SASKATOON – Short line rail operators say Ottawa just doesn’t understand.
Federal officials tell them they don’t want to put short lines out of business and say they have a useful role to play in the grain transportation system.
But, say the short line officials, their actions belie those soothing words.
“They make all the right kind of noises, but they just don’t get it,” said Tom Payne, president of Central Western Railway Corp., a short line company operating in central Alberta.
Paul Beingessner, general manager of Southern Rails Co-operative Ltd., of Avonlea, Sask., said the federal bureaucrats seem genuine in their support of short lines, but they don’t realize the implications of their proposals for the prairie-based companies.
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“They say they want short lines, they talk positively about short lines, but they have a view of short lines that is not applicable or suitable to Saskatchewan,” he said.
The latest transportation reform proposals to come out of Transport Canada would end federal payments to short line railways on Aug. 1, 1995.
Such a move would put the two short line companies operating in the prairies in an “untenable” position, said Beingessner.
He said short lines in the prairies owe their existence to a couple of pieces of federal legislation. The Western Grain Transportation Act allows some of the Crow Benefit money (about $5 million a year) to be paid directly to short lines and the National Transportation Act says a major railway can’t abandon a branch line if a short line company wants to buy and operate it.
If the federal money is cut off, the short lines will have to negotiate directly with the main line carriers for a cut of the freight rate from the interchange point to final destination, a process called “revenue division”. Neither Beingessner nor Payne are holding their breaths on that one.
“We might get some revenue division but whether it will be enough to survive, I’m not sure,” said Beingessner.
Payne said CN and CP should like short lines, because they can haul grain to the main lines more cheaply than CN and CP can do it themselves.
But in practice, as long as the freight rate remains cost-based and distance-related, the major carriers won’t want to give up any of their revenue to the short lines. That’s where Ottawa comes in.
“It’s great for the government to make it legislatively possible for regional railways to come into existence, but if you don’t provide a mechanism for them to get paid, you’ve just built the Hindenburg again,” he said.
If the government goes ahead with plans to pay the Crow Benefit directly to farmers rather than the railways, Payne said, the $5 million now going to short lines must be included. Then the main line carriers won’t be able to argue that there is no money in the pot for short lines and will have to negotiate a reasonable revenue division.
Companies protected
Transport officials have told short line operators privately that the short line companies will be protected by provisions in the NTA which are designed to promote competition between railways.
But Beingessner said that doesn’t mean much since the NTA itself is under review and no one can say for sure what the new rules will be.
All the uncertainty is already making life difficult, since this is the time of year when the company should be planning its summer maintenance and getting its books in order for the coming year.
But all that the short line companies have been told by Transport Canada is that their funding could be cut off in August, with no suggestion how they’re supposed to generate revenue.
Beingessner said the government seems intent on proceeding with deregulation without giving much consideration to whether the changes will actually increase efficiency. “These changes … may result in a system that actually costs us all a lot more,” he said.
