Mr. Speaker, I am pleased to rise today to commence third reading of Bill , the safe and accountable rail act, which seeks to amend both the Canada Transportation Act and the Railway Safety Act.
As parliamentary secretary to the Minister of Transport, I have the great privilege to be a member of the Standing Committee on Transport, Infrastructure and Communities and to have been able to take part in the study of this extremely important piece of legislation.
Before I speak to the important points raised during committee stage, I would like to take a few minutes to remind all members of this place of the important components of this legislation, beginning with the important amendments to the Canada Transportation Act.
As stated by the at committee, the tragic Lac-Mégantic derailment has shown us that our liability and compensation regime for rail must be strengthened. The Montreal, Maine and Atlantic Railway only carried $25 million in third-party liability insurance, which we now know is not nearly enough to cover the incredible magnitude of the resulting damage and loss of both life and property that night.
With this bill, railways would be required to hold a mandatory level of insurance based on the type and volume of dangerous goods they carry. These levels would range from $25 million for short lines carrying limited or no dangerous goods to $1 billion for railways carrying significant amounts of dangerous goods, namely CN and CP.
These mandatory insurance requirements have been set based on analysis of historical accident costs, taking into account the severity of past accidents involving certain goods. These requirements would make certain that a railway's insurance directly reflects the risk associated with its operations.
These insurance levels were determined to be adequate to cover the cost of the vast majority of potential accidents and, while a scenario of the magnitude of Lac-Mégantic is an extremely rare occurrence, we want to be certain that all costs in such a case would be recovered.
That is why a supplementary shipper-financed fund would be created to provide compensation above the railway's insurance for accidents involving crude oil and any other goods added through regulation.
In the event of a rail accident involving crude oil, railways would be automatically liable, without the need to prove fault or negligence, up to their insurance level, and that would happen immediately.
The bill provides that they would be liable for all actual damages, which includes damages to people, property, and the environment. There would be certain defences to this strict liability. A railway, for example, would not be held liable if the accident were a result of war, hostilities, or civil insurrection such as a terrorist act, as these occurrences are outside of the railway's control. If accident costs reached beyond the railway's mandatory insurance level, the supplementary fund would cover the remaining damages.
For the supplementary fund, we have included a broad definition of crude oil in recognition of the serious damage that all crude can cause if released. Even a less-volatile crude can have a grave impact on the environment and result in very high remediation costs.
The fund would be financed through a levy on shippers of $1.65 per tonne of crude oil transported by federally regulated railways, indexed to inflation. The aim is to capitalize the fund to $250 million, which is an amount that would provide substantial additional coverage for crude oil accidents above the insurance levels. Based on a reasonable projection of oil-by-rail traffic growth in the coming years, we have determined that, with the $1.65 per tonne levy, we would reach that target in approximately five years.
That said, however, it is important to emphasize at this point that the $250 million capitalization is a target and not a cap. The bill would allow the to discontinue or reimpose the levy as necessary.
This means that the levy could continue longer than five years should oil-by-rail traffic grow at lower than expected rates. It also means that the fund could be capitalized to a different amount should that be considered appropriate.
Just to be clear. The fund will cover all costs above the railway's insurance and will not be capped. In the unlikely event that damages from a crude oil accident surpass both the railway's insurance level and the amount in the supplementary fund, the government's consolidated revenue fund would back up the compensation fund and would be repaid through the levy.
Bill also propose amendments to the Railway Safety Act, which would seek to further strengthen the oversight of Canada's rail safety regime in certain areas. These include the following: first, a new power for the to order a company to take corrective measures should that company's implementation of its safety management system risk compromise safe railway operations; second, a new authority to regulate the sharing of information, records and documents from one party to another, other than the department, for example, from a railway company to a municipality; third, to broaden railway safety inspectors' powers to intervene in a more effective way with any person or entity, including companies, road authorities, and municipalities, to mitigate threats to safety; fourth, a broader power for the Minister of Transport to require a railway company, road authority, or municipality, to stop any activity that might constitute a threat to safe railway operations, to follow any procedures, or taking any corrective measures specified; and, finally, a cost reimbursement scheme for provinces and municipalities that respond to fires determined to be caused by a railway company's operation.
Part of Transport Canada's prevention strategy has been to ensure the department has an effective oversight regime. This means both ensuring that industry is in compliance with the various rules and regulations that govern them and also responding to changes in the risk environment.
Transport Canada continuously examines and monitors its resource levels to adjust and reallocate, as needed, to address emerging issues, trends and higher-risk issues.
Transport Canada has further enhanced railway safety in Canada by establishing the following new or amended regulations: grade crossings regulations; railway operating certificate regulations; railway safety management system regulations, 2015; transportation information regulations; and railway safety administrative monetary penalties regulations.
Allow me to refer back to the review of the bill at the committee stage.
The review of Bill provided the opportunity for the committee members to examine, in detail, the text of the bill, its purpose and objectives. Particular issues were raised and the hon. provided some important clarifications, which bear repeating in the House today.
