Hon. J. A. MacKinnon (Minister of Mines and Resources):

Yesterday the hon. member for Kootenay East (Mr. Matthews) asked me whether any decision had been arrived at with respect to the route of the trans-Canada highway through the province of British Columbia. I answered that I had not heard of any such decision. A communication has been received from Hon. Mr. Carson, Minister of Public Works for British Columbia, enclosing a plan of the proposed route through British Columbia. This plan shows the route to be the one commonly called the Banff-Big Bend route through the provinces of Alberta and British Columbia. I am not sure that decision is definite as yet, Mr. Speaker, but that represents the recommendation coming to us at this time from British Columbia.

Hon. Lionel Chevrier (Minister of Transport):

Yesterday, when this section was being discussed, a number of questions were asked, and there seemed to be some misapprehension as to the exact meaning of it. I have communicated with the officers of the Canadian National Railways in connection with section 13 as set out in the act to amend the statute law, and I should like to make this statement.

The provision in the bill that through traffic between Canada and Newfoundland shall be treated as all-rail traffic when passing over the water route between North Sydney and Port aux Basques on the steamship now owned by the Newfoundland Railway is nothing unusual. It is the same practice as was followed with respect to the vessel service between the mainland and Prince Edward Island many years ago, when through rates were made via that service; the only difference is that the steamer service between the mainland and Prince Edward Island has been changed to a car ferry. It is not possible under present conditions to establish a car ferry between North Sydney and Port aux Basques; therefore the steamship service must be considered as a substitute for a car ferry service.

Under the circumstances it is quite proper for the through rates prevailing in the other maritime provinces to be extended through to Newfoundland via the steamship service on a basis somewhat comparable to the rates within the maritimes; in fact as soon as the Newfoundland Railway and its steamship service between North Sydney and Port aux Basques come under the provisions of the Railway Act, the provisions of that act will require the extension of reasonable through rates between the other provinces of Canada and Newfoundland.

The same situation exists with respect to the water service now carried on via the car ferry between Mulgrave and Point Tupper- that is, the rates between the rest of Canada and Cape Breton are on a through rail basis.

The reductions in the rates which will result from the taking over of the Newfoundland Railway and steamship service by the Canadian National is exactly the same prac-29087-401

Statute Law Amendment tice as has been followed with other railways taken over by the Canadian National. For example, when the railway from Matapedia to Gaspe was taken over, in accordance with the requirements of the Railway Act the rates were reduced from a combination over Matapedia to a joint through basis which was comparable with the main line of the Intercolonial railway for approximately similar distances.

Mr. McCulloch (Pictou):

What year was that?

Mr. Chevrier:

I have not the exact date, but it was some time ago.

Under the bill the Canadian National Railways is required to file tariffs with the board of transport commissioners on March 31, assuming that confederation takes place on that date, and'assuming also that the lines of railway on the island of Newfoundland and the steamer service between North Sydney and Port aux Basques are entrusted to the Canadian National Railways on the same date. Such rates will have to conform to the general pattern of rail rates in the other provinces of Canada; otherwise they would be discriminatory. Discriminatory rates, either higher or lower than in the same general territory, cannot be maintained under the Railway Act. Therefore, as stated, the rates will follow the general pattern of the rates in the other provinces.

There is a great deal to be done in working out the details of these rates; therefore no quotations are available at the present time. But it may be stated that, from what has been done so far, the scheme of rates to and from Newfoundland compared with the rates to and from Halifax will result in substantial differences between the Halifax rates and the Newfoundland rates. If private steamship operators wish to continue to operate between Halifax and Newfoundland, and particularly St. John's, Newfoundland, the difference between the local Halifax rates and the Newfoundland rates should be sufficient to enable the steamship operators to carry on service at fair and reasonable rates.

On some commodities very low rates have been published from Montreal and points west to Halifax and North Sydney for furtherance to Newfoundland. These rates were established many years ago when there was a steamship line operating between New York and Newfoundland, and the rates to Halifax and North Sydney were established to meet competition via the port of New York. Combined with the local rates of the Newfoundland service beyond North Sydney or the private vessel rates beyond Halifax to Newfoundland, they resulted in very high rates.

