Thank you very much, Mr. Chairman.
Good morning. Thank you for having us here today, and belated happy new year to all committee members.
My name is Sean Hanrahan. I'm the CEO of the St. John's Port Authority in Newfoundland and I'm also the chair for this year of the Association of Canadian Port Authorities.
With me is Mr. Patrice Pelletier, who's the new CEO at the Montreal Port Authority, and Captain Gordon Houston, who is the CEO of the Vancouver Fraser Port Authority. We also have Gary Leroux, who is the executive director of our association.
Ms. Lisa Raitt, who is also a member of our executive, was to come here but is absent due to pressing business in Toronto. She sends her regrets as well as her full support of the brief to follow.
Again, Mr. Chairman and committee members, I'd like to thank the committee for the invitation here this morning, and indeed I'd like to thank the government for moving forward with these key amendments to the Canada Marine Act.
I will address the issues related to the proposed amendments in Bill , but first I'd like to offer a brief introduction. I don't anticipate my remarks will be any longer than five or seven minutes, Mr. Chairman.
The Canada Marine Act, which created the Canada port authorities or CPAs, has been beneficial for governments, for the public, and most importantly for the port users. Section 4 of the Canada Marine Act outlines clear objectives for port authorities, and since 1998 CPAs have lived up to these very important policy goals. The act stipulated a strong public policy role for ports and at the same time mandated them to be self-sufficient and commercial. Further, CPAs must subscribe to rigorous management regulations as well as environmental assessment regulations conferred on them by the act. And finally, we as ports send to the federal treasury for general use a percentage of gross revenues every year. In addition, we also make payments in lieu of taxes to our respective municipalities, as set down in the Payments in Lieu of Taxes Act.
Since the inception of the CMA in 1998, Canada's 19 port authorities—which are now actually 17 port authorities, given the west coast merger—grew the amount of cargo annually in Canada from 240 million tonnes to 280 million tonnes. In dollar value that's $100 billion to $146 billion. Since that time, all CPAs have made investments in infrastructure, undertaken environmental initiatives, ensured strong security measures on port property and other facilities, and continue to facilitate trade and commerce to the benefit of all Canadians. As a trading nation, 40% of Canada's GDP depends on trade, and more than one-quarter of that trade is shipped via the Canadian ports system. Port authorities are mindful of the need to continue to facilitate this trade while carrying on their important stewardship role in the cities and harbours in which we do business.
What is a CPA itself? In general, we are a construct of the Canada Marine Act, and from an operational perspective exist as landlord ports with many diverse tenants, which, by and large, have long-term commercial leases with us as landlords. The port authority ensures that these businesses have what they need for the safe and efficient flow of freight, and, given the cruise industry, the passengers as well. While a port authority itself as an entity may have only a relatively small staff to fulfill their mandate under the Canada Marine Act, there are thousands of other people who work on port property with the myriad of enterprises that involves, all of which are generating millions of dollars in economic activity and in taxes paid to each level of government.
Port authorities have been called vital economic engines because of the contribution they make to the local and regional economies. They will continue to be crucial in this regard, with the growth rate in trade projected to double by 2020. Port authorities and all landside connections, road and rail, must prepare for this trade. If we aren't ready, Canada's prosperity will be diminished. Ports operate in a highly competitive world, and we ignore that at our peril.
The proposed amendments to the Canada Marine Act will add to Canada's competitiveness. I make this statement with the unanimous support of our full membership. Seven issues on which amendments have been proposed have also been unanimously approved by our membership. I'll go through them now.
The first issue is the introductory provisions to the act itself, mainly based around section 4. Changes to the Canada Marine Act, indeed, have been a long time coming. In fact the five-year mandatory review was completed in June of 2003. Here we are now another five years later, in 2008, but with what I feel to be a better product in front of us. The proposed amendments are indeed a right step for Canada's major ports. The proposed changes acknowledge the vital role that port authorities play in the economic health of the country, and they do so by providing more flexibility to grow and prosper. In so doing, the amendments in no way relinquish or reduce any responsibility on our part for full accountability under the act. CPAs have always played an important role in the coordination of transportation in and around ports. We are all only as strong, however, as our weakest link—and of course that is the message to all of us, so that all levels of authority or government ensure that roads, bridges, rail lines, and other transportation infrastructure are operating at their full peak. The CMA and the proposed changes provide an excellent framework for port authorities to do business in Canada. The Association of Canadian Port Authorities endorses the proposed changes to section 4 of the Canada Marine Act to more adequately recognize our role as vital economic engines in Canada.
