October 26, 1951 (21st Parliament, 5th Session)


Lionel Chevrier (Minister of Transport)


Hon. Lionel Chevrier (Minister of Transport) moved

the second reading of Bill No. 12, to amend the Railway Act.
Railway Act
He said: Mr. Speaker, this bill is based upon the recommendations of the royal commission on transportation and seeks to put them into effect, particularly those dealing with equalization. I should like to make some remarks of a general nature on the amendments therein proposed.
The sections of the present Railway Act dealing with tariffs and tolls, which are the principal subjects of the proposed amendments, have been changed little if at all since 1903. In passing the early railway legislation, parliament's concern with rate regulation was a relatively limited one, namely, the prevention of unjust discrimination. Nevertheless it promised a solution to the discontent and dissatisfaction which had been developing for over half a century, and probably few pieces of legislation won greater or more widespread approval.
In a small and compact economy the "unjust discrimination" concept of public control might well have maintained itself to the general satisfaction of all parties. Similarity of conditions, including those of competition, would have required only a minimum of intervention by the regulatory board.
However ideal such a state of affairs may appear, one would be less than realistic to overlook the fact that we are far from having the ideal conditions for it. Instead of being small, compact and homogeneous, our country is large, sprawling and varied. Densities of population, producing and consuming areas, types of traffic, and lengths of haul, to mention but a few factors, all show the widest variation. And in addition thereto, the last quarter century, in particular the last decade, has been a period of tremendous economic change with important consequences to transportation. The royal commission assessed these and other factors in considerable detail; and, in concluding that the present Railway Act was deficient in certain respects, stated:
It appears that Canada has reached a stage in its development when former methods of making regional rates must give way to a uniform rate structure that, as far as may be possible, will treat all citizens, localities, districts and regions alike.
The board of transport commissioners is a statutory tribunal and as such must rely for its authority upon the Railway Act. A warrant must be found in the act for its orders or they are null and void. Its decisions are remedial and corrective in intent, endeavouring to remedy a situation rather than punish a dereliction. The board's responsibility is to see that all parties receive fair treatment. It is legislation based on this premise of fair treatment which confers wide general powers on the regulatory board but is sparing in specific directives. The board is

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Railway Act given wide powers of initiative to meet particular situations, but is not encouraged to expand its regulations as an end in itself. There seems no doubt but that such general policy will continue to meet the approval of the Canadian people. On this point the royal commission found almost unanimous agreement among all who appeared before it. No one asked that the board of transport commissioners be made an economic planning board, nor for that matter did anyone seek to have the board "manage" the railways. I do not believe that this point can be over-emphasized, for failure clearly to define the purpose and extent of regulation has provoked regrettable dispute between parties who actually have been very close to agreement on this essential point all the time.
The findings of the royal commission indicate that rate regulation would be more compatible with the public interest and would more effectively meet our national needs if parliament were to determine a national freight rates policy. In accordance with the commission's recommendations section 332A of the present bill provides an over-all directive respecting freight rates and authority for the board to carry out parliament's intent. If it is the desire of the Canadian people that such basic conditions should govern the freight rate structure-and the royal commission was of this opinion-then the board should be so instructed by the inclusion of those conditions in the Railway Act.
The attainment of basic uniformity in the freight rate structure is to be sought by modification, not repudiation, of the general principles on which existing tariff and toll legislation has been based. Both the board and the railways would retain their respective fields of initiative in rate matters. The rates which by this legislation would be subject to equalization are almost entirely those which might be termed the "permanent" or basic rates in the rate structure. These rates are not subject to the same frequent changes as are those which in the course of the railways' day to day business are constantly being issued, revised or cancelled.
The only changes to which the permanent or basic rates have been subject have been the general percentage increases or decreases and such adjustments resulting from the board's numerous decisions bringing them closer to equality or removing unjust discrimination. With substantial equalization accomplished, the motive for many such adjustments would disappear. The general position would then be a relatively constant body of equalized class and commodity rates applicable throughout the country, and beneath which the lower specific commodity