First, the minister assured committee members that no additional financial resources would be required for the implementation of these new proposed authorities and requirements. The department's operational budget was assessed and represents the level of resources adequate to carry out all of the projects and the priorities. Nonetheless, in the event additional funding is requirement, the government always has the ability to reallocate or request funding through the supplementary estimates.
Second, with regard to the supplementary shipper-financed fund, the minister made a number of important clarifications. The fund has been proposed, through Bill , to provide substantial additional coverage for incidents involving crude oil. The fund would cover any damages that surpassed the railway's required minimum insurance coverage. To finance the fund, the government would introduce a levy of $1.65 per tonne on shipments of crude oil transported by a federally regulated railway. The formula used to establish the levy would be based on a mid-range growth estimate of projected oil by rail. The supplementary shipper fund cannot apply retroactively for incidents that occur prior to the coming into force of the legislation.
As previously mentioned, the proposed supplementary fund would not be capped or cut off. Therefore, claims against the fund would not be limited. The fund would be capitalized to $250 million. However, Bill would allow the to suspend or reinstate the levy as would be necessary. This would ensure that the fund would be at the appropriate level to pay for damages in excess of railway insurance levels without holding excess capital unnecessarily.
The government modelled this compensation fund on the ship-source oil pollution fund in the marine mode. Levies for that fund were suspended once it had been capitalized. The fund has grown through interest over the past 40 years without the need for further levies. For the time being, the supplementary compensation fund will cover incidents involving crude oil.
However, the bill provides regulation-making authority to include other types of dangerous goods in the future. Moreover, Bill provides for a loan from the consolidated revenue fund if the resources in the fund have been exhausted. This loan would be subject to terms and conditions established by the and would be repaid through the shipper levy.
Furthermore, this bill includes the authority to put in place a special levy on railways to help repay the CRF loan to ensure that liability continues to be shared appropriately in the event of a catastrophic accident. The funds would be supplementary to the newly proposed minimum liability insurance coverage for railway companies transporting dangerous goods.
The strengthened liability and compensation regime in the bill is in line with the modernized liability and compensation regime put forward for pipelines in Bill , as well as the regime for offshore oil and gas in Bill , which received royal assent on February 26. This includes a provision that ensures that the strengthened regime for rail would not preclude any other regimes, including future regimes with higher limits of liability from being applied to a railway accident.
It is also important to highlight the clarification made by the at committee regarding subclause 152.7(1) of the bill. Through this subclause, only a railway company that is involved in a crude oil accident through physical operation of a railway, for example, moving a train or responsibility for tracks or cars, would be held liable without regard to fault or negligence.
In the Canada Transportation Act the terms “operate” and “railway” are defined in section 87 of the act. They are defined in a physical sense, not a commercial sense. Therefore, a carrier that quotes a through-rate or interswitches with a railway company that later has an accident would not be considered involved in an accident. With this strengthened liability and compensation regime for rail, the minister clearly stated in committee that she was confident, and “we do have the ability to ensure that the polluter pays and that taxpayers don't have to incur costs”.
The minister confirmed to committee members that where a crude oil accident was the result of an act of terrorism, the railway company would not be held automatically liable under our proposed legislation.
Finally, the committee discussed the cumbersome definition of “fatigue science” presently found in the Railway Safety Act. As stated by the minister, the definition included in the act is simply a definition of a term and does not add any implementation requirements toward the railway companies. By having the term predefined, it restricted the department's ability to enforce. Amendments to the act seek to remove the definition allowing the application instead of the new Railway Safety Management System Regulations, 2015, to fulfill its purpose of ensuring a company's safety management system includes mechanisms for applying the principles of fatigue science when scheduling the work of certain employees.
Following the Lac-Mégantic derailment, the Speech from the Throne in 2013 and the Auditor General of Canada's fall 2013 report, our government has worked to bring forward these amendments to strengthen railway safety in Canada and increase the industry's accountability. Within this process, consultation with our stakeholders, particularly on liability and compensation, was essential to achieve the results we see today in this bill. We are grateful for their collaboration, support and commitment to improve the safety and security of the railway system.
I urge all members to vote in favour of Bill so it can be referred to the other place as soon as possible.
Mr. Speaker, I am pleased to rise today to speak to Bill at third reading.
As the NDP transport critic and vice-chair of the Standing Committee on Transport, Infrastructure and Communities, I found it interesting to study this bill.
I agree with the Liberal member who said in his question that there was not enough consultation and perhaps not enough study. Indeed, the study period was relatively short for such an important bill.
Let me be clear: the NDP will support the bill. We believe that the polluter pays principle is important. Clearly, it was only after the Lac-Mégantic tragedy that the government finally decided to do something about rail safety. Unfortunately, it took a tragedy to finally spur the government to action, a tragedy that cost 47 people their lives, cost millions of dollars in damages and ruined many other lives.
