Toronto Ontario - Canadian Pacific Railway Ltd.'s chief operating officer slammed the federal government for interfering in the rail sector Tuesday, warning that too much intervention could lead to crumbling infrastructure and maybe even taxpayer bailouts.
 
"Our model is a virtuous cycle, where returns support private-sector investment in a long-term, sustainable manner," Keith Creel said at a luncheon event in Toronto organized by the Economic Club of Canada.
 
"The alternative, which is not very appealing, is a vicious cycle based on market interference, loss of investment, ultimately poor infrastructure, poor service, and government bailouts. This is clearly not a path to help Canada compete in world markets."
 
Canada's railways are already regulated by the Canada Transportation Act, which is currently being reviewed by an arms-length advisory panel appointed by Transport Minister Lisa Raitt.
 
But recently, the government has taken a more interventionist approach to its dealings with CP and its chief competitor, Canadian National Railway.
 
The primary source of controversy has been a government order stating that the railways must ship a certain quota of grain each week or face fines, a response to a record harvest in 2013 followed by a rough winter that led to large backlogs.
 
"I think it makes investors nervous," Mr. Creel said in an interview with the Financial Post following his speech.
 
"We have a government that steps in overnight and can effectively change the world we operate in. That's a dangerous proposition when it comes to running a commercial-based rail network."
 
Mr. Creel also said the Canadian and American governments aren't doing nearly enough to harmonize their regulations, particularly when it comes to shipping crude by rail, a business that's come under intense scrutiny since the Lake Megantic disaster in July 2013.
 
"These governments need to try to harmonize, and do it efficiently, or you're going to effectively eliminate all of the synergies that caused crude to move across borders in the first place, and then you're right back to being energy-dependent upon other countries," he said.
 
Mr. Creel said he'd prefer that governments stay out of the rail business altogether, but added that if there must be regulations, they should be based on a careful study of the entire supply chain, not just railways, but trucks and ships as well.
 
"From the fields to the factory to the port, A to B has to be looked at," he said.
 
Last week, CP rolled out an ambitious four-year plan that expects earnings per share to double by 2018, thanks in large part to network upgrades that will allow the railway to run faster trains.
 
Despite his strong words Tuesday, Mr. Creel said he doesn't lose sleep at night over whether regulations, including new rules that restrict speed when dangerous goods are being shipped, will affect the railway's ability to meet its financial targets.
 
"When all the parties bring their facts to the table, I'm hopeful that we'll find a level-headed, fact-based solution," he said.

Kristine Owram.