Gerry Ritz slew the Canadian Wheat Board, but can he rein in the railways?
If anyone can, it’s Canada’s 33rd minister of agriculture.
It won’t be easy, but neither was ending the wheat board’s 69-year-old monopoly.
Ritz had help. Key was Prime Minister Stephen Harper, who had a deep disdain for the board and made its elimination a top priority. But Ritz was just as committed and more importantly, dogged. For both, ending the monopoly was ideological and personal. And they got ’er done to the delight of many farmers and dismay of others. In contrast, rail reform is something almost all farmers agree is necessary.
It’s unlikely Harper has the same fire in his belly when it comes to ensuring grain shippers get the service they deserve at competitive prices. And while rail and grain transportation policy are just as complex and nuanced as the wheat board issue, the former doesn’t fit into the black and white narrative the government used to malign and discredit the board and its supporters. It’s hard to paint the railways as evil incarnate when they are still needed.
Ritz, however, gets it, acknowledging the railways have regional monopolies and therefore immunity to normal market forces that drive competition. Since grain traffic is captive to the railways, the railways know if they don’t move the grain today it will still be there two weeks from now when they can move it without investing more and maintaining their profit margins.
According to some economists, grain transportation, which costs western Canadian grain growers more than $1.1 billion a year, affects farmers’ bottom lines more than marketing systems. Just consider the past winter’s gap between futures and cash prices.
To Ritz’s and the government’s credit, improvements have been made with the Fair Rail for Farmers Act, proclaimed May 29, followed by the act’s regulations implemented Aug. 1. But according to the Western Grain Elevator Association (WGEA) the stick needed to discipline the railways — automatic penalties for failing to meet agreed-upon service — is still missing. This despite the railways being able to penalize the grain companies for failing to load or unload trains during an agreed-upon period. The WGEA will push for reciprocal penalties during the current review of the Canada Transportation Act (CTA).
Whether the WGEA is successful rests with the government. That’s where Ritz comes in. If Ritz is on side, and gets Harper’s blessing, he’ll move heaven and earth to make it happen. He’ll have to because Transport Canada isn’t known as the “Department of Railways” for nothing. Rail lobbyists are constantly making their case to Transport Canada, which has a well-deserved reputation for being railway friendly.
According to some observers, Ritz wanted to do more to address shipper concerns through the new act and regulations but was thwarted by Transport Canada.
It may be losing its influence, as Ritz has changed his tune. Last November he said the railways were doing “an adequate job,” but by March he was promising “get-to-work” legislation.
The new legislation, preceded by that unprecedented March 7 order-in-council requiring the railways to move a million tonnes of western grain a week, is a remarkable achievement. Even more so given how quickly it came.
This government worships at the free-market altar, yet intervened when it was clear to all but the railways that the railways needed a kick in the butt. Now it needs to finish the job. All Stephen Harper has to do is assign Gerry Ritz to the task.