It is sad that previous Liberals governments and the current government have been ignoring rail safety, the very principle of our rail system, ever since the Liberals privatized it. The problems only started when they privatized everything. They also left all the regulations, even inspections, up to the rail companies themselves. As we often say, the system that was implemented is based on self-regulation, and all the companies do their own audits and inspections. That is very clear.
This bill does have some very important points. As I have said from the beginning, we support the polluter pays principle. Obviously, it is not up to the public to pay for damages caused by the industry.
In the case of the Lac-Mégantic accident, MMA had only $25 million in liability insurance. When I asked the minister and Transport Canada officials about the cost, I was not able to get any firm figures, since the numbers vary. Apparently, $400 million has already been spent to repair damages. However, it could cost billions of dollars in the end. That is a huge amount of money.
Unfortunately, governments must pay because MMA filed for bankruptcy. The federal and the Quebec government had to spend money to repair the damage. When I refer to damage, I am also referring to the damage caused by the Conservative government for allowing self-regulation at a time when the rail transportation of crude oil has increased exponentially.
As for the budget, we see that there are gaps, and that has been raised many times. The government says it is taking action. However, there are budget cuts.
Let us look at just the office responsible for rail safety, the people who specifically look after implementing the system and ensuring that it is safe. We see that between 2010 and 2015, there were cuts of about 20%. Those cuts affected the people who look after rail safety and ensure the safety of Canadians. That shows that the government does not have its priorities straight.
We agree that there must be minimum liability levels. Once again, we deplore the fact that this was not the case earlier and that a company like MMA, with respect to Lac-Mégantic, only had $25 million in insurance coverage.
This bill is certainly a step in the right direction. It contains various categories for many rail companies, which will have to have minimum insurance levels based on the volume of dangerous goods shipped via its rail lines.
However, I asked the parliamentary secretary a question about the calculations. We wanted to know whether the amount established was sufficient. I gave the example of class 1 railways, like CN and CP, that have minimum insurance coverage of $1 billion. We learned from the news or other studies that these companies probably already had insurance coverage in excess of $1 billion.
Ultimately, the government reduced the amount of insurance coverage companies are required to have, when the purpose of the bill is to increase it.
Unfortunately, as the parliamentary secretary mentioned, when we asked questions in committee we were told that the information belonged to the railway companies. However, the government has the power to get that information. The Conservatives are the ones who did the study regarding the insurance limit, and once again, they are not being transparent. That is shameful.
The parliamentary secretary spoke about the additional powers granted to inspectors and to the minister in cases where tracks are not safe. That makes me think about what happened in Gogama, in northern Ontario, where other derailments occurred. They happened despite the events at Lac-Mégantic and the public outcry in regard to the dangers associated with the transportation of dangerous goods by rail. I think that, like me, any Canadians who saw the pictures were shocked to find out that this type of derailment is still happening. Cars carrying crude oil are still exploding.
The parliamentary secretary told us that the government introduced new standards for the DOT-111 cars, which will eventually be replaced. However, it will be another 10 years before they are all replaced. These cars will still be on our tracks for another 10 years, even though the Transportation Safety Board described them as dangerous and unsafe. The TSB said that these cars were essentially the same as the old DOT-111 cars that exploded in Lac-Mégantic.
This concern has to be taken into consideration. I am asking the government to set a deadline and show more leadership when it comes to protecting the public.
There is also the issue of inspectors and self-inspection. The system that was put in place and that has the support of the Liberals allows companies to do their own inspections before potentially, maybe, submitting them to Transport Canada for inspection.
The Auditor General issued a scathing report on rail safety. He said that the inspectors overseeing the safety of the system did not fulfill their obligations and that all they do is look at the rail company's plans without ensuring that they effectively protect the environment and the public. That is a problem.
Another problem with inspectors has existed for a long time. Let us take the example of the derailments in Gogama, which caused explosions. According to the TSB's preliminary report, the condition of the rails was definitely a factor. When we talk about inspectors, the government responds that the companies do the inspections themselves and that it expects companies to properly inspect their rails. However, it is careless to rely on self-inspection.
Before the events in Lac-Mégantic in 2013, there were 116 rail inspectors at Transport Canada. After the events in Lac-Mégantic, there were 117. The government added just one inspector. It seems that others were hired, but they are not officially assigned to rail safety.
What is certain is that all of the workers and unions in this sector agree that there is a problem with inspection. Even the rail companies, as well as the Railway Association of Canada, report the same problem. It is clear that there is a problem.
The government, meanwhile, is addressing this problem by making budget cuts. It makes no sense.
How can the government say that it cares about the safety of Canadians and then turn around and cut the budgets of those who conduct inspections and make sure that laws are in place and that the companies are complying with them, as well as ensuring that the rail lines themselves are safe? It is shameful.
As for the polluter pays principle, I applaud the fact that the bill provides for a compensation fund. Unfortunately, as my NDP colleague mentioned in his question, this fund applies only to accidents or disasters involving crude oil.