and competitive rates will appear, change or disappear as particular circumstances and conditions require.
It need not be anticipated that the proposed amendments will result in a body of freight rates which will disrupt established industry and trade patterns. The differences to be equalized are not that extensive. The legislation offers a means whereby general agreement will be obtainable on the basic elements of the rate structure-class rates and commodity mileage rates-and relief to the board from those regional controversies from which it has never been free in all the 48 years of its existence.
In my opinion the great advantage to be derived from this legislation lies in the removal of a persistent source of regional grievance. In this country, made up as it is of widely differing regions, no state of affairs within the power and responsibility of parliament, and which is a source of friction and grievance between regions, should be permitted to continue. So long as regional grievances remain unsolved they encourage thinking _ exclusively in terms of regional interests rather than in terms of national interest.
Clauses 1, 2 and 3 of the bill relate to the appointment, term of office and salary of the chief commissioner. As the Railway Act now stands, the office of chief commissioner is filled by a judge of the exchequer court. It has been considered advisable to change these requirements and the bill now provides that any person may be appointed chief commissioner who is or has been a judge of the superior court of Canada or of any province of Canada, or who is a barrister or advocate of at least ten years' standing at the bar of any such province. The bill also provides that the chief commissioner shall have a position and pension rights similar to those of a judge of the exchequer court and an annual salary equal to the salary of the president of the exchequer court. If the term of office of the chief commissioner expires before he reaches seventy-five years of age and he is not reappointed, he becomes a supernumerary judge of the exchequer court with the same rights and privileges as a puisne judge.
Clause 4 of the bill provides for an appeal from a decision of the board to the Supreme Court of Canada on a question of law upon leave being obtained from a judge of the supreme court. Parties to a proceeding before the board now have the right to apply to a judge of the supreme court for leave to appeal to that court on a question of jurisdiction. It is proposed to give the parties the right to apply to a judge of the supreme court

for leave to appeal on either a question of law or a question of jurisdiction. This amendment would make an application to the board for leave to appeal unnecessary and it is proposed to repeal subsection 3 of section 52. The commission did not recommend any change in subsection 1 of section 52 which provides for appeals to the governor in council, and no amendment is proposed in this respect.
The next amendment of importance provides for a new division of freight tariffs. In order to implement the recommendation of the royal commission and to bring the provisions of the act relating to freight tariffs more in line with modern railway practice, sections 328 to 332 inclusive are repealed and new provisions substituted therefor. At present, section 328 of the Railway Act provides for three classes of freight tariffs, namely, the standard freight tariff, special freight tariffs and competitive tariffs. The bill provides for a new division of tariffs into four classes, namely, class rate tariffs, commodity rate tariffs, competitive rate tariffs and special arrangements tariffs. This new division of freight tariffs is well understood by railway and shipping interests and will be helpful in working out the application of the equalization sections of the bill.
New section 331 of the bill provides that the board may require a company issuing a competitive rate tariff to furnish information to establish that the competition actually exists; that the rates are compensatory; and that the rates are not lower than necessary to meet competition. The section provides that the board may require other information to be filed regarding competitive rates.
The part of the bill that empowers the board to effect and maintain the uniformity in freight rates throughout Canada recommended by the royal commission is found in new section 332A. Subsection 1 of this section declares the national freight rates policy and says that every railway company shall, so far as is reasonably possible, in respect of all freight traffic of the same description, and carried on the same kind of cars, passing over all lines or routes of the company in Canada, charge the same rates to all persons. Subsection 2 provides for a uniform scale of mileage class rates and a uniform scale of mileage commodity rates and for revision of any other rates with a view to implementing the national freight rates policy. Subsection 3 gives the board power of disallowance of any tariff considered to be contrary to the national freight rates policy, and subsection 4 contains the exceptions to equalization.
Hon. members will note that the provision for an equalized freight rates structure is
Railway Act
made subject to the proviso to subsection 5 of section 325 of the Railway Act which establishes the Crowsnest pass rates, and is also made subject to the Maritime Freight Rates Act. Neither of these special statutory provisions will be affected by the new equalization section of the bill. The other exceptions are joint international rates, rates on export and import tariffs, competitive rates, agreed charges, rates on the White pass and Yukon route, and any other case where the board considers an exception should be made from the operation of this section.
Provision is made in new section 332B to implement the recommendation of the royal commission that the benefit of any transcontinental rate from the east to the British Columbia coast or from the Pacific coast to eastern Canada should be carried back in the rate to intermediate territory on a basis not more than one-third greater than the transcontinental rate. In other words, when competitive transcontinental tariffs are published by the railways, such tariffs shall provide that the rates to or from intermediate territory shall not exceed the transcontinental rates by more than one-third.
Another amendment contained in clause 10 of the bill carries out the recommendation of the commission on interline rates. An interline rate is one which applies between stations on the lines of two or more different railway companies. As a rule these rates are lower than the sum of the local rates but more than the rate for the same distance over the line of one company. The amendment dealing with this problem provides that in any case where it is shown that joint interline rates exceed the rates in a single line tariff for the same or similar distances in the same locality, the burden of proof shall be placed on the companies to show to the satisfaction of the board that there are greater costs involved in the joint movement, and only in such case are the companies permitted to charge joint rates higher than on the single line basis.
The royal commission recommended that the Railway Act be amended so that the board should be empowered and directed to prescribe, as soon as practicable, a uniform classification and system of accounts and reports for rail items for the Canadian National and Canadian Pacific railways. The commission also recommended that the board be empowered and directed to maintain a revised statistical procedure so designed as to provide the requisite data necessary for the performance of its duties. Effect is given in clause 15 of the bill to these recommendations.

