CARS Government Initiatives

CARS Government Initiatives

Published on: 1 Nov 2019

CARS Government Initiatives

 Recently, CARS conducted a telephone conference with the U.S.A. Railway Supply Institute to explore potential areas of collaboration between the two organizations. During the discussions, several topics were considered, inter alia, USMCA support issues, tanker cars etc. A specific part of the U.S.A. RSI (RSI Committee on Tank Cars (RSICTC)) opened the possibilities of close collaboration with CARS pertaining to dealing with the production of tank cars and Transport Canada permits. In general terms, the RSICTC addresses issues of importance to tank car builders and owners and regularly reviews tank car requirements through its membership on the Association of American Railroads Tank Car Committee. RSICTC remains at the forefront of the latest research to improve tank car safety and represents tank car manufacturers in federal, legislative and regulatory matters. The Engineering/Technical Subcommittee oversees the RSI/AAR tank car safety research project and meets quarterly with the AAR Committee on Tank Cars to discuss tank car security, packaging and operational issues. Membership on this committee is restricted to companies engaged in the design, manufacture, ownership, or leasing of railroad tank cars.
As a result of the initial telephone conference, CARS GR staff visited Transport Canada directorate dealing with tank cars and their licensing in Canada. Based on this meeting with Transport Canada, CARS GR staff was able to provide an update on tank car issues to U.S.A. RSI staff and clarified the Canadian process for licensing. The current standards pertaining to tank cars in Canada indicate a harmonized approach to licensing to ensure the removal of potential trade (technical licensing of tank cars) barriers between the two countries.

CARS member industries and the aftermath of the 2019 elections…

The 2019 elections are over, the guessing has begun as to the results/consequences of this election will have on the Canadian economy, jobs, investments, transportation and specifically in transit matters - remain clouded in mystery.  Experts have attempted to “read the tea leaves” and predict the road ahead with the Liberal minority government, but only time will tell if some of the predictions will come to fruition or will they manifest in a totally unexpected turn of events.

We know the facts to be: Liberals have 157 seats; the Conservatives have 121 seats; the BLOC has 32 seats; the NDP has 24 seats; the Greens have 3 seats and Independent has 1 seat.

Let’s attempt to look at some of the commonly recognized areas by parties and consider those issues to be in the vested interest of the parties to address them expeditiously in the national interest.

TRANSPORTATION

During the election all major parties recognized the need to improve transit and supporting infrastructures in the major cities, (i.e. Toronto, Vancouver etc.), and promised their support for such funding. 

The Liberals promised $9 billion toward various transit expansion projects in Toronto, two-way all-day GO Transit service from Toronto to Kitchener-Waterloo, expanded rail service from Hamilton to the Niagara Region, money for local transit projects in London, Ottawa and Kitchener-Waterloo. want all new vehicles sold to be zero-emission by 2040. They’ve promised an additional $3 billion in public transit funding per year. Transit funding would be tied to investment in zero-emission transit vehicles from 2023.

The Conservatives said they’ll close the gap between conventional and electric vehicles but have not offered a timeline. They promised not to renege on federal funds already committed to transit projects.  He plans to revive a public transit tax credit axed by Liberals in 2017. Adding an additional $5 billion to previous transit pledges earmarked for Toronto subways, making the province responsible for infrastructure of the Toronto Transit Commission while leaving operations in local hands, two-way, all-day GO Transit service to the Niagara Region, regional transit projects in Mississauga, Brampton, Hamilton, London, Kitchener-Waterloo and Ottawa.

The NDP wanted to electrify transit fleets by 2030 and work with municipalities to eventually make rides fare-free.  The NDP would waive the federal tax on zero-emission vehicles and work toward the goal it shares with the Liberals of getting all new vehicles zero-emission by 2040.  Funding 50% of net transit and paratransit costs across the province.

In summary, the initial predictions are that the NDP will support Liberal initiatives, thus it would appear that in the area of transportation the funding and the conversion of fossil fuelled vehicles will be pursued as a priority agenda as contained in the election programs.  The amount of funds provided to Toronto transit and its expansion will remain in limbo, as Trudeau actively used Premier Ford as boogey man of Ontario in his campaign, and during the tenure of his majority government could not come to an agreement on funding of the ongoing transit projects - prior to the elections.  However, the vote rich 905 region, and the area that enabled the Liberals to remain in power will demand its share of the funding, if the Liberals want to count on this support in the future.

The pipeline issues will have to resolved in the near future.  The Liberals have to count on the NDP for their support in legislative initiatives, but the NDP is dead set against pipelines.  Consequently, there would be no sudden pipelines constructed, and a prolonged debate on their future is anticipated.  This could be good news to CARS, as demand for rail tankers, supporting maintenance and other railway infrastructures will remain in the forefront, whilst oil by rail will continue to be the most expedient mode of transportation.