One question was raised by the Federation of Canadian Municipalities, the Canadian Association of Fire Chiefs and a number of other stakeholders who appeared before the committee. Why did the government not include other dangerous goods? The Conservatives were asked that question today. They replied that they were studying the issue and they would see. Do we need to have another accident like the one in Lac-Mégantic for them to realize that something has to be done? It is important to raise this issue. This is not about demagoguery. The government did indeed act after the Lac-Mégantic tragedy. The government has even said that this bill resulted from that tragedy. Why not also include a compensation fund for other dangerous materials, since that is a concern and the municipalities and first responders are asking for it?
Let us come back to firefighters. A question about training was raised by the Canadian Association of Fire Chiefs, a question that we had also brought forward. Yes, the aim is to prevent accidents. However, prevention depends on inspection. As we know, the government is failing in that regard. What must be done to prevent an accident, or at least to respond quickly when one does occur? How can we ensure that first responders are properly trained and that they have the resources they need?
Unfortunately, this bill is silent on that issue. This is what firefighters, among others, proposed: since there is already a fund in place—once again, I am referring to the fund established from fees paid by oil companies—why not use it to pay for training to ensure that first responders, firefighters and those who respond to emergencies receive the training they need?
This problem has been flagged and it is a serious problem, especially because we are shipping more and more dangerous goods by rail. Furthermore, based on the Lac-Mégantic accident and what is happening in the United States, for example, we can say goods are increasingly dangerous and there is less and less information about these goods. That was clearly the case in Lac-Mégantic. The dangerous nature of the goods being moved was underestimated.
Legislators or those who implement the regulations are not well informed. What about the people who respond to emergencies? What we are asking for is simple. We are asking for a fund to cover training for first responders such as firefighters and paramedics. How do we intervene in this situation? The Lac-Mégantic accident opened our eyes.
The bill could have covered this, but unfortunately it does not. There is still work to be done. As I said, the NDP will support the bill and hopes that it will pass quickly. However, there is still a lot of work to be done.
In committee, an amendment did not pass. It dealt with fatigue, or what is known as fatigue management.
The bill actually repeals a clause, repeals the definition of fatigue management, and we do not understand why. Just to be clear, what the definition basically said is that we have to base fatigue management on science, and what we are doing here is actually repealing that definition.
I asked the minister and officials, and the answer was not satisfactory. I think we want to make sure that we have a base, and our base was the definition of fatigue management, fatigue science. It was scientifically based, but unfortunately, that was deleted.
We will have to take a close look at the regulations. Unfortunately, from our perspective, the approach was going in the wrong direction.
We did not anticipate one of the other consequences that witnesses told us about in committee, namely the fact that some companies do not do the same kind of transportation for dangerous goods. Some companies transfer oil and other goods in certain places. These companies, therefore, do not transport goods the same way and do not have the same problems. This concern was raised, and I asked questions about it. I was told that these cases can be addressed through regulations. I asked the question clearly and openly, and now we will have to follow up. We have to figure out how to treat companies that do not pose the same risk but that transport goods that are, by definition, dangerous. We have heard that the costs can be quite high for these small companies. We are talking about smaller companies that might not have the means to pay for this insurance. As legislators, we need to trust Transport Canada and its officials to take that into consideration. We will keep a close eye on this issue.
There is something else we are disappointed in. It was already mentioned, and that is the fact that the environment has been put on the back burner. Certain priorities have been set out in the bill. We agree that municipalities or individuals who are victims of accidents should be compensated and helped at any cost. There is no doubt that they must compensated. However, the wording of the bill puts long-term environmental impacts in the back seat. The request cannot necessarily come from an individual who says he can no longer use a certain natural resource for the long term, a river for example, and that his rights have been violated in the long term. According to the current wording of the bill, only the government can go after the railways and say that they caused damage that undermines the long-term use of the environment. However, we know that in fact the government does not do that. It will not go after a company for damages. We are a bit surprised to see that this aspect does not have the same priority in the bill. We would have preferred it to be considered on an equal footing.
I would like to come back to the question that we asked ourselves: why did the government not go further in terms of coverage for dangerous materials? The reason I am mentioning this again is that the committee was almost unanimous in this regard. Firefighters, the Federation of Canadian Municipalities and the oil industry all asked us why the bill only went after oil companies or crude oil and why it did not provide for a fund that would cover other dangerous goods, since we know that other dangerous materials are being transported on our tracks. I asked the government that question. I was told that the matter was being looked into. I would have liked a more concrete answer.
However, we did obtain a more concrete answer in regard to what the said about the cars. He said that there will be new standards for the cars. However, the United States announced that a braking system will be implemented and gave us a timeline.
The government established a deadline of 10 years for oil cars, but as we said, we would like that deadline to be shorter. The United States said that the braking system for cars was a safer system. Unfortunately, the government did not give a deadline in that regard in its announcement.