Railway Act
Clause 18 of the bill covers the payment to the Canadian National and Canadian Pacific railways of the cost of maintaining corresponding amounts of trackage on that part of the two transcontinental railway systems which serves as a link or bridge between the east and west, that is, between Sudbury and Fort William on the Canadian Pacific and between Capreol and Fort William and between Cochrane and Armstrong on the Canadian National. The payments to the railway companies are limited to $7 million in the aggregate and are to be paid out of the consolidated revenue fund. This part of the bill was outlined when the resolution was considered in this house on October 23.
In view of the complicated and difficult nature of the provisions of the bill to amend the Railway Act, and the importance to the welfare of all citizens in all parts of Canada of the changes recommended by the commission, I consider that this bill should be referred to the special committee on railway legislation for further examination and study. The bills to amend the Maritime Freight Rates Act and the Canadian National-Canadian Pacific Act deal only with minor amendments and should go to the committee together with the bill to amend the Railway Act.
I have already indicated on several occasions that in our minds these bills are the implementation of the recommendations of the royal commission in so far as equalization is concerned. In other words, these bills not only lay down the principles recommended by the commission but also give effect to a number of recommendations on equalization in the report. I do not think it desirable that the government should be committed to all the details of the legislation prior to its being referred to the committee for consideration and report. It was our feeling all along that these bills should be referred to a committee. First of all I thought that the standing committee on railways, canals and telegraph lines might be the appropriate committee. Later, after giving it further thought and because of the reasons mentioned earlier this day and also because of the fact that this would be a committee to study principles, it was felt that it should be a special committee.
I hope that the committee which will hear these representations will not be put in the position of having to rehear all of the briefs, recommendations and statements that were made before the royal commission on transportation. I think it will be for the committee, in consultation with subcommittees if it is decided to establish them and in consultation with the chairman, to determine what the procedure should be. But if this

committee receives all these representations again it will bog down and the house will not be in a position to deal with this legislation at the present session. It seems to me -and I give this as my own opinion, not as any direction but for what it is worth-that those who will appear to make representations before the committee, individual witnesses, groups, associations and the like, should indicate whether or not this legislation has a detrimental or favourable effect upon their respective regions. Otherwise the committee will be listening to a repetition of arguments and representations already made. I am sure the house will wish those appearing before the committee to follow that course. Again I repeat that I give no direction. The committee is master of its own destiny, and I am sure that its members will deal with this legislation as it should be dealt with. At the conclusion of this debate I intend to move, as I have already indicated, that this particular bill, together with the other two which will follow, be referred to the special committee on railway legislation.

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