There will be no change to the railway revenue cap until a new study is completed to determine how much the railways should be paid to cover car maintenance costs.
That makes it unlikely that details of the promised reduction in the cap will be known when the new crop year starts Aug. 1, says a senior official with Transport Canada.
Helena Borges, director general of surface transportation policy for the transport department, said the Canadian Transportation Agency can’t undertake a new study until the government passes Bill C-11, which will authorize the cap adjustment.
Read Also
Stock dogs show off herding skills at Ag in Motion
Stock dogs draw a crowd at Ag in Motion. Border collies and other herding breeds are well known for the work they do on the farm.
If the bill passes before the end of June, there’s a slim possibility the study could be completed by Aug. 1.
If not, then details on how the cap will be adjusted won’t be known until later in the year.
“I’d like to be really optimistic about getting a bill passed in June,” she said. “Maybe we’ll be surprised. I hope so.”
When transport minister Lawrence Cannon announced the government’s decision not to sell its grain hopper cars to the Farmer Rail Car Coalition, he also pledged to reduce the revenue cap to more accurately reflect how much the railways pay for maintenance.
A study completed last spring by the Canadian Transportation Agency concluded that in 2004 the rail companies were receiving about $4,329 per car annually for maintenance expenses, but spent only $1,686, representing a total overpayment of some $48 million.
Borges said the government will ask the CTA to do a new study because those numbers are outdated.
“Using two-year-old numbers is not necessarily helpful at this time,” she said.
“All it does is confuse the issue.”
For that reason, she said, the government has no plans to release the 2004 study, noting that it has been leaked and made public on the Western Producer website. The government has acknowledged the overpayment, she said, and no purpose would be served by releasing an outdated study.
In his May 4 announcement, Cannon said the reduction in the cap would translate into a $1.50 to $2 a tonne drop in freight rates.
Some farm groups have called on the government to adjust the cap as quickly as possible.
“If there are savings to be had, we need them sooner rather than later,” said Western Canadian Wheat Growers Association president Cherilyn Jolly-Nagel.
Frank Urban, head of the CTA’s rail economics division, said it’s hard to say how long it would take to complete a new cost analysis, adding that the 2004 study was a challenge due to lack of co-operation from the railways.
“We had a lot of difficulty getting some of the cost estimates,” he said.
“How co-operative the railways will be this time is difficult to gauge.”
Farmer Rail Car Coalition president Sinclair Harrison said while he agreed the government should use current numbers to adjust the revenue cap, there’s still no reason not to release the 2004 study, suggesting those numbers could be adjusted for inflation.
He also called on the government to release another CTA study that has been kept secret.
In June 2005, the agency launched a review to determine the net effect on the revenue cap of the possible transfer of the federal grain cars to the FRCC.
It focused on the potential removal of car maintenance fees from the cap and the potential addition to ownership costs such as lease fees paid by the railways to FRCC.
Harrison said the study concluded that, contrary to what critics of the FRCC have claimed, there would be a slight reduction in the revenue cap under the FRCC’s business plan, adding he was bound by a confidentiality agreement not to reveal the numbers.
