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Time to re-regulate transportation?

After two decades of deregulation, it’s time to restore some government supervision of the transport sector to ensure it remains sustainable, says former transport minister David Collenette.

“Regulation is back and it’s time it was,” he told the annual meeting of the Chartered Institute of Logistics and Transportation in North America. “We have learned that unabashed reliance on market forces isn’t the answer.”

While a return to much of the old government regulation isn’t called for, he said the financial pressure on carriers raises real questions about how well they perform their safety responsibilities.

“A sustainable transport system requires swinging back to more government intervention. Market forces have an important role to play in shaping transport policy but the government has responsibilities as well,” he said. Inspecting the safety procedures of carriers and their suppliers is among them. “Government has to be a partner to ensure the safety of the system.”

Although most of his remarks were aimed at transportation companies, he said the Big Three North American automobile manufacturers had dragged their heels for decades in collusion with the petroleum companies on producing small, fuel-efficient vehicles. Governments shouldn’t bail them out until they change their ways.

He said he had reservations about the scope of government deregulation when he was a senior minister in the Chretien government but went along with his colleagues and senior bureaucrats. He also wasn’t happy with budget cuts that forced government departments to withdraw from many of their safety inspection functions.

He complimented former transport minister Lawrence Cannon tackling rail safety after a string of serious accidents and praised the work of the Lewis task force. “More government oversight is needed to ensure the rail system remains safe.”

Governments should continue to invest in transportation infrastructure development because Canada has to be ready when the global economy recovers, Mr. Collenette said. The government could even consider taking an equity position in troubled carriers and selling that stake in better times.

Second guessing the wisdom of government economic deregulation is easy to do in the current financial market turmoil, Mr. Collenette admitted. But he’s not alone. He noted that Bob Crandall, the former head of American Airlines and one of the great champions of deregulation, is now of the opinion that some re-regulation of the airline industry is needed.

It also should be remembered that government had an historic role in transportation development in Canada especially in building canals, railways and airlines, he said. He lauded Paul Tellier and Rob Ritchie, the former presidents of CN and CP, for understanding their companies “had to ensure the country was well served.”

Mr. Collenette also suggested the government should reconsider its airport rental policy, which he blamed Finance Department officials for, because it sucks billions of dollars out of the airports every year and results in high costs for the airlines using them.

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