Progressive Conservative

Mr. Ferguson:

Mr. Speaker, I was only trying to emphasize the fact that these freight rate increases are due to a lack of planning.

I hope that something will be done to see that the burden is not increased, and that there may be some redress for these people to alleviate the burden of the present method of increasing freight rates across Canada.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Hon. Lionel Chevrier (Minister of Transport):

The debate which has taken place, and is continuing, is not a new one in this house. We have had many discussions on the subject of freight rates, certainly since I have been in the house and more particularly since I have been in change of the Department of Transport.

This debate has arisen today, and as a general rule arises, because of a judgment of the board of transport commissioners increasing freight rates. When the board declines to hear an application for an increase or when the board dismisses an application, there is rarely a debate in the house. This

was the case when the board recently decided to dismiss an application by the railways to increase rates by a certain percentage. We heard nothing of it, though I must admit that at the time the house was not in session, but it did sit a short time thereafter.

The judgment that was handed down this morning increases the freight rates in Canada by 7 per cent and makes the effective date for the increase March 16, 1953, on a five-day notice. The reason given in the judgment- which unfortunately I have not had time to read in full, but which I shall read in due course-is this, and the house knows what it is. Two major wage increases which raised the operating expenses of the Canadian Pacific Railway and the Canadian National Railways by approximately $104 million during 1952 and, as projected for 1953, bring about this 7 per cent increase.

There is in the minds of certain hon. members some doubt that the government should allow this increase to go into effect; and I think that doubt was raised by the hon. member for Rosetown-Biggar (Mr. Coldwell) who felt that it should be rescinded or should not be allowed to stand. I shall deal with that point a little later on, but I want to remind the hon. gentlemen and the house that a similar situation arose some two or three years ago when the then chief commissioner of the board of transport commissioners decided that, while an application had been made on account of increases in wages of railway employees, he should not at that time grant a proportionate increase in freight rates. The matter was immediately taken by the railways to the Supreme Court of Canada in appeal, and the Supreme Court of Canada directed the board of transport commissioners to give consideration immediately to the application of the railways because of the increase in wages that brought about the application.

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CCF

Major James William Coldwell

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

Mr. Coldwell:

That would not stop the government from exercising its power under the act.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

No. I said I would deal with that point later on. I am dealing now with the position in which the Board of Transport Commissioners for Canada would find itself if it refused to grant this application because of an increase in wages. Immediately the railways again would launch an appeal to the supreme court, and there is a precedent in this respect which the board of transport commissioners would have to follow. The point I am therefore making to the house now is that under the law, as I understand it, the board of transport commissioners would have no alternative but to grant this application

Freight Rates

if it was established that the rate of increase sought is necessary because of the increase in the wages of the employees.

It has been stated in the house that this is not a railway policy matter but that it is a transportation policy matter, and that we should have a transportation policy in this country. In reply, Mr. Speaker, I say that we have a transportation policy in this country, and that we have a good one. Furthermore, we established a royal commission on transportation to consider some of the defects and some of the matters having to do with freight rates and other transportation facilities. These matters were referred to that body several years ago. The house knows that most of the recommendations made by the royal commission were put into effect by the government.

I should like to remind the house what some of those recommendations were because there seems to be a lapse of memory on the part of certain members as to what was done. It is true that the hon. member for Rosetown-Biggar referred to one of these matters, but there were several other matters recommended by the royal commission on transportation and put into effect by the government.

Some of the many adjustments which were made in rates were as follows. First of all, there was the removal of the mountain differential on traffic within, from and to British Columbia. There had been a demand over a long period of years for the removal of that differential so that products from the prairie provinces could move into British Columbia and vice versa. The board of transport commissioners, after having listened to the evidence, decided to remove that differential; and effective July 1, 1949 the prairie level of rates was made applicable throughout western territory. The reductions then made were of benefit chiefly to British Columbia and to the prairie territory immediately east of the Rocky mountains.

The next adjustment in rates was with regard to competitive rates between eastern Canada and the Pacific coast. This came about in 1949 upon resumption of the water service through the Panama canal. On that occasion the rates on many specific commodities were reduced-that was in 1949-and have since then been subjected to numerous adjustments; there have been both reductions and some slight increases.

Then agreed charges on petroleum products in western Canada were brought about because the railways decided to reduce their charges on the movement of those products following applications made to the board of

Freight Rates

transport commissioners, and because of the highway competition which they received from the trucks.

Then we enacted in this house, following the recommendations of the royal commission, section 332B of the Railway Act which brought into effect the one and one-third rule. I think that had a great deal of effect with regard to certain commodities moving into the central parts of western Canada. Then there is section 18 of the 1951 amendment to the Railway Act; that is the subsidy of .?7 million which was voted by this house and which is paid to the railways because of the nature of the territory which traffic moving from east to west must traverse. This was a recommendation of the royal commission on transportation, and I think that statute has been well received.