 

MANUFACTURING

Prior to the elections, the Liberals handed out chunks of the $1.33 billion they raised from retaliatory tariffs on the U.S. to the steel and aluminium sectors across Canada. They also dished out money through their Strategic Innovation Fund. They promised to cut taxes by 50% for companies behind zero-emission technology or products.  

The NDP have long called for a national auto strategy which they say would include $300 million for “innovation.” It wants a national industrial strategy to build a “low-carbon manufacturing economy” and require infrastructure projects use Canadian-made steel and aluminum. 

The parties saw economic anxiety as one of the key themes during the election. Overall employment numbers remain strong but, for many, work feels more precarious and uncertain than ever.

Emerging technologies like artificial intelligence threaten the jobs of unskilled workers, while skilled labour shortages hold businesses back and the growth of contract work means fewer people are protected by union membership or enjoy a full-time job with benefits and a pension. Organized labour remains a factor in Canadian politics ⁠— and the NDP has their loyalty.

The ruling parties (current and previous) ⁠— believed that exports would grow Canada's economy. However, the current economic signs indicate trouble: The American economy is sputtering, China is proving to be an unreliable partner, and the British and EU are struggling with their own relationship.

Thus, while the economy outside of the energy sector has put up strong numbers lately, uncertainty still lurks around the corner.

NAFTA 2.0 (alias USMCA/CUSMA)

Liberals gave up some concessions on greater access to Canadian dairy, chicken and egg markets, but were ultimately able to strike a new USMCA/CUSMA with the U.S., something they are very proud of. But it has yet to be ratified by U.S. lawmakers.

The Conservatives were quick to criticize the Liberals when they struck the deal, arguing it was worse for Canadians than the old one. They specifically complained about its impact on softwood lumber and dairy.  Ultimately the PCs came to accept the current deal.

The NDP don’t think the deal is good enough for Canadians. They are in favour of changes and hope they can be approved by the U.S. Congress. They are worried about increased drug costs, a concern they share with Democrats in the U.S.

In summary, the Liberals had hoped this saga would be finished by the time an election was called but, like much of the trade negotiation process, things haven't gone exactly as planned. Canada is waiting for U.S. lawmakers to approve the three-way trade agreement before ratifying the pact here.  The ongoing impeachment proceedings do not bode well for an expedient USMCA ratification by the U.S. Congress.

The NDP is the wild card in this situation. The party has called for the agreement to be reopened to make changes to the way drug price regulations are set and ensure lower drug prices.

The issue of no elected Liberal MPs from Saskatchewan and Alberta, i.e. no representative in the Cabinet could manifest in the following possibilities: 1.  Trudeau ignores the two provinces and carries on, risking complete isolation of these two provinces and potentially enabling separatist sentiments to grow and take solid roots;  2.  Trudeau goes out of his way to appease the two provinces and presses on with pipelines (alienating potential coalition partners, such as NDP and Greens) to jump-start the Western economy (and to top-up the national funds from energy source taxes); 3. Trudeau takes the half way approach makes some half hearted gestures towards those two provinces to be able to claim involvement and demonstrate care, whilst keeping the NDP and Green parties appeased by not taking any “sudden” measures which would alienate any climate activists.

SUMMARY

In conclusion, from the CARS’ members perspective the challenges the minority government faces will have an economic impact on the country.  Delays in legislature, delays in rendering critical government decisions, while negotiating with like-minded parties for coalition support, all amount to uncertainty and investor insecurity.  First and foremost, investor confidence must be taken into account.  The recent past of Liberal history has created erosion of foreign investment in Canada and which resulted in much reduced infusion of foreign capital translating into less available capital investments. 

The persistent battle over, and the abandonment of natural resources industries (oil, gas, other carbon energy sources) under the guise of “progressive measures” by the Liberals, NDP and Greens will deny Canada its greatest sources of revenues and potential investments opportunities.  Since manufacturing has taken a hit in the tariff battles, agriculture exports were damaged by the Chinese boycott, and evidence of Canadian energy conglamorates moving south to the U.S., the pressing question will remain: how and who will pay for the “progressive ideology”?

The uncertainty brought on by the U.S. lack of NAFTA 2.0 ratification only exacerbates the investor’s confidence in bringing capital to Canada.  

On the positive side, with lack of new pipelines coming on line, or improvements in the capacity of existing pipelines, oil by rail will continue to be a requirement in the near future. 

The continuing unresolved issues with China will have a negative impact on Canadian agriculture goods and the need to transport them to port facilities.  The rather docile Canadian responses to China’s aggressive economic onslaught by hindering certain grain and pork exports will require a more determined resolution in the future.   

The life-span of a minority government is estimated at two years (or earlier).   I believe the CARS member industries will manage the issues to remain competitive, and strong – in spite of the prevailing political hand it was dealt in the 2019 election.

 


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