IF ANY Western Producer readers still have a bit of equity left in the farm, don’t bet it on the prospect of the Farmer Rail Car Coalition consummating a deal with the new Conservative government to transfer 12,000 grain hopper cars to the FRCC as the previous Liberal government promised it would do.
The Conservatives have a deep-rooted skepticism of the relationship between the FRCC and the Liberals, suspecting that the coalition had the inside track in a somewhat-fixed process.
They consider the November 2005 election eve deal a deathbed reward to friends by a government on the way out.
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At the very least, the new government will announce that since the rail cars are a valuable federal asset, they should be sold through a more open bidding process.
The Liberal agreement-in-principle announced late last year is essentially a dead issue.
Western Economic Diversification Canada officials insisted last week that the decision to end funding support for the FRCC was not politically driven, but it surely is a sign of the times.
And the Conservatives have a perfect cover for their action.
In February 2005, the House of Commons transport committee issued a unanimous all-party report calling on the government to reopen the hopper car disposal issue to a new bidding process.
It insisted that a final decision not be made until the disparity was cleared up between the FRCC claim it can maintain the cars for $1,500 annually while the railways were claiming $4,300 in annual maintenance costs.
It hasn’t been.
And since then, other unanswered questions have arisen that give the Conservatives some ammunition.
The FRCC business plan promised lower farmer costs in part on the assumption that the cars would be transferred essentially for free.
In the end, there was a price tag of close to $200 million and some Conservatives suggest privately that the capital cost could eat up much of the promised savings.
The issue of the unresolved maintenance cost argument and its importance to the Conservatives was summed up succinctly more than a year ago by Saskatchewan MP Dave Batters, then a member of the transport committee studying the issue.
“The FRCC claims that the maintenance cost on these cars is roughly $1,500 per year,” he told a senior Transport Canada official appearing at the committee.
“If that is the case, my producers in Palliser (riding) have been overcharged for a dozen years in terms of how much it’s cost to transport their grain. If it is $4,300, then the FRCC’s plan simply doesn’t work. It’s not a feasible business plan.”
Batters is back in Parliament and likely will be on the transport committee making the same argument.
That conundrum has never been cleared up and the FRCC now has lost its friends in high places.
The Conservatives won’t necessarily be looking at an alternative to the largely bogus 11th hour proposal from a corporate and farm group consortium to place a competing bid last year.
That was more mischief than real business since the industry had almost a decade to fashion a proposal and cobbled one together only when it was clear that the Liberals were going to act.
But to scuttle the FRCC bid, the Conservatives don’t have to promote a competitor.
They simply have to say that the race is starting again.