Second is the fees and leases issue, and the definitional issues surrounding them. This is in regard to sections 2 and 53 of the act. For port authorities to continue to operate their assets in a commercial manner and to remain self-sufficient, a critical component of our ability to do so is to set fee schedules, as well as to negotiate commercial leases and contracts. Experience has shown that it is imperative that lease and rent negotiations be market driven, and not be subject to external review or adjudication or amendment. Government and port authorities have long agreed on this need; hence, the value of this proposed amendment to bring the regulation and the definition in line with practice—and also, frankly, to bring these in line with Federal Court of Appeal dicta in this regard. The ability to set fees based on commercial needs is a critical element for port authorities to remain self-sufficient, as required under the Canada Marine Act. The association again endorses the amendment of the definition of fees and leases.
Number three—access to government funding programs—is related mostly to section 25 of the current act. Port authorities are currently prohibited from accessing federal funding programs. ACPA, our association, has long argued that port authorities should have program parity with other Canadian commercial enterprises, which have such access. We have pointed out that the federal program guidelines and the criteria themselves ought to dictate who receives funding. In the current situation, port authorities are at a disadvantage with respect to federal programs. For example, access to security funding after the tragic events of 9/11 had to be provided by a consequential amendment to another act, the Public Safety Act, rather than our own Canada Marine Act. Unfortunately, the three-year window provided in that act has now closed, and port authorities are now ineligible for any future funding from this specific security contribution program.
Another example of how this has impacted port authorities relates to Transport Canada 's freight efficiency program. Denying access to programs like it prevents CPAs from taking on development projects that could lead to more efficient and sustainable freight movement.
Finally, many public and private enterprises have accessed important federal funding to enhance infrastructure in order to facilitate the movement of goods and people. As noted earlier, and as stated in section 4 of the act, port authorities have an important public policy role to facilitate trade, and yet we cannot obtain federal infrastructure support for this important function.
On the list of conditions set out for a port authority to receive federal contribution funding as per the proposed amendments, the association indeed supports the amendment, without question. However, it would make a very minor amendment to the actual wording. Proposed subparagraph 14(b)(iv), which relates to the current section 25, would be amended to have the word “and” deleted and the word “or” substituted to more accurately express the intent of the clause.
Item four is our borrowing limits, and this relates to sections 28 and 30 of the act. We have asked for changes to the current borrowing regime under the Canada Marine Act, and we are very pleased that this has been addressed in the current bill. This amendment will provide the opportunity for port authorities to work with government to establish appropriate borrowing frameworks that meet the diverse requirements of Canada's 17 CPAs.
The development of a workable borrowing code remains a key part of ensuring the success of this policy initiative. Port authorities will work with government officials to seek minor improvements to the draft borrowing code to ensure the effectiveness of this proposed new mechanism. We endorse whole-heartedly the proposed amendments related to borrowing limits.
Item five is amalgamation, and this pertains to section 13 of the act. The Canada Marine Act review panel had recommended that amalgamations be permitted where there was a strong business case to do so. The proposed amendments to the Canada Marine Act provide more clarity related to the transition to such amalgamated port authorities, and are welcomed. We endorse the proposed amendment.
Item six pertains to section 14 of the act and the board of directors term renewal limits. Port authorities have benefited greatly from the new governance structure created under the Canada Marine Act in 1998. This structure recognizes the importance of having local representation in place on our boards. It also recognizes the important need to have broad experience on the board, with directors nominated from each level of government, and the majority of directors selected by the federal minister after consultation and receipt of nominations proposed by the user classes of a port authority.
While the various nominating parties nominate directors, once on the board, under current governance law, the fiduciary duty of a director is to the port authority. The proposed amendments strengthen this structure by providing an additional three-year term for directors that allows port authorities to benefit from their experience. Finally, the idea of having directors remain in place until they are reappointed, or until another director is appointed, would prevent situations where vacancies exist for an untenable length of time. We endorse the proposed amendments in this regard.
Finally are enforcement provisions that relate to section 61 of the act. The proposed amendments related to enforcement provide port authorities with a more efficient process for ensuring compliance with regulations under the act, while also providing a suitable review and appeal mechanism of such enforcement decisions. The proposed amendments to address regulatory non-compliance would also preclude the need for redress to the courts in many cases. ACPA endorses the proposed enforcement provision in the Canada Marine Act.
Mr. Chairman, I have outlined seven particular issues and the amendments pertaining thereto with which the Association of Canadian Port Authorities unanimously agrees. We feel Bill is a huge advance for our industry. We encourage quick and speedy passage of the legislation, and look forward to any questions you may have.
Thank you very much.
Mr. Volpe, in terms of the act, in terms of the legislation of which you speak, we are directed, under section 4, to liaise.
I don't know if Gary can tell me the wording of section 4....
National objectives? Yes, I got it, thank you.
I'll say a couple of things, Mr. Volpe. First of all, fundamentally what you're talking about is the division of powers. It comes straight from the Constitution. In fact, that hit the Supreme Court of Canada only last June. There was a ruling that set out the law in the matter. Now, you're not talking about setting law, you're talking about communication and compromise and working together. The Constitution doesn't bump that out of the act.