Statute Law Amendment The through rates now proposed by the legislation to and from Newfoundland will be on a more reasonable basis, and the steamship operators at Halifax cannot expect the railways after the union to carry such extremely low rates to Halifax and North Sydney and thus result in the diversion of traffic from the through route of the Canadian National Railways.

There is nothing, however, in this act or the Railway Act to prevent other carriers, such as the Canadian Pacific Railway and the Dominion Atlantic Railway, from maintaining rates to Halifax via the route through Saint John and Digby for furtherance to Newfoundland, and in connection with steamship operators from Halifax providing competition with the joint through rates over the Canadian National Railways.

Mr. Nowlan:

I appreciate the courtesy of

the minister in making the statement he has made. Partly because of the difficulty in hearing him, and partly because it will take some time to digest the statement, I am not in a position at the moment to deal with it fully. With most of what he said I think we are in substantial agreement. I take objection, however, to one of the references made by the minister, if I understood him correctly. He said that the rates which were to be made in Newfoundland would be fair, reasonable and nondiscriminatory; in other words, they are to be on the standard pattern of railroad rates. That is one of the matters directly dealt with by the Maritime Freight Rates Act, section 7 of which reads as follows:

The rates specified in the tariffs of tolls, in this act provided for, in respect of preferred movements, shall be deemed to be statutory rates, not based on any principle of fair return to the railway for services rendered in the carriage of traffic; and no argument shall accordingly be made, nor considered in respect of the reasonableness of such rates with regard to other rates, nor of other rates having regard to the rates authorized by this act.

If I understood the minister correctly his statement implies that the principle of the Maritime Freight Rates Act is to be whittled down by having whatever rates may be imposed in Newfoundland on a fair and reasonable basis. That matter was fought out many years ago. I understand that the statement read by the minister, and prepared by his responsible officials, cannot be at all derogatory of the statute, and that the statute still governs. But I want to take special exception to that principle enunciated by him.

As to the rest of what the minister said, I do not think it differs materially from what I suggested last night. My quarrel with this section is that it cuts down the application of

the Maritime Freight Rates Act in the maritime provinces. If hon. members will look at section 4 of the act, they will find that preferred movements are defined by two subsections. Section 4(a) defines one as "local traffic, all rail." Obviously traffic can only move "all rail" into Newfoundland over the Canadian National Railways, because by this bill we are adopting the principle that the steamer between Port aux Basques and Sydney becomes part of the railway. That would be an "all-rail" movement, and in that way a preferred rate could be established over the Canadian National Railways, but certainly not over any other system.

The only other definition which is open, and which, I suggest, will be closed after this section is adopted, is section 4 (c): "Traffic moving outward, export traffic. . .''As the Prime Minister agreed last night, traffic moving today to St. John's, Newfoundland, is export traffic. After March 31 it ceases to be export traffic, because if the legislation which we have been considering here is enacted in the proper places, Newfoundland will become a province of Canada and there can be no export traffic to Newfoundland. There will then be only one way in which the Maritime Freight Rates Act can apply, namely, under this specially-designed section which applies to only one railway, and to traffic moving in one particular manner.

I suggest that this minimizes the effect and implication of the Maritime Freight Rates Act in the province. I suggest that, if necessary, this section of the Maritime Freight Rates Act should be amended so as to maintain the scope which exists today, by virtue of which freight moving over any of the railways in the province obtains the benefits of the act. I appreciate the fact that at the present time much of that freight moves from Halifax bywater. As the minister well knows, established shipping lines, such as Furness Withy and others, have been operating freight services there for many years.

Over the Canadian National Railways it will be possible to obtain a through all-rail rate, obtaining the benefits of the Maritime Freight Rates Act, from any point within the area to any point within Newfoundland. I suggest that this section be changed to apply to freight moving over the Canadian Pacific Railway, if you like, or over the Dominion Atlantic Railway, coming into Halifax, and that a through rate be provided so that if that rate is established it can be in competition with the one which will be fixed by the Canadian National Railways.

We know what will happen. The Canadian National Railways will apply and fix a through rate for goods moving eastward.