This 7 per cent increase has many exceptions in its application. There are a large number of commodities to which it does not apply at all. For instance, the increases do not apply to grain and grain products governed by the Crowsnest statute, nor to such commodities from prairie points to the Pacific coast ports for export. A large proportion of the traffic which moves in western Canada is covered by that exception. Similarly I doubt if any increase was authorized in general cases in respect of grain and grain products moving locally within western Canada and not subject to the Crowsnest rates. Competitive rates and agreed charges are exceptions. International rates, import and export rates, again are excepted from the operation of this judgment. There are also other minor exceptions which are made to its application.

Just as do the hon. member for Rosetown-Biggar and other members of this house, I realize that an increase of this kind is bound to have an inflationary effect on the cost of living. Unquestionably that is so; and I agree with his apprehension in that respect. But what other alternative is there? Parliament has established the board of -transport commissioners to deal with this question. The board of transport commissioners is the only body authorized by parliament to consider the question of freight rates. It deals with it after exhaustive investigation, assisted by counsel from all of the provinces except Ontario and Quebec, and by experts from the board, accountants, traffic men and the like.

Neither my hon. friend nor any other hon. member has submitted an alternative. One hon. member suggested that the government should have some definite policy which relates freight rates to the cost of living. But

the Railway Act governs the manner in which this shall be done, and the Railway Act has made clear in certain of its sections that upon application by the railway association of Canada, or by other railways of Canada, the board of transport commissioners shall hear and determine what the rates for certain commodities shall be.

That is the procedure which we ourselves have authorized. That is the transportation policy, and only recently we submitted this whole policy to a royal commission on transportation. That royal commission agreed that the method which was being followed was the right one, but suggested certain amendments that might be made, and we have put those amendments into effect for the most part.

One of the amendments recommended that there should be an equalization of freight rates across Canada. Unfortunately it has not been possible to put that recommendation into effect. What the board of transport commissioners is doing now, as the house knows, is conducting an investigation under P.C. 1487. They have begun that investigation, or at least are about to begin it in western Canada, dealing with a formula which is to become effective on January 1, 1954, I believe. They are inviting representations from all the provinces. I understand that they will sit in the capital of each province to hear representations in so far as this new plan or new formula is -concerned.

It is unfortunate that that plan and formula were not completed before this increase in freight rates went into effect, but I cannot see how the board would have any other alternative -but to grant the request of the railways, in view of the position in which the railways find themselves. The only other method would be to vote hundreds of millions of dollars in this house, and I do not think that would be the proper procedure.

I said that before I resumed my seat I would deal with the suggestion made by my hon. friend as to the rescinding of this order.

I do not think the government should rescind this order. Certainly I, as the minister, have no power so to do. The procedure is quite clear under the Railway Act. By virtue of section 52 of the Railway Act the provinces -and I am not too sure whether the section does not refer to other groups who feel that they are aggrieved-but certainly the provinces or other parties to the judgment that has been handed down have the right to appeal to the governor in council. There is a form of appeal which is made to the governor in council, setting out the reasons why the judgment should be set aside. If that appeal is made under the formula established

by virtue of section 52 of the Railway Act the government will of course hear it.

Therefore my answer to my hon. friend is that I have no authority as minister to rescind, do away with or set aside the order which the board has made today. But if the provinces, as they have a perfect right to do, proceed under section 52, I can give my hon. friend and the house the assurance that their application, as have other applications in the past, will receive the attention of the government. I do not know that I can add any more than what I have said at this moment.

Some mention has been made of the number of increases and their effect. Compared with other countries Canada is doing pretty well, I would say, in so far as increases in freight rates are concerned. The hon. member for Macleod (Mr. Hansell) stated that there had been an 85 per cent increase in freight rates since 1947 or 1948. Well, the increase in the United Kingdom is higher than that, and the 85 per cent figure compares favourably with that of the United States. As a rule, freight rates in Canada have been slightly lower than freight rates in the United States and slightly higher than rates in the United Kingdom. As it is now, I believe our position is that our rates are slightly lower than those in the United Kingdom and compare favourably with those in the United States. Therefore, on the whole, if we compare our rates with other countries that have conditions similar to ours I do not think we will find that the comparison is at all out of line.

Consequently I find myself in the position of not being able to accept the suggestion of my hon. friend; but I repeat that if an application is made in the usual way it will receive the attention of the government.

