The business plan prepared by the Farmer Rail Car Coalition, challenged by its critics and presented to Transport Canada, is credible, a senior departmental official said last week.
“Generally, we have found the plan to be quite good,” assistant deputy transport minister Kristine Burr told the House of Commons agriculture committee Dec. 2.
And she said the coalition’s proposal to have about 13,000 government rail cars turned over to a non-profit farmer-run corporation does not produce an increased risk of trade challenge by the United States.
She was summoned to the committee at the request of Liberal MP and coalition supporter Wayne Easter, who wanted to counteract negative opinions and skeptical questions in earlier testimony from railways, grain companies and some prairie farm groups who prefer a more commercial system.
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While Canadian National Railway has offered to buy half the fleet and Canadian Pacific Railway has suggested the government should continue to own the cars and lease them to the railways, Burr agreed with Easter that neither railway has filed a business plan detailing how their proposal would help the system in the long term. The coalition business plan is the only full-fledged plan the department has received.
The coalition proposal has been reviewed for years and just as the government is on the verge of making a decision after eight years, other system players come forward with criticisms, Easter complained.
“Suddenly, we have what is almost a lobby by railways and grain companies to challenge the FRCC without them putting on the table their own proposals that can be critiqued.”
One of the key issues in the debate is the cost of maintaining rail cars. The Canadian Transportation Agency has included in the railway rate cap formula an estimate of annual maintenance costs of $4,329 per car while the coalition says it can do that maintenance for $1,500.
Neil Thurston, director of rail economics at the transport agency, told MPs the transport department has asked for a new calculation on maintenance costs and that should be available by the end of the year. He would not speculate on the result.
Easter suggested the railways have been overcharging in maintenance costs, perhaps by as much as $1 billion since 1984. It is a claim the rail companies deny.
