:
Yes, but I'd first like to thank the committee for inviting me here to talk about the report we produced in 1999 for the small craft harbours program. I think you were given a summary. It's entitled
Small Craft Harbours in Foreign Countries.
At the time we did the study I was both fortunately the lead consultant and a partner with a firm called Sypher:Mueller. We had done some other port work and maritime-related work over the previous 20 years, so we were successful in winning the proposal. Our firm at that time, Sypher, was more concentrated on airports and aviation, and since that time we probably have even focused more on airports and aviation. Our firm has been purchased by a very large U.S. organization called Jacobs, and therefore you see a name change from the original report.
In the consulting business we produce a lot of reports, and unfortunately many of them end up on shelves and gather some dust, so it was a very pleasant surprise that I received a call and was asked to be a witness here. I hope today I can be of some assistance to the members of the committee.
It was suggested that I give a brief summary of our report, and I'll try to do that.
The objectives of the report were threefold. One was to compare small craft harbours in Canada with those in foreign countries, and we ended up with I think nine foreign countries and three U.S. states. When we said “comparison”, we meant what was the importance of the small craft harbours to the economy of that country; a profile of the small craft harbours in terms of size and number; ownership; who was conducting or responsible for management, operations, and repairs; fees and charges; and of course, very important to any small craft harbour, capital budgeting and funding.
The second objective was to determine the importance of government support to all these harbours.
And then the third objective was to discover or identify some of the new ideas for the small craft harbours program from what we learned from doing this review.
We conducted the review through a collection and a review of relevant documentation either provided by the department or that we found on sources like the Internet, etc. Then we contacted various transportation departments and fisheries departments in the countries concerned and made a lot of phone calls until we found the right people, and we had long interviews by telephone with them.
So those were the objectives and that's how we conducted the study. In our report we identified a number of themes that emerged, and I'll quickly discuss those themes.
The first one is that ownership of small fishing harbours is at the local level. That came through in all of the countries, I think, except for perhaps one, which was Australia. So local ownership was the first theme.
The second theme was that central governments continue to fund small but strategically significant harbours. That's a lot of language in one sentence. Small fishing harbours in other countries are, by Canadian standards, relatively large, much larger than the average size of 45 boats per fishing harbour in Canada. By “strategically” we meant that the governments were supporting, fostering, funding ports and harbours that not only had fishing, but also they wanted to promote export and trade, whether that was in oil or goods. They wanted to support tourism, for example, in Maine. So that was a second theme: central governments continue to fund small but strategically significant harbours.
Then a third theme: central governments are not involved in small harbours. In many cases, after pressing very hard, the people we talked to might not even know how many small craft harbours there were in a country. They just weren't that concerned with them, and that was true for Norway, Denmark, Sweden, New Zealand, and Australia, which was a bit surprising.
Getting back to this theme, the fourth point is that the small but strategically significant harbours are much larger. They're fewer in number, and they're much more multi-purpose than small craft harbours in Canada.
The fifth theme is that local governments and authorities have a high degree of self-reliance to operate and manage their facilities. They're at least expected to cover operating repair costs and contribute to or pay for all of the capital developments.
Sixth, where central governments do get involved with harbours they work in a number of partnership arrangements with local governments and authorities. It could be dredging, for instance, in the United States; capital planning and development systems, and Iceland stands out there as a very good one; revolving funds, which I think were in Maine; collection of taxes; and of course grant funds.
Those were the themes.
On my last notes, we were asked to look at lessons learned or ideas for DFO. We concluded that there was no single approach or right answer to funding and management. We looked across the spectrum of the countries. They all have a different history, a different geography, different demographics, definitely a different culture. There is also a difference in the relative importance of the harbours to their economy and in the role of the central government in their economy.
Some approaches clearly won't work in Canada, such as privatization, which we saw in Australia and I believe New Zealand. We suggested a third point here that you need long-term assurance for third-party investors. So that would be long-term leases as compared to the small craft harbour programs, where they had very short-term leases. I think it was five years at the time; it may have changed.
We suggested that DFO consider some innovative financing, direct loans, loan guarantees, revolving funds. We also thought, based on a model of airports--we were very familiar with small airports and large airports--that we would encourage local municipalities if they're not already doing so to provide administration and operational support services.
The sixth point is not a very large one, but it was true in the U.K. There should be a mechanism to ensure the board of directors is openly accountable and effective in providing management.
That concludes my summary. I hope I can answer any questions you might have.
:
If I could come along, yes, I'd really recommend quite a few.
Some hon. members: Oh, oh!
Mr. Matthew Bol: And I'd really love to get to New Zealand. I'm a recreational sailor.
I was very impressed with the organization and the planning mechanisms that Iceland used. There they have harsh climates. There the fishing is important to the economy. I thought they had some novel ways to fund their harbours.
I was very impressed by their officials. I recall talking to both harbour masters and government officials and thinking, wow, these guys really know what they're doing. In some sense, they don't have as many harbours, of course, as we do, but it's important to them. They have really harsh climates and weather conditions.
So if you were in the region of Iceland—well, I guess it's not really a region—I think Denmark and Norway are interesting, but again, the central governments are only dealing with larger harbours there.
:
I think you asked me to rate something on a scale of one to 100, and then I heard a question about the degree to which it's politicized.
For an observation on “politicized”, if that's the right term, I can give some general impressions from what I have seen not only in small craft harbours but other capital-intensive endeavours that governments get involved with, whether that's at a federal or a municipal or a provincial level.
Typically, for geographically dispersed requirements for capital projects, the process is onerous, and I do believe it has been, at least in the past, very politicized. It's people trying to make sure their harbour, their port, receives the appropriate priority for funding. It may or may not always be the most rational approach.
