Realizing that a prolonged strike or lockout would have been devastating to the Canadian economy and could have crushed several sectors dependent on the timely delivery of goods, the federal government imposed binding arbitration to end the rail stoppage. Beyond the economic dangers presented by an interruption in rail service, the safety of Canadians could have been put at risk if the delivery of chemicals for public water supply treatment or propane for home heating had been disrupted.
What can be done to reduce Canada’s insecurity in transportation sectors, though?
As a free market proponent, my first instinct would be to call for increasing competition in rail and airline services, but it’s not that simple. Canada’s low population density and vast distances between ports and population centres make it difficult to sustain multiple service providers. The country can’t just lay parallel tracks and spawn new railway companies, nor does the population warrant maintaining many domestic airline companies. Trucking can’t move large volumes of goods as efficiently as railways. Bus lines can’t compete with airlines on long runs, as even an industry giant like Greyhound had to shut down its Canadian operations.
In Canada, the majority of all the tracks are owned by Canadian National Railway and Canadian Pacific Kansas City. Those companies are the prime service providers as well. Having that near monopoly helps maintain the profitability of the companies, but as we just saw, it leaves the nation dangerously dependent upon their services when labour actions occur.
If Canada nationalized the infrastructure but left the rail service to the private sector like Australia, it could foster the growth of several competitors in the field. Competition reduces labour unrest as railways would have to ensure specialized workers don’t leave to work for competing entities. With several providers of rail services, a strike in any one or two of the companies wouldn’t be as harmful to the country. That said, the capital cost of such a venture would be massive and the government has never been very effective at managing large enterprises. The Trans-Mountain pipeline expansion demonstrated that.
Canada could deem railways as an essential service. When binding arbitration is the inevitable outcome of strike or lockout action, it wouldn’t be a big leap to just take away the ability to strike. Such a move would infuriate labour unions across the country, however, and might even violate the right for labour to organize. It might not withstand a court challenge.
Even if we want to remain true to free market principles, we must design policies with the understanding that Canada isn’t like other countries. Exceptions must be made.
While Canada Post is losing hundreds of millions of dollars, it would be devastating to people living in northern regions if the crown corporation were to be shut down. Canadians are willing to accept that a degree of subsidies or government controls in the delivery of goods or services is required to maintain populations in some regions. There is no way a private company would be able to provide mail and parcel delivery to Nunavut without charging an astronomical premium.
Canada’s economy just endured a near miss with a labour dispute that could have created an economic catastrophe if it were to last even a week. Policymakers must re-examine the national rail network and seek ways to stabilize its reliability. Confidence among enterprises and communities has been shaken by the short-lived disruption.
Some tough choices must be made to ensure something like this can’t happen again. We can’t let ideological leanings get in the way of maintaining reliable national transportation networks.
