Thank you very much, Mr. Chairman.
Good morning, honourable members of the committee.
I'm very pleased to make a presentation to this committee on the proposed amendments to the Canada Marine Act as contained in . This suite of amendments recognizes the underlying importance of marine transportation to the Canadian economy. This is reflected in the proposed changes, initially in the introductory provisions of the act; and indeed, throughout the various measures, the proposed amendments aim to promote the competitive viability and sustainability of Canada port authorities.
The national marine policy of 1995 emphasized the elimination of overcapacity, promoted cost recovery in marine transport, and mandated self-sufficiency for the port authorities. It also instituted a consistent governance structure for all major ports. The objectives of the national marine policy relative to ports have largely been met through the Canada Marine Act, the legislation that introduced a commercial approach to managing the national ports system and marine infrastructure.
Modern transportation infrastructure is important to a country's ability to be competitive in the global market. This ability depends largely on port efficiency and access to the necessary port infrastructure. The national strategic and legislative frameworks governing the ports are reliable, but must be adjusted to respond to new pressures and demands. Greater flexibility is required in the financial tools available to the ports so that they may be competitive on international and domestic markets.
Marine transport and ports are key aspects of the gateways and trade corridor initiatives that have been announced.
On page 3 of the handout, we see that 19 port authorities are part of the national port system. Each region covered by the initiative on gateways and corridors includes a number of port authorities. The Asia-Pacific port and corridor, on the west coast, includes several CPAs, as do those in Ontario, Quebec, and the Atlantic.
The key consultations resulting in the draft amendment, were held in fall 2002 by the Canada Marine Act Review Panel. The panel went to 11 cities and 7 provinces, where it heard more than 75 presentations and received over 140 written submissions. These consultations were exhaustive. They were aimed at all levels of government, port administrations, marine transport companies, marine industry associations and associations representing other modes of transport, namely shipping, logistics companies and union organizations.
The result was the Report on the Review of the Canada Marine Act tabled in Parliament by the Minister of Transport in 2003. This report was subject to ample deliberation and served as a source of information for the department. Regular and ongoing consultations and follow-up with marine stakeholders have also contributed to the ongoing work at Transport Canada on policy development. A number of other events have also contributed to further discussion between stakeholders and parties interested in the marine sector.
The genesis and foundation of can be found in the former , which was introduced in Parliament in June 2005. Many of the provisions in Bill C-23 indeed build on those of Bill C-61.
Based on representations and more recent stakeholder consultations, the following provisions are proposed: to allow port authorities access to federal contribution funding for infrastructure, environmental sustainability, and security; secondly, to introduce more flexible corporate financing options; thirdly, to improve port governance; fourthly, to complement existing regulations regarding possible amalgamations of port authorities; and finally, to introduce administrative monetary penalties as an alternative enforcement scheme for regulatory infractions on port lands and to streamline certain other enforcement provisions.
During the CMA review, many stakeholders voiced concerns regarding the low profile of the marine industry and requested that the Government of Canada recognize the importance of the marine transportation sector.
Accordingly, the amendment includes the addition of the following into the bill, at clause 3: the introduction would recognize the contribution of the marine sector to Canada's economic health; there would be a new objective confirming the government's commitment toward the success of the ports; and finally, there would be coordination and integration of transportation at ports through enhanced financial and operational flexibilities.
Slide 7 in the presentation deck that was circulated speaks to access to federal contribution funding. Changes in the economics of marine transportation have necessitated a re-examination of the general prohibition that currently exists in the act—that's section 25—against federal funding to Canada port authorities. While ports around the world are receiving increasing funding for capital, environmental initiatives, and security enhancements, Canadian ports are generally prohibited from accessing federal appropriations. The only exception in recent years was with respect to security enhancements at the Canadian port authorities.
Without these changes, Canadian ports will not be well positioned to compete with international ports. An amendment to the Canada Marine Act to make Canadian port authorities eligible to apply for federal contributions for capital costs of infrastructure, environmental sustainability, and security projects would set CPAs on an equal footing with other ports and other transportation sectors. You will find these at clauses 14 and 15.
The bill, however, does not propose the creation of a new funding program. Rather, it would allow Canada port authorities to apply to contribution programs that either currently exist or future contribution programs that may be developed. In all cases, of course, the port authority would have to present a very strong business case that fits the specific program criteria.