That is all to the good; but other carriers should be permitted to file through rates over any other system so that the accommodation of rail and water, if necessary, out of Halifax or out of Pictou or any other port, as mentioned by the senior member for Halifax last night, could be taken advantage of. Other carriers, if they desired, should be permitted to file through rates in competition. That will be prevented by the bill we are discussing at this time.

I do not propose to move an amendment; this is a matter of government policy and the government must accept responsibility for it. I suggest, sir, that they are reducing and belittling the effect of the Maritime Freight Rates Act within the maritime provinces. They are prejudicing those who are using other carriers, and they will reduce employment in Halifax and other districts which are served by the Dominion Atlantic Railway, the Canadian Pacific Railway, and others. That is contrary to the principle which this house recognized many years ago when the Maritime Freight Rates Act was first adopted. At that time it was a matter of reducing costs to benefit shippers out of that area. I suggest in all deference that this section is so designed as to benefit the Canadian National Railways, to give that system a monopoly of traffic within the new province of Newfoundland, and to prejudice all those in other areas.

Mr. Isnor:

I wish to compliment the hon.

member who has just taken his seat on the way in which he has presented this subject to the committee. The Minister of Transport made an important statement, and I think we should have an opportunity of studying it; moreover, we should give the same opportunity to those who are interested from the competitive standpoint. Before I conclude I am going to suggest that the sponsor of the bill allow this section to stand until such an opportunity is given. I judge that that does not meet with the approval of all concerned, but I am going to urge it for the following reasons.

The hon. member for Digby-Annapolis-Kings has said that the minister's statement indicates the creation of a monopoly, and I believe it does. The statement prepared by the officials of the Canadian National Railways presented one view and one view only. There must be competition if we are to bring about the benefits which Newfoundland and the maritimes expect from the Maritime Freight Rates Act. I do not wish to go into the question that arose at the time of confederation in relation to the maritimes. We do know that in the negotiations preceding confederation the question of transportation

Statute Law Amendment was given serious thought, because of the need of connecting the maritime provinces- the same question arises now in respect to Newfoundland-with central Canada in the way of trade. Instead of developing trade as we thought we would in the maritimes, the railway carried people who built up a large population in central Canada. The result was that in Ontario, for example, a population of three and a half million was built up within a radius of a hundred miles of Toronto. Because of that large market, industrial centres have developed in central Canada to such an extent that we in the maritimes are suffering under a handicap. The same situation may develop in respect to Newfoundland if we are not careful in dealing with the question of transportation to that new province. We hope to continue to have products in the maritimes to ship to central Canada, and we want the Maritime Freight Rates Act, and the benefits we derive from it, to be undisturbed. For that reason we believe there is a definite thought of monopoly in the statement presented by the Minister of Transport.

The shipowners who have been carrying on business between the maritime provinces and Newfoundland should still enjoy the opportunity to carry on that trade through the shipping business which they have built up. The statement made by the minister more or less eliminates water-borne traffic because of the monopoly mentioned by the hon. member for Digby-Annapolis-Kings. We should carefully study the effect that this is likely to have on the maritime provinces, particularly on the large shipping ports. May I emphasize the fact that Halifax depends to a very great extent on employment along its waterfront. I am concerned about it. Before this section passes the shipowners of Nova Scotia should be asked to give us their advice about it.

Mr. St. Laurent:

I fear the hon. member is under a misapprehension as to what is being done. No increase is being provided in rates from any point within the preferred area to any point in Newfoundland. At the1 present time there are no through rail rates from Halifax to Newfoundland. There is a rail rate to Halifax, and then water carriage beyond that. Under this arrangement a through rate will be possible from points within the preferred area through North Sydney and Port aux Basques, treated as an all-rail rate. All hon. members know that the procedure provided in the Maritime Freight Rates Act to give the benefits recommended by the Duncan commission required that new tariffs be filed twenty per cent below what they would normally be,

Statute Law Amendment and this house votes a special appropriation each year to the amount of twenty per cent of the freight bill. What is being done here is that twenty per cent of the freight bill on traffic moving under the Maritime Freight Rates Act to Newfoundland will be borne by the federal exchequer, including that portion of the freight bill which covers the ninety miles between North Sydney and Port aux Basques. Twenty per cent of the freight bill from any point within the preferred area to Halifax will still be paid by the federal exchequer.

