Bill C-26: VIA Rail Mandate

Ms. Judy Sgro (Parliamentary Secretary to the Minister of Public Works and Government Services, Lib.): Madam Speaker, I am pleased to speak to Bill C-26 and the importance of this legislation for the country.

Moving people and goods efficiently, safely, securely and in an environmentally respectful way is vital to our economy. As Canada's national passenger rail service, VIA Rail has an important role to play: providing safe, high quality, efficient passenger service to Canadians.

Moving people out of their cars and onto trains is one solution to the problem of congestion, which we see each and every day in and around our cities and on our major highways and was an issue frequently mentioned as we did our work on the Prime Minister's task force on urban issues. Not only is congestion a personal frustration, but it also slows down our business.

Passenger rail also gives Canadians a convenient and economical choice, whether they are travelling for business or pleasure. Many Canadians do not have the means to travel by air.

For many Canadians in northern and remote parts of the country, rail provides an invaluable lifeline, especially where no other transportation options are available.

The Government of Canada is dedicated to passenger rail and its revitalization, not only as a viable transportation option that is central to our identity as Canadians but also as one that makes good economic and environmental sense.

A strong passenger rail system also contributes to building stronger communities. Passenger rail provides a vital link for the movement of people, encouraging business development and growth. VIA Rail connects some 450 communities with services that run across the country.

More Canadians are using the train today than ever before. In 2001, VIA Rail carried 70,000 more passengers than the previous year. In fact, passenger revenues have grown steadily over the past decade while VIA Rail has steadily improved the cost effectiveness of its services. VIA Rail now carries over 400,000 more passengers and operates 153 million more passenger miles than a decade ago. It has reduced government funding from 45.6¢ to 17.2¢ per passenger mile. VIA Rail's operating subsidy is now fixed at $170 million per year compared to $410 million in 1990.

With this demonstrated growth and improved cost effectiveness, we are pleased that we are making a commitment to passenger rail in legislation.

Up to now, VIA Rail has been operating as a crown corporation subject to the Financial Administration Act but governed by the Canada Business Corporations Act. But most crown corporations and other enterprises created by government are governed by special acts of Parliament. That is because they were created for specific purposes. Pilotage authorities are governed by the Pilotage Act. The port authorities are governed by the Canada Marine Act. Canada Post is governed by the Canada Post Corporation Act. It is time for VIA Rail to be governed by its own act of Parliament.

Bill C-26 sets VIA Rail's mandate in legislation, a mandate that calls for VIA to manage and provide a safe and efficient passenger rail service in Canada. This mandate is consistent with VIA's mission statement, which is to offer safe, high quality, efficient passenger rail service. This mandate means that VIA Rail will continue to provide its current passenger rail services across Canada.

From the perspective of the travelling public and taxpayers, there will be no changes to VIA Rail as a result of this new legislation. Trains will continue to run on the corridors and across the continent. VIA Rail will continue to receive appropriations from the government and the Minister of Transport will remain accountable for VIA Rail.

There are many who expected the legislation to specifically allow VIA Rail to finance its capital needs from the private sector so as to reduce government funding. Let me make it very clear that VIA Rail already has and will continue to have the legal power to borrow money to finance its capital needs, so we do not need to give the corporation special powers. However, it is subject to the Financial Administration Act, which sets out the control and accountability regime for crown corporations.

For VIA Rail to borrow money from the private sector, two approvals are needed. The governor in council must approve the corporation's five year strategic plan. This plan must set out the operating and capital budgets and any borrowing plan. The Minister of Finance must also approve the terms and conditions of the borrowing. To date, the government has prudently decided that private sector borrowings are not an appropriate source of funds for VIA Rail.

VIA Rail is an appropriation-dependent crown corporation. This means that VIA Rail relies on government funding for its operations as well as its capital needs. Also, the government is liable for VIA Rail's debts. As such, it makes more sense for the government to provide the capital funds as well as the operating funds.

Over the past few years, there have been a number of studies considering the privatization of VIA Rail or other public-private partnerships. There are some who expected that this legislation would allow for more private sector participation in the provision of inner city passenger services currently provided by VIA Rail.

The earlier studies confirmed that the timing was not right for such direction. The results of the last study show that passenger rail needed to be revitalized so that the private sector investment would be more attractive. To this end, the government announced in April 2002 that it would provide VIA Rail with an additional $401 million in capital funding over the next five years to allow the company to address urgent capital requirements and to undertake a modest expansion.

Once the revitalization initiative launched in 2000 has been implemented fully, I expect the government will consider the next steps, but as members might expect, capital improvements to take some time to bear fruit.

VIA has already made improvements as a result of this funding. The company purchased 139 new passenger cars and began operating 21 new high speed locomotives in December 2001. It has also completed the refurbishment of several stations across the country and equipped the corridor fleet with waste retention systems.

However, the government recognizes that major investments are still required to maintain the integrity of Canada's rail passenger network and to ensure its viability in the long run.

VIA has been directed to review its long term capital requirements and to develop a capital investment plan for the government's consideration. This plan is to address the need to replace existing equipment and make additional track upgrades to improve rail services that are key to the corporation's future viability. In this context, it may be some years before the government can consider privatizing VIA Rail.

This legislation does not materially change anything for passengers, taxpayers or the corporation.

So what does this legislation do? It demonstrates the government's commitment to passenger rail in Canada. It sets out the government's objectives by requiring that VIA Rail provide safe and efficient passenger rail services. However, it recognizes that VIA operates in a commercial environment and therefore provides VIA with the flexibility to deal with the demands of the marketplace. It means that VIA can add capacity if there is sufficient demand or reduce capacity if there is insufficient demand.

This legislation would also allow VIA to use its excess capacity for purposes other than its mandate so as to reduce the need for government funding.

In setting the mandate for VIA Rail, the government also makes a commitment to ensure that VIA Rail has the resources to fulfill its mandate. The government made an initial commitment in 2000 by guaranteeing stable, annual operating funding of $170 million and investing $401 million to begin the revitalization of passenger rail.

With this new legislation, we make a commitment to continue improving passenger rail service to meet the needs of Canada across the country.