OTTAWA – The federal government says it is sympathetic to the complaints of short-line rail operators that they face bankruptcy unless Ottawa changes the rules set up to end the Crow Benefit subsidy.
However, it is far from clear what the government will do about it.
“Rest assured we are looking at the situation with a very sympathetic eye to see what we can do to satisfy the concerns,” agriculture minister Ralph Goodale told MPs on the Commons agriculture committee May 4.
Later, he told reporters a solution has not yet been decided. “How it gets addressed remains to be seen.”
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Tom Payne, president of Alberta’s Central Western Railway Corp., did a blitz of Parliament Hill last week, warning that the end could be near for his 280-kilometre short-line railway.
“The last train of CWR will run before midnight on July 31,” he told MPs. “If this isn’t fixed, we will have to shut down.”
The problem is that when federal transport bureaucrats wrote the rules for grain freight rate setting after the Western Grain Transportation Act is abolished July 31, they did not include the two prairie short-line railways in their calculation.
Under the WGTA, the Camrose-to-Drumheller railway received $3.5 million per year as its share of the Crow Benefit subsidy, directed through CN and CP, plus freight charges on its own track.
Under the new cost base laid out in the federal budget, the costs of the CWR and Saskatchewan’s Southern Rail Co-op were not included and will not be reflected in freight rates charged.
“It means that CN and CP will have no money to pay us for trains delivered to interchange,” said Payne.
Business, jobs jeopardized
It would mean his railway, which serves 1,500 farmers and moves 350,000 tonnes of grain annually to the main lines, would go out of business, taking more than 20 jobs with it.
He noted the federal government says it wants to encourage short-line rail as the main railways begin to abandon more branch lines. Payne’s solution is to change the budget bill now before Parliament to increase the cost base.
It would mean an increase in freight charges of nine cents per tonne across the Prairies, with the revenues to be passed on to the short-line railway company.
MPs on the agriculture committee said they would lobby for Payne’s cause.
He told them he has not been able to discover why his costs were dropped from the formula.