What the hon. member would like to have done, perhaps, would be to have the federal exchequer assume twenty per cent of the water carriage bill from Halifax to St. John's. That is a matter which was discussed with the delegation, and we could not agree to it. There is no control, other than that arising out of competition, over the amount of freight that water carriers take. We could not agree to pay out of the federal exchequer twenty per cent of the cost of water-borne traffic from Halifax to ports in Newfoundland. The other rail rates are not being changed in any way. It may be that having the ninety miles between North Sydney and Port aux Basques treated as rail movement "would make a rate which would be more attractive than a water-borne rate from Halifax to St. John's, but it would be merely for Port aux Basques and nearby operations, because a through rate all rail from any point in Canada to St. John's via North Sydney and Port aux Basques will be a rate that should be higher than a combination of the freight rate to Halifax plus a fair and reasonable water rate from Halifax to St. John's. On the rail portion, either within Nova Scotia or New Brunswick or within Newfoundland, the federal exchequer will reimburse the shippers twenty per cent to the railways, but it will not reimburse twenty per cent of the water freight from Halifax to St. John's or any other port, and it never has. So it is not creating anything different in that respect. As a factual result, it may be that because the ninety miles water haul between North Sydney and Port aux Basques is to benefit from the twenty per cent reduction, it will prove to be more effective for Port aux Basques than if there were a rail rate to Halifax and then water carriage from Halifax to Port aux Basques. But when you consider that these are two rail movements, water carriers from Halifax should be able to quote a very reasonable freight rate for their portion of the water carriage and still have the total remain under the all-rail rate.

.

Mr. Isnor:

I think the Prime Minister has forgotten one point, namely, competition in water-borne freight. As has been said, in Halifax we have four or five large shipping companies which have been doing a good business between the mainland of Nova Scotia and Newfoundland. Naturally we do not want those firms to be put out of business because of a monopoly in transportation. As was pointed out yesterday by the hon. member for Cape Breton South, the Canadian National has a long line from Halifax to Sydney to carry freight. And if freight is carried over that line it will not be beneficial to the merchants and users in St. John's and other sections of Newfoundland.

I believe that if freight from Halifax or other points in Nova Scotia is carried by water it will lessen the operating cost and bring down the rate. That is what we want- to create open competition from Halifax to Newfoundland as compared with a long rail haul. If we can have the assurance that there will be no interference with that competition and rate, that is what we want. In the meantime, while I am willing as a rule to take the word of the Prime Minister or of the Minister of Transport, I doubt whether either is as well versed in these transportation matters as the men who carry on the work. For that reason I ask that an opportunity be afforded to present the statement of the Minister of Transport to the shipping firms in Halifax.

Mr. Gillis:

I listened carefully to the Minister of Transport, and so far as I am concerned the statement he made was fair and reasonable. I cannot follow the argument of the hon. member for Digby-Annapolis-Kings -I wish they would shorten the name of that constituency-or the argument of the senior member for Halifax, because this arrangement with Newfoundland is not changing anything.

Mr. Nowlan:

Yes, it is.

Mr. Gillis:

It was in existence before the proposal to bring in Newfoundland was made, with the exception that the Maritime Freight Rates Act has been extended and made applicable to the ninety miles between North Sydney and Newfoundland, and to the railways in Newfoundland. That does not affect the port of Halifax at all; it does not do anything to that port which was not in existence before.

I understand the argument of the hon. member for Digby-Annapolis-Kings, because a section of the Canadian Pacific Railway, a privately-operated company, runs through that valley. And while these private companies argue that they do not want any entanglements with the government, they are

always willing to put their hands out for anything the government may be able to give them.

Mr. Isnor:

Competition.

Mr. Gillis:

The senior member for Halifax says that this will be a great monopoly. If it is a monopoly, then he is arguing against a monopoly of his own government.

Mr. Isnor:

That does not matter.

Mr. Gillis:

Apparently he has very little faith in it. The Canadian Pacific Railway would be affected to only a very small extent. They still fall within the terms of the Maritime Freight Rates Act from the valley into the port of Halifax.

Mr. Nowlan:

No.