Allowing Canada port authorities access to funding for environmental sustainability projects would provide new tools for ports to address environmental concerns through the application of new technologies—for example, to improve emission controls at the ports.
I should point out that the Canada Marine Act is an economic legislative framework. Issues relating to such things as accidental oil spill, spills of noxious substances, releases of invasive species in ballast waters are not addressed in this act, but they are addressed through a number of other statutes and programs.
With respect to security, as of this month any contribution funding for the implementation of security enhancements is no longer available to Canadian port authorities. In order to ensure that Canadian port authorities continue to have access to potential security funding in the future, this amendment would be required.
With respect to financial instruments, page 9 in the deck deals with a modified borrowing regime. Presently Canada port authorities can seek an increase in their borrowing limit by making a request to the Minister of Transport for supplementary letters patent that increase the borrowing limits set out in their letters patent. An increase would require the recommendation of the minister, supported by independent financial assessment of the port authority's debt capacity and ability to remain financially self-sufficient. Approval is then required by the President of the Treasury Board, the Minister of Finance, and finally the Governor in Council.
We are proposing amendments to the act that would allow borrowing based on a code governing the power to borrow in combination with commensurate accountabilities on the part of the board. You will find these at clauses 5, 17, and 18.
Those ports earning revenues of over $25 million a year for three consecutive years—and at this point that would involve Vancouver, Halifax, and Montreal—could, and I stress here “could”, if they chose to do so, implement a commercial borrowing regime that would be subject to a code governing borrowings. This code is detailed and can be found in the documents provided to committee members, part of the briefing binder.
A complementary policy initiative—and this is not reflected in the bill per se—would also provide for a more streamlined process for ports that request changes to existing borrowing limits within the current regime. This policy initiative would provide Canada port authorities with a clear indication of the steps involved and the precise information required for requesting borrowing limit increases. This in turn, we believe, could allow Canada port authorities to better plan their investments in a timely fashion.
Page 10 of your deck deals with governance issues. Other elements of relate to strengthening the governance provisions of the Canada Marine Act, which would provide greater clarification regarding the terms of appointment for the board of directors. These changes are geared to providing long-term stability in the governance of Canada port authorities. Many of these will be found at clause 10.
Specifically, these amendments would provide for an additional term of reappointment of board members, thereby increasing the maximum tenure for a director from six to nine years, in effect three terms of three years each. In addition, incumbent directors would be able to remain in office until renewed or a new appointment is made, up to a maximum, of course, of the nine years. This would increase overall continuity and stability of the board and ensure that boards are able to continue to function.
These amendments do not, however, change the composition of the board, nor the criteria to become a board member. The majority of board members will also continue to be nominated by the users of the port and appointed by the Governor in Council. Municipal, provincial, and federal governments would continue to appoint a nominee to the board.
Page 11 of the deck speaks to amalgamation. New and emerging trends in the economics of marine transportation have provided an opportunity to explore options that could make Canada port authorities possibly more efficient, competitive, or able to respond more quickly to emerging opportunities and growing business volumes. Of particular interest are integrated port operations, such as amalgamations of port authorities.
An integrated port authority may be a possible and viable option for certain CPAs that are in regional proximity, so as to address competitive pressures in a manner that maximizes business opportunities. This is addressed in various clauses, principally clauses 5, 9, and 16.
With respect to regulations and enforcement, current legislation contains an array of alternatives to court actions. These alternatives are intended to address instances of non-compliance with respect to regulatory offences, and we're not talking here about criminal offences for which criminal prosecutions would obviously continue to apply. But in the case of regulatory violations, alternative enforcement mechanisms such as an administrative monetary penalty regime would offer a more efficient, more cost-effective way for both the enforcement officers and users to respond to enforcement issues while utilizing a recognized independent review and appeal mechanism.
I turn now to the complementary policy initiatives that support the proposed amendments.
I spoke earlier about a key policy initiative as it relates to streamlining the process for borrowing limits. We've developed guidelines to streamline and simplify the current process. These guidelines are contained in your briefing binder. These guidelines would provide Canada port authorities with a clear indication of the steps involved and the precise information required prior to requesting a borrowing limit increase. We believe, by virtue of clearer, more precise guidelines in this respect, that some of the issues associated with seeking borrowing limit increases in the past would be precluded.
