By Alex Binkley
Don’t let discussions of improved trade and transportation corridors become mired in debates about which infrastructure projects are most important, says David Emerson.
The former federal cabinet minister and head of the group that produced a sweeping review of Canadian transportation policy released last year, says it would be a mistake to focus solely on the state of railways, bridges, pipelines and power transmission lines.
“Trade and logistics corridors are complex, dynamic systems made up of many parts,” he told the Senate banking committee. Basically they are the main rail lines and highways that link the country to ocean ports and connections to the United States. “Without really efficient connections to the global marketplace for Canadian goods and services, Canada’s economy would be, quite bluntly, toast. Transportation and logistics are now a more important competitive driver than most tariff and non-tariff barriers.”
Budget 2017 proposed creation of a National Trade Corridors Fund to tackle congestion and inefficiencies at major ports and on main railway lines and highways. The Fund would receive $2 billion over 11 years from Ottawa and be eligible for another $5 billion from the proposed Canada Infrastructure Bank.
Every project approved under this program needs to contribute to the overall flow of imports and exports, he said. Trade corridors must be “formally embraced and defined, and part of the government’s decision-making and regulatory mechanisms and processes,” Without government-wide involvement, “the trade corridor concept will fall short of its potential.”
The federal government needs “a mechanism through which trade and transportation and logistics decisions could be made in a comprehensive way.” The government-wide approach must include “way more than infrastructure.” It needs to cover research, manpower, the application of technology and innovation, security and border issues, environmental issues, and other factors. “If you don’t connect all of those in a focused decision making exercise, driven by the need for the most efficient connection possible from Canada to the global marketplace, we will simply fall behind because other countries are doing it and you know we have issues with the U.S. these days,” he said. “You simply cannot go on assuming the status quo stability of NAFTA and the relationship with the U.S. We’ve got to get into Asian and European markets. If we’re going to do that, we have to have world leading transportation and logistics capability.”
Bottlenecks have developed in the Canadian transportation “where urban encroachment is bringing the system if not to a standstill, then at least creating serious delays and problems with the import and export of products,” he said. “We will need and should put in place mechanisms and authorities that would enable government to take control of certain pieces of land or implement certain initiatives that would prevent the ultimate encroachment into the trade corridor that is already starting to bind.”
The east-west corridors running between the Atlantic and Pacific need “efficient feeder systems, whether it’s through short line rail, better trucking and road connections,” he said. Without them, “we will disenfranchise a large number of smaller communities and prevent their growth and development over time.” The feeders would move goods between the corridors and the northern parts of the country, he said. The number of short line railways proliferated in the aftermath of rail deregulation during the 1990s but many have ceased operation or been absorbed into CN or CP. Emerson said they are important to ensuring smaller communities and rural-based industries have competitive transportation services.
Canada needs much greater public policy focus on short line railways rather than treating them the same as the major carriers, he said. Short lines are regulated “in ways that basically inhibit their economic viability. They’re taxed in a way that is much less generous and competitive than short line rail in the U.S. Many of these short line rail systems are peeled off from the Class 1 railways, so they tend to be under-invested in, under-maintained.
“We have a problem with neglecting short line rail. We’ve made it pretty easy for the Class 1s to basically terminate a spur line,” he said. “Frankly, I don’t think we should be doing that. I think we should be making it exceedingly difficult to get rid of a short line railway. I think we should be recognizing that at some point the economics of reinvesting in those spur lines could be very critical to the country, particularly to the development of the hinterland and rural communities.”