The government told us that it was looking into the issue, but it has not even set a deadline yet.
We need to learn from our mistakes. Twenty years ago, the Transportation Safety Board of Canada said that the DOT-111 cars were dangerous. The Liberal government did not do anything about it. The federal government did not do anything either and the Lac-Mégantic tragedy occurred. We need to think about that. The government needs to act quickly, show some leadership and protect the public.
Mr. Speaker, it is a pleasure to be here this afternoon to join this debate. This is a profoundly important issue for Canadians. It has been lingering now for almost a decade under the Conservatives and has been brought to the fore as a result of the tragedy at Lac-Mégantic, where so many vulnerable and innocent people either lost their lives or their families were touched. In fact, the entire community was destroyed.
As a result of that wake-up call, the government has been reacting. What we are here to debate today is frankly how it has been reacting. What we have seen is a series of dribs and drabs and slow release of technical and regulatory amendments and bills. This is part of that process.
First, it is important to step back for a second and remind Canadians what this bill is really all about, which is changing the way we establish minimum insurance levels for railway companies that are regulated by the federal government. Second, it intends to create a new compensation fund that would cover damages that arise from railway accidents involving the transportation of not all but certain kinds of dangerous goods. That is what this bill is really all about.
When the spoke a moment ago he mentioned that the government knows without a doubt that the amount of money that it is calling upon the industrial sector to make available in insurance and in this compensation fund is a sufficient amount of money. I would ask how he would know that. We asked the minister, the parliamentary secretary, the officials from Transport Canada, the Canadian Association of Petroleum Producers, the Railway Association of Canada, the Canadian Association of Fire Chiefs and beyond how much the tragedy at Lac-Mégantic has cost thus far. No answer is forthcoming.
The mayor of Lac-Mégantic told us that at minimum it was somewhere in the neighbourhood of $500 million. That is half a billion for an accident in a smaller town. We were also told by the ecological experts that that amount of money would have been considerably higher had there not been a layer of natural clay in the subsoil in that area that prevented the seepage of fossil fuels into the aquifers below, which would have produced almost unquantifiable damages to the natural ecosystem in the region. Therefore, when the government states that it has the truth and the answer, that it knows that $1 billion or $1.5 billion is sufficient, I would ask this. What if, heaven forbid, an accident like the one that occurred at Lac-Mégantic occurred in downtown Toronto, Montreal, Edmonton, Ottawa or Vancouver? I think the government would be singing a very different tune.
I raise this straight up at the beginning of my remarks to illustrate the kind of obfuscation, subterfuge and unwillingness to come clean with Canadians that we have seen from the government on rail safety over the last several years. It is no surprise. The first fact for Canadians to remember is that this is the fifth in eight years. That tells us that the current government's ministers of transport have been transiting through the department, whether upward, downward or out of cabinet. That indicates that the government has been putting in a number of individuals, not taking this portfolio seriously, not until of course this horrible tragedy at Lac-Mégantic happened upon all of us. That is important for us to remember.
The second fact that the government does not want made public but would rather deny, bob and weave, or create fictitious responses for, is that it is categorically and undeniable slashing funding. It is killing funding when it comes to rail safety. In fact, rail safety funding financing is down 20% over the last five years, year by year.
This year, for Canadians who follow these things, we are all being bombarded with obscene, unwarranted, unjustifiable advertising. Most recently it is the 's own 24/7 channel, the vanity video channel he has that records him every week and broadcasts at considerable taxpayer expense. As they say in French, “c'est du jamais-vu au Canada ”. It has never been seen before. We know this year alone the government is spending $42 million on economic action plan advertising. That is a number Canadians have a hard time getting their heads around, so let us juxtapose it in a meaningful way. There is $42 million for economic action plan advertising and $34 million for rail safety. There is $42 million for advertising and $34 million for rail safety. That is the priority of the Conservative regime.
What the Conservatives are doing by subterfuge, by stealth, by miscommunicating, by misleading Canadians, frankly, is they are trying to create an impression that they are on top of this profoundly important public safety issue called rail safety. They are not.
The Conservatives have been consistently and repeatedly warned, first by the Auditor General several years ago who came out and said in practical terms, that we agree with the notion of a safety management system, unlike the NDP, but as Ronald Reagan might have said, trust but verify.
It is the verification where the government as the regulator of a regulated sector is falling short, mostly falling short. The Conservatives cannot stand up and look constituents in the eyes and say that they have enough inspectors, because they do not. They cannot stand up and say that they have enough qualified inspectors, because they do not. They cannot stand up and tell us that they are properly trained and not coming primarily from the private sector that is regulated, because that is not true either. That is in fact where they are coming from.
There is a capacity problem inside Transport Canada. A department that is filled with good people, passionate, dedicated public servants, is being cash starved by a government spending $42 million on economic action plan advertising. As a result, it is our view that the government is putting Canadians at risk. Do not take our word for it; take the word of the Auditor General.
