OTTAWA — The federal government’s budget call for spending more billions on roads missed an opportunity to address our highway and border congestion challenges, according to an editorial by W.A. Rowat in the National Post. Both the $600-million earmarked for border infrastructure and the $2-billion for strategic infrastructure initiatives to move goods paves over the real problems by focussing primarily on trucking solutions. It is the same old-fashioned solution that has gobbled up so many resources and left taxpayers staggering.
The other way — the rail way — is less expensive, consumes less land and fuel, creates less pollution, reduces road congestion and enhances border trade flows securely.
Congestion problems at busy highway border crossings didn’t start on Sept. 11. They are partly a result of skewed policies that foster even greater use of our public road system by big trucks that cover just half of their road and bridge impact costs. Rail, meanwhile, finances, builds, maintains and pays taxes on its infrastructure.
In practice, the taxpayer picks up the additional costs trucks impose on the economy through congestion, on the environment from emissions and land consumption, on the public treasury in road construction and renewal spending and on public health from accidents, pollution and noise.
Given this subsidy, is it any wonder that truck’s market share has grown at the expense of rail? Is it any wonder that the border sees tremendous delays and truck queues? Public infrastructure investment should be allocated among all modes, including railways, based on individual project merit, and on the contribution such projects make to the public interest.
Canada is a trading nation, and the United States is our principal trade partner, yet Canada’s transportation policies lack a clear focus. The rail-truck modal split for freight shipments from Canada to the U.S. is 44% rail/56% truck by volume. If this ratio were to shift to even 50/50, there would be a substantial reduction in road congestion, taxpayer funding of new highways and maintenance, air pollution and land-use in urban areas.
Such a modal shift would bring strong, residual security benefits as well. Rail’s transborder shipments were largely unaffected by the events of Sept. 11 because trains runs over dedicated, controlled corridors with highly trained crews known to customs and border personnel, backed by extensive electronic communications, information management and data systems.
Some argue that rail can’t carry the kind of products that truck can. This is untrue.
Rail’s fastest growing line of business is intermodal: truck trailers and containers on rail. This intermodal business carries just-in-time sensitive goods for a wide range of overseas and continental manufacturers and retailers.
A recent KPMG report on tax policy demonstrates the Canadian tax treatment of railways penalizes the domestic rail sector vis-ˆ-vis U.S. rail, but also versus other modes and other sectors. The tax burden on railways in Canada, expressed as a percentage of revenues, is 13.38%, significantly greater than the tax burden on railroads in the U.S. (6.43%), trucking in Canada (10.38%), airlines (5.07%), marine carriers (5.43%), manufacturing (7.07%) and services (10.74%). Canadian railways’ property tax burden is the highest of all transportation modes. Trucking pays no property taxes on the corridors it uses.
Canadian provinces allow trucks to weigh 70% more than on U.S. Interstates. According to a U.S. Department of Transportation study, allowing trucks in the United States at near Canadian weights would cost $65-billion in bridge damage and shift 7% of rail freight to road, reducing rail revenues by 11% and contributing to rail overhead by 50%. A NAFTA Annex required harmonized oversight of trucking safety, operations and technical standards by 1997. It hasn’t happened. In some cases, regulatory differences appear to be increasing. To fulfil its international obligations, the Canadian government should use its constitutional power to set and enforce trucking standards.
Government is capable of positive thinking and action. Federal legislation in 1996, as an example, facilitated the creation of some 40 new short lines and regional railways. As partners with Canadian main line railways, these low-cost, growth-oriented businesses are operating lower density lines, are more responsive to customers and are winning back traffic from road, even on short hauls.
In the main line sector, Canadian National’s and Canadian Pacific Railway’s operating ratios are now the lowest among the six biggest North American railways. CPR revenue, as part of a continental alliance with Union Pacific and four Mexican railways, has almost doubled since 1999.
CN has improved its intermodal schedules, reducing transit time for its Chicago-Vancouver service by 24 hours. It is building a state-of-the-art intermodal terminal to handle 30% more intermodal traffic in the Montreal hub, it announced a $40-million new intermodal facility in Milton, Ont. and this fall, it opened a $23-million intermodal terminal in Edmonton.
Over the past decade, the number of intercity rail passengers has increased to 5.9 million annually. The government of Canada is investing $400-million in a program to modernize VIA Rail equipment and services. This complements the United States, where most transportation corridors will have high-speed passenger train service by 2025.
Rail commuters in Toronto, Montreal and Vancouver have grown to 46 million per year. Just imagine the number if vision, imagination, and leadership were turned loose on a level playing field! (W. A. Rowat is president and CEO of the Railway Association of Canada.)