Under section 4, we are charged with managing the marine infrastructure and services, as a commercial manager that encourages and takes into account input from users and the community in which a port is located. So in the national marine policy of the country, there in section 4 is the charge that, if I take what you're saying, ought to be given to the port authorities. We had that here under section 4.
I'd also point out--
I fully agree with the comments made by my colleagues and the Port of Montreal is in full agreement with the position of the association and supports this bill. Among the essential reasons for that position, there is traffic along the St. Lawrence which you mentioned. We've had growth for 27 years. The results for 2007 will be announced very soon. Once again, we beat our record for the previous year. This year, we had more than a 9% increase in cargo container traffic, which is double that of the previous year.
There's also been a certain transformation with regard to cargo transport. Formerly, there was a certain quantity of bulk cargo that disappeared in favour of some form of containerization. That is an effect of globalization, we didn't invent it. That transformation has been going on for 30 years and will continue to increase. Ships are getting bigger and bigger and they will transport more and more goods by container.
We believe that growth is possible in Montreal. Today, in 2008, we know there will be a capacity problem in 2015. Within only seven years, the Port of Montreal will have attained its full capacity. We must take measures now in order to be able to grow because this demand exists. You can rest assured, this increase will come.
Moreover, to achieve our growth objectives, we will have to expand. There will certainly be a major expansion project for the Port of Montreal, which will enable it to increase its capacity in accordance with the needs that will appear within seven years. Without going into detail, we're talking about an investment of over $500 million just for that work.
We also have other objectives. We have to look after our existing infrastructure first. In the next five years, we're going to spend over $220 million in capital expenditures. Those are our own funds; so we're not talking about loans. That's the minimum we have to invest in the next five years. If we do forecasts for the next 10 years, that amount will certainly easily be multiplied. In the last five years, the total investment in capital expenditures was only $110 million. So we can see that there's growth.
There's also the issues of cruises on the St. Lawrence, consolidation, better access, maritime stations that perform better. That could be a very good project for Montreal and for Canada. And that wouldn't be just because of income, but also because of openness and recognition both in North America and worldwide. In our opinion, this expansion project could very well complement the objective of governments with regard to domestic trade and international trade. Montreal is a hub; it's the gateway to a pool of 100 million consumers located within an hour or an hour and a half from Montreal by plane. That's important.
The other issue I was discussing with Mr. Volpe is that by law, our administration certainly has socio-economic obligations, or in other words, our activities have repercussions on society. For Montreal, that in fact adds up to about $2 billion in economic spinoffs and 17,000 direct and indirect jobs. If you look at all ports, be it Vancouver, St. John's or anywhere else, they have an incredible multiplying effect on the economy.
I know others will want to speak on that as well.
First and foremost, going forward, if the bill passes as it is constructed currently, there will be two levels of ports, tier one and tier two, for the purposes of borrowing. A code, which is yet to be finalized, would require more work, we feel, between our officials and Transport Canada, and both sides are committed to coming up with an end product that will make it most efficient. That's a work in progress.
As to the philosophy, we were delighted to see in the bill that the government has shown an interest in proceeding with this kind of mechanism. We are all very pleased. The finer points have yet to be worked out by way of a code.
To the second part of your question, on what we would do, I mentioned in my presentation earlier the size of trade and the fact that it's going to double by 2020. What has to happen is that we make sure, as a port community and as a country, that we don't find ourselves in some kind of infrastructural deficit vis-à-vis ports in the U.S. and indeed elsewhere.
What we will do in our long-term planning—in consultation with others, of course, in our communities—is make sure that does not happen. That infrastructural deficit cannot happen.
There's rising volumes of trade; there's changing trade patterns; there's improving corridors of trade. All of these have to be addressed. The way you address all those concepts is by concrete—building things. That's what we would do, and that's what we haven't been able to do specifically in the past.
But even more, what we have to do is dovetail development with the increase in the trade patterns and volumes that are happening right now.
I'm sure I should share the floor on that one, if I may.
Yes, I'll try to be concrete in terms of our plan.
There are basically two elements. One is about our current infrastructure. I'm not talking about a new terminal; I'm talking about our current infrastructure.
Today, one of the elements for the Port of Montreal is to look at how we can optimize the water draft. Basically, if I can gain a few inches, if not a foot, that would permit the ship to come with more cargo. This is significant. You're talking, let's say on a 3,000- to 4,000-TEU ship—or even the 5,000-TEU ship that came to Montreal this year—about 15% to 20% additional cargo, with that additional foot. It's substantial.
That costs money. Naturally, there are all kinds of issues and impacts that we have to study and find mitigation measures for, but it's quite feasible. This is a concrete element.