VIA Rail in a three-year or four-year audit period was not audited once by Transport Canada. VIA Rail carries over four million passengers a year, and it was not audited once. The systems safety audit that ought to have been accomplished was not done once. In fact, the government's own numbers indicate it is only completing 25% of the audits they themselves say are necessary to keep rails safe.
It is absurd to hear senior members of the government claim that things are getting better and that they have made so much progress in these dribs and drabs releases. It is not true.
We have a problem; we have a cultural problem in the government. I hate to go back to this, but it is important because past behaviour often indicates a propensity for future behaviour.
There are at least five remaining front-line ministers in the government who were in Ontario when the Walkerton water crisis hit the province. When that crisis hit the province, they all stood up in Ontario and used the same language we heard here today. “We can adjust based on the estimates with supplementary estimates.” “It is the officials who tell us that is enough money to conduct rail safely in the country.” These are the same buzzwords and the same sloganeering that we heard right after the Walkerton crisis, where people died and lots of people got sick.
In fact, in the report by Mr. Justice Dennis O'Connor, five or six of these front-line ministers were singled out as contributing to the Walkerton crisis. Why? They slashed the funding. There was not a sufficient number of water inspectors, just as there is not a sufficient number of qualified rail inspectors today. This is the same story.
One would think that the government would have learned from the terrible tragedy at Lac-Mégantic, but it has not. That is the context within which this bill has been brought to the House for third reading.
When the minister came to committee, I asked her not once, not twice, and I did this on purpose, I asked her ten consecutive times why she had cut the budget by 11% for Transport Canada, for a total of $202 million cut from the budget. She denied it. I asked her again and again. Finally, she turned to her officials and said that they gave her the numbers, that it was their responsibility, and they said that is all the money they need. Nobody believes this. That is not how governments work. Budgets are allocated. The Treasury Board sits down with finance. The PMO overrules, agrees or disagrees, and the money is allocated.
We have a situation where these choices have been made at the highest levels of government. I asked her ten times, and ten times she denied it.
It is funny because the Parliamentary Budget Officer says that those are the numbers. The Library of Parliament's research says that those are numbers. We are hard-pressed to understand why the government will not come clean. Why will the government not just simply say that it is making a choice, that it is cutting the funding for Transport Canada and cutting rail safety by 20%?
When it comes to the testimony of the experts that we rely on in this place and who bring a perspective that is invaluable to improving legislation, not necessarily perfecting it, but certainly improving it, the Conservative majority on the committee brought the hammer down and said that there shall be no more than two meetings of two hours each. It is serious. We are talking about billions and billions of dollars of insurance coverage. My prediction is we are talking about billions of dollars in litigation that will follow this bill, because it was not thought through legally. The government said that there shall be two two-hour meetings.
When I pushed the four top witnesses on this very issue, they all admitted that, in fact, they had not been properly consulted at all. They had never had a chance to dialogue properly with the department. They had serious, profound questions about the insurance implications, the distributive effects, employment implications, trade competitiveness implications, and beyond. That is what has happened here.
As I said earlier, in my view, there is no greater responsibility of a government than to keep its citizens safe. Canadians today are rightly concerned about rail safety. They are very worried about rail safety, and it is not just the terrible Lac-Mégantic tragedy. We have had three major derailments in the province of Ontario in the last three months. There have been many more in the United States.
The Transportation Safety Board warned the government about the DOT-111 cars. The Transportation Safety Board looked at the northern Ontario accident and confirmed that the new standard brought by the government was not satisfactory. The government came out and said that it has a three-year phase-out and retrofit schedule for DOT-111s, which it knew was false, but it had to put something in the window, instead of slowing down, taking a bit of time and coming up with a better projection and a better plan for the phase-out of the cars that are dangerous.
That is just not the way it operates. The Conservatives had to say something to Canadians. They were really frightened of this file, so as a result they had to make an announcement, even though they know and were told by the number one company in the country that retrofits to these cars are technically impossible to do. The minister was told by her own advisory committee that it is technically impossible to do. The Conservatives announced it.
People are concerned. Recently, many of my caucus colleagues held a very public, large town hall in Toronto on rail safety. They have since written to the minister herself. They said that they are “worried about the massive increase in shipments of crude oil by train, up from 500 tank cars in 2009 to an estimated 110,000 tank cars in 2014”. We are reminded that the minister's spending on rail safety, as I said, is down 20% since 2009-10. She cannot deny it. The numbers are there. “Northern Ontario”, they go on to say, “saw three derailments in less than a month between February and March”. They raised concerns about the accuracy of the current speed limits on trains routed through Toronto and for that matter, all urban centres in the country, whether trains with dangerous materials should be routed through highly populated neighbourhoods at all. Is that a discussion we are having here? Never.
Band-aid after band-aid after band-aid, image after image after image, rolled out of technical dribs and drabs has been the response to the wake-up call of Lac-Mégantic. It does not cut it. It is not good enough.