Finally, there is a second key policy initiative that relates to land management flexibility. Transportation sectors are increasingly facing pressures related to land holdings. Some key ports are facing encroachment from developers or facing capacity limitations, which are adding pressures on the preservation of critical port lands or transportation corridors, particularly in, but not strictly limited to, the urban areas.
It's important to find the right mechanism to maintain ports as economic generators for national, regional, and local economies. Equally important, we need to find ways to encourage ports to invest in and manage land holdings for the long term. Such effective short-term use of properties under port management by way of leasing or licensing to third parties would be desirable. This would assist Canada port authorities in generating revenues on those lands until such time as the port was ready to develop the property for port purposes. This would be done principally through supplementary letters patent, which would be issued for each Canada port authority.
It should be noted that the legislative change related to land management—and that is in clause 23 of Bill C-23, which proposes amendments to subsection 45(3.2) of the Marine Act—is being made simply to bring clarity and transparency to the existing provisions. The rest, with respect to this policy initiative, would be done by virtue of the letters patent.
It is important to note that all permitted activities would need to be compatible with port operations and must take into account the land use plans of adjacent communities. A number of strict conditions will need to be met before these lands can be leased for interim uses, and these conditions will be required to be included in the leases between the port authority and the third party. This is outlined in an issue paper, which we've provided in the briefing binder that was circulated to committee members.
Thank you very much, Mr. Chairman. My colleagues and I would be pleased to respond to any questions that committee members may have.
Sure, I would be quite pleased to.
I guess there are a couple of elements in your question, and I'll deal with them systematically.
First of all, with respect to access to contribution funding for these capital projects—and we have singled out specific areas, no doubt—we would expect port authorities to work in conjunction with other parties--provinces, municipalities, third parties, terminal operators, railways, logistics providers. There could be a number of different parties that would come together in terms of a particular project. Even now, of course, port authorities do work closely with private parties in terms of development projects. The advantage they would have, of course, under this new regime is that they would be eligible for contribution funding, which they are not now.
So the first point is that we would expect them to go forward, on a partnership basis, with a multitude of other interests.
Who would they be competing against? Presumably they would be competing against other transportation projects. There may be several even within the confines of a port authority that may be up for consideration. For example, the gateways and borders contribution funding would have to be on a merit-based approach. I mentioned earlier that a very strong business case would have to be outlined. It would need the support, obviously, of other interests, in some cases the province.
Would they be competing necessarily with municipalities? Not necessarily, if they're operating in conjunction with some of the municipalities. As I understand it, as well, some of the infrastructure programs that have been announced would be principally targeted to provinces and municipalities, and they would not necessarily involve port authorities.
So on the one hand, it's a partnership approach; on the other hand, they are looking at very specific programs, such as gateways and borders, that would be primarily tailored to port authorities and their partners in that respect.
With respect to the question of the land—
If we are talking about the St. Lawrence Seaway and the Great Lakes—in some cases, goods that move through the St. Lawrence in fact move through the Great Lakes, as you know—the market has different dimensions.
I will begin by answering your question on which ports might benefit.
There are two components to this bill. One is on the level of borrowing. As you were saying, the Port of Montreal does not have any need in that area. That is a choice its administrators can make if they want.
However, as far as access to the contribution program is concerned, the ports of Montreal, Saguenay, Sept-Îles, Trois-Rivières and Quebec City could all benefit from it or have access to it. They do not have this type of thing right now.
Secondly, Transport Canada, in cooperation with our U.S. counterparts, has just issued a report on the results of economic, environmental and infrastructure studies of the St. Lawrence Seaway in its entirety, where bulk is being transported already, and of the markets on the Great Lakes. The report provides an overview of potential new markets on the Great Lakes and along the seaway.
One thing that is very important in this policy initiative is short sea shipping, or short distance marine transport.
Mr. Mario Laframboise: You mean cabotage?
Mr. Emile Di Sanza: Some use the term “cabotage”, but it has different connotations. Let us talk instead about short sea shipping.
There are people assessing the potential of the Great Lakes, where there is a huge market for container transport, for example.
St. Lawrence seaway officials, together with various ports in Quebec and Ontario, are assessing the possibility of perhaps one day transporting containers. There is also potential for bulk markets. There has been growth in some products and a decline in others.