Volume 13 Number 3 February 9, 1983

Winnipeg - The federal government plans to spend $3.7 billion over four years to improve and expand Canada's western rail system.

At a news conference here 1 Feb 1983 Transport Minister Jean-Luc Pepin said the program will result in $16.5 billion in direct railway investment during the next decade. The initiatives will provide about 375,000 person years of employment nationally.

The federal government plans to introduce legislation early in the next session of Parliament to replace the 86-year-old Crow Rate with a new grain transportation regime.

In the interim, to ensure that this transportation initiative brings jobs and investment as soon as possible, the federal government will make payments of $313 million to the railways, so that additional railway construction and investment can be undertaken this spring.

The minister of finance announced that special additional capital cost allowances for new investments in track and other railway assets will be extended for five years, to the end of 1987. This will provide an important tax benefit to encourage investment, Mr. Pepin said.

COMMITMENTS

CP Rail and CN Rail have made commitments to invest $806.6 million in 1983.

The government said its initiatives are designed to remove a long standing barrier to economic growth and diversification in Western Canada, and will help generate much needed jobs and spin-off activity to stimulate economic recovery and development throughout this decade.

These investments will alleviate capacity constraints and bottlenecks which would have clogged Canada's western rail network by 1985, Mr. Pepin said.

The added capacity will ensure that more Canadian grain, coal, potash, forest products, and other goods can be moved to export markets when world demand strengthens.

The government's investment will strengthen and diversify the Canadian industrial economy, he said. The revised freight rate structure will remove disincentives to livestock and specialty crop production and food processing in Western Canada. Complementary initiatives will enhance feed grain production in Eastern Canada.

To ensure Canadians realize maximum economic benefits from these transportation incentives, the government also announced incentive and assistance measures totalling $250 million over five years to promote industrial and agricultural development.

Of the $250 million, $75 million will be provided to increase the supply capability of western manufacturing and service sectors and to expand the western food and agricultural processing base.

Agricultural assistance of $175 million, aimed at capitalizing on new economic opportunities, will increase agricultural production and provide the necessary research and marketing infrastructure in Western and Eastern Canada.

The federal announcement came after years of debate on the need to reform the western transportation system and to change the Crow Rate. The rate was fixed in 1897, leaving the railways and the government to carry the burden of subsequent losses, Mr. Pepin said.

NEW POLICY

The new policy will mean the rates western farmers pay for shipping grain will be brought more in line with actual costs. Grain freight rates will increase to slightly less than double the current fixed level by 1985-1986 and farmers and the government will share cost increases under a new formula.