Lac-Mégantic report skims surface of deep problems – by Greg Gormick (Toronto Star – August 22, 2014)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Greg Gormick is a Toronto transportation writer and policy adviser. His clients have included CN, CP, VIA and numerous elected officials and government transportation agencies.

The report of the Transportation Safety Board of Canada on the Lac-Mégantic disaster blames “systemic problems” for the fourth deadliest accident in nearly two centuries of Canadian railroading. Those problems are more deeply rooted than even the TSB indicates.

As an arm’s-length agency, the TSB isn’t controlled by politicians and doesn’t bow to any master except public safety. But it does not play a public policy role. That’s in the hands of politicians, backed by their advisers and ministry staff.

It is at that level where blame must be placed. The Lac-Mégantic tragedy can be traced to decades of policy and investment failures resulting from unbridled faith in deregulation and competition as the guiding rules of rail legislation and funding. The biggest culprit is the 1985 transportation act, which the Mulroney government billed as “legislative change which will free Canada’s transportation system from the burden of excessive economic regulation.”

That it did. But it went further by eliminating most of the public interest tests contained in the previous acts, which applied both commercial and public policy requirements to all federally regulated transportation. The 1985 act was based on the profitability test for the regulation of our system, particularly rail.

On the surface, that seems reasonable. It implies operators shall compete fairly with each other and only the most efficient win the business while paying all their costs. But our system has always contained public investment, whether directly or indirectly through infrastructure and support services. It still does, but little goes to rail.

When policy decisions cut off investment in one mode and not another, we’re not likely to get maximum utility from the mode lacking access to the public funding necessary to optimize its infrastructure and services. That inevitably leads to the disadvantaged mode slicing away unprofitable or marginal services. As stockholder-funded enterprises, the railways concentrate their capital to produce the greatest return.

At its worst, it results in cutting corners on safety. The weaker players in this unbalanced game do what they can to keep their financial heads above water. That was the case with the railway through Lac-Mégantic, which cut many corners.

These decisions roll out well beyond safety. One recent example is our rail system’s inability to deal effectively with surges in grain and crude oil, complicated by harsh weather conditions. Network capacity and resilience have declined because it’s not cost-effective to have assets sitting idle pending unexpected demand changes. Adding them requires time and scarce capital.

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