I guess I would prefer a system I saw in Denmark, I think, one that allows for longer-term financial funding.
:
I'll try first with the United States, where one would think that private industry is heavily involved. But the real facts are that the U.S. Federal Aviation Administration provides a high level of funding to airports at all levels, and that's probably to over 400 airports.
They are owned and operated at a local level through quite a few different models. So there is local-regional ownership and operation.
On airports in Canada, we have a little bit of a similar situation I think as we have for harbours and small craft harbours in that the larger airports, under the national airports system--Toronto to Vancouver to Calgary to Winnipeg--are on long-term leases. They are 50 years or longer. Again, small craft harbours are for only five years.
So airports have long-term leases. They are free to raise their own capital through debt, not equity. They're not-for-profit. Of course, the larger ones can make money. They have enough traffic, so they're all right.
Once we get into smaller airports, I think you would have two classes of airports. One can exist and can generate enough revenue to meet its operational needs, but in the long term it may not be able to meet all its capital needs. There is some aviation funding available through Transport Canada for certain capital projects, but not all. It is usually for things related to safety--the runways, the navigation equipment, the snow-clearing equipment.
Then you get another group of much smaller airports. There, as you know, the government has divested itself of smaller airports and given responsibility to local municipalities. There are some benefits to that, because the local municipalities can provide some tax space and can do some borrowing, yet at the same time there are a lot of those smaller airports that are struggling and will continue to struggle. They're not going to make it in the long term.
:
In 1999, through the Department of Fisheries and Oceans, the federal government hired you as a consultant to see what was going on in Australia, in Denmark, in Iceland, in Japan, in New Zealand, in Norway, in Sweden, in the United Kingdom and in the United States. Your mandate was to go and see how those other countries were handling small craft harbours and compare that to what we have in Canada. That mandate certainly cost several thousand dollars, you will agree.
Of course, you wrote a report in which, of course, you made recommendations. Do you feel that your report has done little more than sit on a shelf in the department library? Has it been read, has it been used, have your recommendations been put into effect?
Forgive me if I have grave doubts, because since 1999, even though the harbours belong to the government, it has invested little or no money to maintain its own harbour infrastructure.
Did you provide recommendations in your report? Do you feel that they have been followed? If so, which ones?
I'd also like to express my sentiment in your passion to protect Stephenville Airport. Could you please extend the same courtesy to Gander? We would appreciate it, sir, and put you on a pedestal for it.
I want to ask a question that ties into airports as well as small craft harbours. The government divests these properties for the sake of local ownership and so on, but the constant complaint we get is that the government doesn't pay when it continues to use those services. For example, the coast guard arrives in Botwood. It anchors up for a couple of days and it doesn't pay the fee you would put upon the private sector. A military plane lands in Gander and it doesn't pay. The government is compelling these people to search for revenue streams but at the same time is a customer that is, if I could put it mildly, delinquent.
There are other countries, from my understanding, that do provide grants to, say, airports, marine infrastructure--I don't know--for the sake of the emergency services they provide, or for whatever services are required in operations. Are there other countries that do this in small craft harbours, that provide money to them whenever a government boat pulls up to a small craft harbour, or a government plane, a state-owned aircraft, lands?
:
I would like to continue for the committee's benefit and for mine.
You told the committee that, in 1999, your consulting firm received a contract from Fisheries and Oceans Canada for about $25,000. You prepared a report in which you made no recommendations. You also told the committee that you did not travel, that you did not go and see the state of harbour infrastructure in the countries mentioned, their level of management and how they run their small craft harbours. As I understand it, everything was done by telephone, and the report then reflected your telephone conversations.
Here is the question that concerns me. At that time, in 1999, what was Fisheries and Oceans Canada`s interest in having a telephone survey done to find out about small craft harbours in other countries? Could an official from the department not have done the same work? I have a hard time understanding that. I was sure that you had visited those places and that you had met people there, because in your presentation you mentioned that you had been impressed by officials and by harbour managers. I had the impression that, as a reputable company mandated to see what was happening in other countries, you would have gone to them.
Mr. Chair, I see that this is absolutely not what we were expecting this morning. Personally, I expected that the company had gone overseas to observe, but now I see that this was done by telephone. That takes away a lot of the report's credibility; in terms of this committee's work, we can take it or leave it.
:
Norway was the worst case. I was most surprised that I couldn't find the information, and if I did find someone, they didn't know about what was happening at a local level. I came to the conclusion, after a lot of phone calls, that the central government wasn't involved and didn't know what was going on.
In Iceland there are 60 harbours, quite large--200 to 300 boats per harbour; 13 large, multi-purpose harbours. The ownership is local government; operations and repair are local government; fees and charges are set nationally, collected locally based on tonnage. On capital funding, central government does fund 60% to 75% of the capital funds, and they have a very centralized capital planning system.
I think I described it in more detail, because I thought that was important. On page 6 of the report it says the federal government, through the Icelandic Maritime Administration, plays a major role in funding harbour works. It reviews the financial statements of each harbour annually as part of funding requests by the municipalities. A four-year capital plan is prepared every two years. So it's forward looking.
Municipalities submit project proposals, which are evaluated against a set of well-defined standards through the use of a computer program. The plan is submitted to the Althing, which is the parliament in Iceland, for approval. The use of specific evaluation criteria and a transparent review process apparently results in few changes in the list of projects provided to the parliament, according to our interview. Only five of 130 projects were changed in the last plan, according to my contact.
So you go from one extreme, Norway, which is not involved, to a very elaborate system.