We have tried to work collaboratively with the government. I think there are many MPs on the government side themselves who are dissatisfied with this response, because they are feeling the heat from their own constituents, as they should, as we all should, because we have an obligation to get this better for Canadians.
It is hard for us to square a number of other technical parts of the bill which I want to turn to. One is that the parliamentary secretary got up and said, in fact quoting the minister, that they have been assured that there are no financial implications for the bill, no additional costs in bringing in a 59-page bill. Really?
I asked the director general of the Canadian Transportation Agency whether that was true, and she could not answer, because now one of the things the bill does is it actually takes away litigation and gives a new responsibility to the Canadian Transportation Agency to adjudicate, to decide on how much compensation should be paid if there is an accident if a claim is made by a municipality or province. They admitted in testimony that they are not qualified to do it. The director general of the Canadian Transportation Agency said that they will think it through later. They have to get it done. There is an election coming October 19. They have to get it done.
There is one technical gap. Another is related to a really important legal liability issue where the test as to who is responsible if there is a railway accident has been changed by one stroke of a pen. I want to finish with this, because I predict this is going to cause all kinds of problems. Now a railway company that operates a railway which is involved in a railway accident, simply involved, the problem with that is railways often pass goods on from one railway to another, so who is involved? Who will pay the compensation? Whose insurance company will indemnify for the cost? This is completely unclear.
The Conservatives were warned. They had legal opinions that told them this was a real problem going forward. They were told it would lead to difficulty getting insurance coverage and difficulty later on with litigation, but they ignored it. It was brought to them in committee by me, by others, by their technical experts.
It is unfortunate that we missed the opportunity to take the time we need to improve things for Canadians when it comes to rail safety, because we need our railways. They are a big part of the engine of the economy. I think right now we have an obligation to go back and build on this bill and get it better.
Mr. Speaker, I am truly honoured to rise in this place today to speak to this very important piece of legislation. I represent the great riding of Wetaskiwin, which has major rail lines in it, both CP and CN. Constituents in that large rural riding know the value railways have, and I take very seriously the importance of the safety of the operation of the railways in that riding.
Before I go on, I would like to advise that I will be sharing my time with the dapperly dressed member for , who will, I am sure, enlighten the chamber with his thoughts as well.
I rise today to speak in support of Bill . It is a good bill. It is the safe and accountable rail act, which would reinforce the government's polluter pays principle for the rail sector.
The polluter pays principle holds industry accountable to Canadians and supports responsible resource development. It also reflects Canadians' expectations about making responsible parties pay the costs of the accidents they are responsible for.
The polluter pays principle is a key part of the modernization of the liability and compensation regime in other sectors, including the marine sector, the nuclear sector, pipelines, and offshore oil and gas. A number of those bills have already been brought before the House, where we have made exactly the same kinds of legislative changes when it comes to the polluter pays principle in dealing with absolute liability and so on.
In voting for this bill, parliamentarians will be supporting this important principle. This is our government's objective: to ensure that sufficient funds are available to compensate victims of railway accidents and to pay for cleanup costs in the event that those things may happen.
The polluter pays principle means, first, that railways pay the cost of accidents for which they are responsible. Therefore, we are proposing that each railway be required to hold a minimum amount of third-party liability insurance to cover the cost of an accident. This is a good thing. This would give a level of assurance to Canadians that their tax dollars would not be used when it comes to an accident, cleanup, or spill or any of the other damages that might be associated with a minimum level of liability. These minimum insurance levels would be established in the legislation so that they were clear and transparent and so that Canadians would know what they could expect.
With this approach, Canadians would be reassured in the wake of something like the Lac-Mégantic tragedy that railways would have enough insurance to cover these costs when accidents, unfortunately, may happen in the future.
These insurance levels are based on risk. It is an insurance program, and it will be based on risk, as any other real insurance program is. They were developed based on an analysis of rail accident cost data and the potential severity of incidents involving certain types of dangerous goods. The levels range from $25 million to $1 billion, based on the type and volume of dangerous goods the railway may carry. When the new regime comes into force one year after the bill's royal assent, railways that carry little or no dangerous goods will be required to carry $25 million minimum in insurance.
Requirements for railways carrying higher amounts of specified dangerous goods, including crude oil, would be phased in over time. Initially, the railways would be required to carry either $50 million or $125 million of insurance coverage. One year later, those requirements would increase to $100 million or $250 million of coverage.
Railways moving substantial amounts of specified dangerous goods, such as our major national railways, CN and CP, would be required to carry a minimum of $1 billion in liability insurance.
We have heard that some short lines may have difficulty adjusting to the enhanced insurance requirements or that the increased costs may affect their viability. However, as the Lac-Mégantic incident has shown us, accidents involving smaller railways carrying dangerous goods can result in catastrophic damages. It is for this reason that the government committed to hold railways more accountable through enhanced insurance requirements.