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SC

Solon Earl Low

Social Credit

Mr. Solon E. Low (Peace River):

I want to assure you, Mr. Speaker, that I will not detain the house long, but I do want to say a word and join in the protest against the 7 per cent freight rate increase that was granted by the board's decision today.

I listened very attentively to what the minister had to say, and as usual I found that he took a pretty sound position. But there is one thing the minister did not consider, and it is because he did not consider it that I thought it might be wise for me to enter the debate just briefly.

The minister said there is some doubt that the government should allow the board's ruling to go into effect. I believe that is quite correct. Under the circumstances the government-and I shall show later on what circumstances I mean-should not have allowed the board's ruling to go into effect,

<18108-175

Freight Rates

and that is in spite of the exceptions which the minister cited in the board's judgment that was handed down today. He mentioned grain. Of course we know that the board's ruling could not apply to grain because that comes under the Crowsnest agreements which are not subject to the board's rulings.

He mentioned a few other things; but in spite of these exceptions I still say that the minister should not allow the board's ruling to go into effect. I shall tell you why. In the hearing that was completed a short while ago, the yardstick company, the Canadian Pacific Railway, represented the views of both railways; but they took as the yardstick their own requirements. The Canadian Pacific Railway asked the board for a new formula. They asked for the income formula rather than the old requirements formula, according to which rates would be struck in the future. If the board had been foolish enough to grant a new formula, based on a guaranteed income to the railways, then I say that there would be a lot more room for playing around with rates than there has been in the past. I am very glad that, thus far, that old requirements formula has not been changed. It simply means that the rates are struck or allowed by the board according to the requirements of the railways.

About the biggest item connected with the request for the increase in rates at this time was that of increased wages. But wages are not the only things that enter into railway expenses. The expenditures of railways are partly controllable and partly non-controllable. I would say that, to a degree, wages are pretty nearly uncontrollable at the present time, with employment in Canada remaining almost at the full employment level.

That is quite correct. But I would point out to the minister that there are many railway expenditures which are controllable. It is well known that when we have a good year and I have noticed this particularly in my own experience in the west-the railways invariably put a new coat of paint on the railway stations, even though there may be half an inch of paint on them already.

I have noticed that in those good years they also put a new coat of whitewash on the stockyards and, particularly in these days, they shop around for the latest type of diesel locomotive. There is plenty of opportunity to curtail expenditures in connection with controllable items; and there are plenty that are controllable.

If the board had said to the Canadian Pacific Railway, the yardstick company, "Now, go back and do some homework. Then

Freight Rates

come back here in, six months and show us where you have trimmed some of your expenditures in the controllable division", the situation would be somewhat different. The board could have said, "You can call it deferred maintenance, if you like; but you should cut back on some of your controllable expenditures. After doing that, show us your requirements, and we might be inclined to be a little more lenient with you."

But unless the Canadian Pacific was prepared to do that sort of thing, unless the railway was prepared to do some paring of its controllable expenditures, then I think the board was very wrong in allowing the 7 per cent increase. It would seem that the board has been too easy. Either that, or I must conclude that it has not the machinery with which to investigate thoroughly what railway requirements are. It is perfectly clear that the board did not say to the railways, "Go back and see where you can trim expenditures." No, not at all; it gave the railways a blank cheque: "Seven per cent you have asked for; seven per cent it is."

No one can tell me that the Canadian Pacific Railway, the yardstick company, with its expenses in maintaining right of way and equipment running to about $400 million a year, could not have found some places to have trimmed those expenses. And it did not have to be off wages, either. It is because the board did not require the railways to attempt to trim their controllable expenditures that I think it was wrong in allowing the increase. I say the alternative the minister asks for is right there, in asking the railway companies to take back their statement of requirements and to do some paring.

I am satisfied they could have made a good showing. The railway companies might reply to the board, "If we do that we may be impairing safety on our railways, and we do not want to jeopardize life and property". I certainly agree with that point of view; I would not want to see railway expenditures cut to the point where life and property were jeopardized. I would want to see safety measures maintained at as high a level as possible. But when the board grants virtually a blank cheque and does not ask the railway company in question to see wherein it can trim its controllable expenditures, then I for one cannot help feeling that the board has been too easy.

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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I do not wish to interrupt the hon. member, but may I make one observation?

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SC
LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

As the hon. member knows, the board dismissed an application for an

TMr. Low.]

8 per cent increase made by the railways. So when he says the board is not scrutinizing railway expenditures carefully, or is granting a blank cheque, I think he is not being quite fair to the board.

