A “Mega” Win for Canada’s Economy
There are advocacy wins, and then there are those that can fundamentally change the investment landscape for an entire economy. The federal government’s announcement of the Productivity Mega Deduction falls firmly into the second category.
For years, RAC and our members have made the case for permanent tax treatment that recognizes a basic reality about rail: ours is an extraordinarily capital-intensive industry. Railways invest billions of dollars every year in the track, bridges, rolling stock, terminals and technology that keep goods and people moving safely across the country.
These investments create capacity across our supply chains, support customers, connect Canadian businesses to markets and strengthen the trade infrastructure our economy depends on. The Productivity Mega Deduction makes Canada a more attractive place to invest and gives companies a stronger incentive to make major capital investments here — and to make them sooner.
For railways, that means a better environment for the long-term investments that add capacity, improve efficiency and strengthen the infrastructure Canada will need to grow and diversify its trade. Just as importantly, the same incentive encourages railway customers to invest in their own facilities, equipment and capacity — supporting a broader wave of private-sector investment across Canada’s supply chains.
Earlier this year, RAC commissioned independent research to put numbers behind the argument. It found that extending permanent immediate depreciation to the transportation and warehousing sector could generate an additional $591 million in private-sector investment every year and increase Canada’s annual GDP by $887 million.
Now, we are seeing that advocacy translate into policy.
For me, this announcement also demonstrates what sustained, evidence-based advocacy can accomplish. RAC, our members and our partners made the case that encouraging private-sector investment is not simply good policy for railways — it is good economic policy for Canada. But investment is only part of the competitiveness equation.
Businesses will invest in Canada when the conditions are right. They also need confidence that our transportation networks and supply chains will be reliable. Canada needs both investment and predictability if we are to strengthen our competitiveness and reinforce our reputation as a reliable trading partner.
That brings me to Bill C-39.
There is much in the legislation that RAC supports. Measures aimed at accelerating project approvals, encouraging earlier bargaining and introducing special mediation can help make Canada a better place to build, invest and do business. But we have also been clear about where the bill needs to go further.
Most importantly, the proposed changes to section 107 of the Canada Labour Code still leave a significant gap. In exceptional circumstances where the national public interest is at risk, the federal government needs a mechanism to act before a strike or lockout causes significant economic harm — not just after a disruption is already underway.
This is not a rail-only concern. Since the Bill’s introduction, RAC has brought together 19 supply-chain and industry organizations behind a joint letter to Prime Minister Carney calling for a targeted amendment to address that gap. The breadth of this coalition demonstrates just how widely the need for greater labour predictability is felt across the Canadian economy.
Our work is continuing as Bill C-39 moves through Parliament. RAC is engaging with government and parliamentarians, preparing for the committee process and ensuring the rail sector’s perspective is heard as legislators consider the bill.
Of course, competitiveness is about more than investment and labour stability. It also depends on operating safely, efficiently and sustainably.
In September, RAC and Operation Lifesaver, marked Rail Safety Week, joining railways, governments, law enforcement, communities and partners across the country in reinforcing a message that remains fundamental to our industry: safety is at the heart of everything we do. Rail Safety Week may take place once a year, but the work behind it happens every day — across our networks, in our communities and among the thousands of railroaders who keep Canada moving safely.
We also recently released our annual Locomotive Emissions Monitoring report, highlighting the rail sector’s long-term record of efficiency and environmental performance. And with RailCAN26 just around the corner, we are preparing to bring industry, government and partners together in Ottawa for an important conversation about the future of rail in Canada. I hope to see many of you there.
There is a lot happening, but there is a common thread running through all of it. Canada is making consequential decisions about how we attract investment, build infrastructure, strengthen our supply chains and compete in a changing global economy. Rail connects all of these priorities. Our job at RAC is to make sure that rail is at the table when those decisions are made — and that Canada has the safe, reliable and competitive rail system it needs to grow.
-Eric Harvey, President and CEO, Railway Association of Canada