Phasing in the highest levels of insurance for short lines at $100 million and $250 million would help mitigate concerns and provide the railways required to hold these amounts with sufficient time to adjust. We do not expect that railways required to hold either $25 million or $1 billion in insurance would need additional time to adjust, so those levels would take effect immediately after the legislation comes into force. This is only fair.
Railways would have to notify the Canadian Transportation Agency of any changes affecting their insurance coverage. The agency could make inquiries to ensure compliance, and the insurance requirements would be enforceable through penalties of up to $100,000 per violation. These measures would ensure that railways were properly insured for their operations.
Another important component of the bill is the polluter pays principle and its clearly established liability in this legislation for railways.
Under the bill, railways would be liable up to their minimum insurance level, without the need to prove fault or negligence—and I have to stress that, without the need to prove fault or negligence—for a railway accident involving crude oil or any other designated good.
As our 2013 Speech from the Throne commitment implied, the railway is not the only responsible party in a railway accident that involves goods such as crude oil. Our government committed to requiring both shippers and railways to carry additional insurance, so that they are also held accountable.
Shippers of dangerous goods like crude oil are a part of the polluter pays concept for the railway sector. This is because such goods have inherent characteristics that contribute to the severity of an accident.
Accordingly, the bill would provide for a mechanism to share liability for accidents more broadly between shippers of crude oil and railways. This would be done through a shipper-financed fund that would supplement a railway's insurance if and when necessary. The fund would be triggered once the cost of a crude oil-related railway accident exceeds a railway's insurance level.
The fund, combined with the insurance levels, would protect potential victims and pay for environmental cleanup and restoration. It would also reimburse governments for the cost of responding to a railway accident.
This two-tiered approach—the insurance and then the fund for any accidents that go over the insured amount—would provide a broad range of coverage for damages in the case of a crude oil railway accident. Higher insurance levels would ensure that railways have more resources available to pay for their liabilities. For accidents involving crude oil, the fund would insure that all other damages and losses were compensated.
This regime would equally cover all actual loss or damage incurred, including damage to people, property, and the environment. The costs incurred in responding to the accident might also be claimed. In addition, the federal or provincial Crown may seek compensation for the impairment of non-use value of public resources.
We are focusing on crude oil because this is a dangerous product that is moved in large quantities by rail over long distances and is a particular concern for Canadians following the Lac-Mégantic tragedy. However, recognizing that other goods have characteristics that could also contribute to the severity of an accident, we have provided the option of adding other goods to the fund in the future by regulation.
Shippers of crude oil would contribute to the fund through a levy of $1.65 per tonne shipped. This levy would apply to any shipment of crude oil carried by a federally regulated railway including a shipment originating from the United States or on a provincially regulated short line.
Capitalizing the fund to $250 million initially would provide substantial additional coverage for crude oil accidents, but this is a notional amount and certainly not a cap on the fund. The bill would allow the minister to discontinue and reimpose a levy as necessary.
Based on a reasonable projection of oil-by-rail traffic growth in the coming years, we determined that a $1.65 per tonne levy on rail shipments of crude oil would likely generate $250 million for the fund in approximately five years. However, the bill provides flexibility for the levy to continue longer than five years should oil-by-rail traffic grow at lower than expected rates.
It is important to emphasis that. Regardless of the capitalization target, the fund would cover all rail accident costs above railway insurance. In the unlikely event that damages exceed the amount being held in the fund, the consolidated revenue fund would provide a loan to cover the shortfall and pay the remaining claims. Any loans from the consolidated revenue fund would be recouped from the industry through levies. These measures are also to reinforce the polluter pays principle.
As I conclude, I want to urge all members to think carefully about how they are going to vote on this piece of legislation. Canadians are counting on us to make a good decision on their behalf.
As we have seen, the accidents have happened in Lac-Mégantic and in my riding of Wetaskiwin, where there are so many communities right on the CP and CN lines. We start out in places like Millet and Wetaskiwin and go down through the Maskwacis area, through Ponoka, Lacombe, and Blackfalds, through Red Deer, and so on; and the CN line goes out in the eastern part through communities like Mirror, Gwynne, and so on. These are communities that are near railway crossings.
The railway traffic in Alberta has increased tremendously over the last number of years with the expansion of oil sands projects and the inability of some pipeline companies to get their projects approved. We have seen an increased dependency on rail for the movement of these items, so it is very important to reassure my constituents, and reassure not only Albertans but any people who have a rail line going through their community, that there will be the coverage available and it will not be at taxpayers' expense as it was with the absence of this legislation, unfortunately, as we saw at Lac-Mégantic.
This is very important legislation, and I encourage all colleagues to vote for it. While they may have criticisms of the bill, or they may want to play politics with this bill, in essence, it would be a sad commentary if we could not come to an agreement in the House that the bill, while it would never be perfect for 308 members, certainly is good enough to be passed into law before we rise for the summer.