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SC

Solon Earl Low

Social Credit

Mr. Low:

The minister of course is closer to the board than any of us, and I am making my statement only on the information I have. However, I have tried to keep in close touch with what has been going on, and I know the statement of expenses presented to the board by the Canadian Pacific Railway was in the neighbourhood of $400 million a year. They based their application for the 7 per cent that has been granted upon the anticipation that their wages bill is going to be increased and that the 7 per cent will be required to take care of that increase. My complaint is that the board did not ask the railway to take that bill of $400 million for expenses and trim back the controllable section of it.

As I have already said, there are many items upon which the railways do not have to spend in a particular year, necessarily. With the rest of us, they must look forward to a time when it may be possible to bring down the cost of living. Surely if they are interested in keeping the cost of living from going higher, particularly at a time when farm income is declining seriously, they would not object to taking back their request, trimming it, and then coming to the board at a later time with a revised figure.

I know the railways say, "Well, this business of trying to trim down our expenditures simply means that we defer maintenance", and they add that deferred maintenance may endanger life and property. But I do not think it needs to endanger life and property, because there are certain fields where they can cut down measurably without impairing efficiency in any way whatever.

I feel that those who have taken strong exception to the granting of this 7 per cent increase are standing on sound ground because last year, according to the dominion bureau of statistics, our farmers had to suffer a 19 per cent decrease in their wholesale price index. This simply means that farmers' incomes declined seriously last year. Yet they are asked to meet increased costs of equipment and freight rates, thus narrowing their margin of profit to a point where they will not be able to stay in business.

I would like to see something done to enable the farmer to stay in business, because he is the backbone, the strength of this country, and it is on his behalf mainly that I rose in my place today to protest.

Topic:   FREIGHT RATES
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CCF

Clarence Gillis

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

Mr. Clarence Gillis (Cape Breton South):

Mr. Speaker, I rise only to pose a question to the minister, so that he may answer it later. I am going to state my question to the minister because I see he wants to leave. Is there a possibility of having a stay of execution of this decision until the committee provided for on the order paper is set up and has examined the accounts of the Canadian National Railways and formed an opinion as to whether the increase now asked for is justified? When the minister returns he can answer that question, as I am going to say a few words.

Topic:   FREIGHT RATES
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I can answer it now if my hon. friend will allow me to do so. The answer is no. The application for reconsideration should be made under section 52 of the Railway Act, as I stated earlier. The procedure is set out therein, and the matter is dealt with by the governor in council.

Topic:   FREIGHT RATES
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CCF

Clarence Gillis

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

Mr. Gillis:

I am not going to go into the ramifications of freight rates because that would entail a long story. I think the railroads are smart when they base their application on the need to meet their wage bills which have risen because of demands on the part of the railway workers for increases in wages. There is a certain psychological effect in that. Members of the house will say if it is to pay wages, we are in agreement with it.

In my opinion that is a false argument. I do not think the real reason for asking for increased freight rates is the increases in wages asked for by the railway workers. When he was speaking the minister stated that it would be necessary for the Canadian National Railways to raise $104 million for wages. I do not think the wage increases constitute a reason why the Canadian National wants increased freight rates. When the committee is able to sit down with Mr. Gordon and his officials and take a look at their operations over the past year I think they are going to find that the real reason is the modernization that has been carried out, particularly the dieselization of the Canadian National almost from coast to coast. I think the Canadian National were shortsighted and in too much of a hurry in putting diesels into operation on the section from Montreal to Mulgrave in Nova Scotia.

I say that advisedly because, as the minister knows, there is a coal-burning turbine engine almost completed. It is expected that when it gets into operation it will make the diesel obsolete, because it will cut the cost of operation to about one-fifth of the present cost. When we were examining the accounts of the Canadian National last year 68108-1751

Freight Rates

I asked Mr. Gordon if it would not be feasible to delay the dieselization on that end of the line until such time as the experiments with the coal-burning turbine engine were completed. I did not get a definite answer one way or another, but the dieselization is completed right through to Mulgrave, Nova Scotia. The chances are that this turbine will revolutionize transportation over the whole system from coast to coast.

I think if we have a chance to sit down to examine the accounts of the Canadian National, and those of the Canadian Pacific if necessary, we will find that the argument that the wage increases justify these freight rate increases does not hold up. I agree with the hon. member for Peace River (Mr. Low) that in an operation like the Canadian National or the Canadian Pacific the economic experts could sit down and trim their sails in many directions and find the necessary money to meet their wage bills without asking for a flat increase right across the board.

Topic:   FREIGHT RATES
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SC
CCF

Clarence Gillis

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

Mr. Gillis:

They have $400 million to play with. The figures put on the record this afternoon by the hon. member for Macleod (Mr. Hansell) were rather revealing. This 7 per cent increase will bring the total increases in the last few years up to 92 per cent.

Topic:   FREIGHT RATES
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March 9, 1953