The other concrete project we're looking at is all about the St. Lawrence cruise aspect. How can we, with better installations and better facilities, bring more ships and more passengers and therefore directly have more economic impact for the cities of the ports where the ship will call? This is another clear element.
The other one, to which I was referring earlier, is about the future, the 2015 horizon—not to talk about the 2020 horizon, which will be even more challenging. This, in our case, means an expansion. It means a new terminal, and that means investment, and it is only seven years away.
One could ask, “Why didn't you do this five or seven years ago?” Maybe the time was not right in terms of our need for additional capacity, or in terms of the transformation of the shipping industry to being very focused on the port of call, through the design of the ship. People put a lot of effort into designing the ship today, in ways not necessarily the same as before. This is very good timing in terms of our future development.
Gentlemen, thank you very much for being here today.
My home town of Saint John, New Brunswick, is obviously very much a port community. One of the things I thought we would do is take advantage of your being here today to have you give us a couple of examples and also some help, and maybe we'll leave you with some homework.
I think my colleague Ed had talked about the municipality services and the kinds of things that a community needs to have as a result of working with a port. In Saint John, for example, there are new challenges for policing and security. The post-9/11 environment has created new challenges for your industry.
We all acknowledge that they are centres of activity, and in certain circumstances, whether it's in Montreal or the west, there are opportunities when certain lands may be surplus and these are community opportunities when, in concert, working with a community or a municipality or an organization, there may be a joint development that would occur.
I wonder if you would share with us your philosophy. Also, when we're talking about infrastructure costs, I'd like to hear from you if there is a study, and if there isn't a study, whether you would consider a study as to what the global bill of our ports would be for infrastructure, not blue-skying, but to say how much money would be re-invested in the communities from Quebec, the Maritimes, the west, where we need, as a global competitive country, to be able to attack the global competition that's occurring in China and India. As a country, what are some of the general principles we might move forward with?
I suspect he's doing that because he wanted somebody to make an intervention on behalf of a Great Lakes gateway from an economic perspective in terms of developing the entire economy of Canada.
I thank you, gentlemen, for pointing out that there is a Pacific gateway strategy. The government members are keen to take full credit for it. We're not going to engage in partisanship, but it is one of the gateways. On the other, I see Mr. Hanrahan and Mr. Leroux, along with Monsieur Pelletier, have done well, speaking about the gateway that comes from Atlantic Canada and through the Port of Montreal.
I want to thank you before I make my comment on focusing strictly on the changing economic and trade patterns that impact on the way the port authorities see the world, and the way they must prepare for the world.
We have a variety of ports in Ontario. Mr. Watson has pointed to one, Windsor. There are several others. I'm thinking in terms of my own home city—Toronto—although other people might view themselves as expert on what happens in that city. I know that what you'll want to do is give us an indication about why it's important to think about the macro-economic changes for which we must prepare. That's why I asked you—and I'm wondering, Mr. Hanrahan, whether you'll do it perhaps from a different perspective—to talk in terms of governance issues in a CPA that will take into consideration any potential or foreseeable differences with local authorities about developing the infrastructure for changing trade patterns--why it would be important from your perspective that the jurisdictional authorities vested in CPAs, and confirmed by the courts, stay within the structure of material that must be dealt with from an investment perspective locally, but within a larger perspective.
And I'm taking the lead from Monsieur Pelletier, who said that the Port of Montreal really has a great dependency on the northern European market, secondarily on the southern Mediterranean, and thirdly from the Indian market accessing the Atlantic through the Suez Canal. This strikes me as a more studious approach to what should be happening with a port like Montreal if it's going to be a gateway into the Great Lakes basin, the northeastern United States, the midwest United States, and the biggest market in Canada, the Golden Horseshoe.
Those Canadian ports that are resident in the interior of that gateway, the Great Lakes ports, must have a similar strategy based on significantly similar economic assessment of where the future is going. So I'm wondering whether from your perspective the governance issues addressed by Bill are focused appropriately on that expansive mode, or whether they should concentrate, notwithstanding the jurisdictional decisions that have already been confirmed by the courts, on local issues only.
Mr. Chair, I did have an opportunity to get some research done by the department. It wasn't in both official languages and I'm undertaking to get that done so we can circulate it to the committee. I will advise that I did give a copy to Mr. Volpe, because it was from the department and it dealt specifically with his motion.
I do want to say this. I think it's a good motion, but we should put it after we've heard these other investigations that are under way, especially because it's provincial jurisdiction, first of all. I want to make that very clear. We have the ability to do blanket studies, but the reality is Canadian legislation does not allow the imposition of a selective ban like that. Provinces and territories have the authority over road use.
Saying that, our understanding on a preliminary basis from Dr. Frank Wilson--and this is in the report--is that what happened in this particular case was the van went sideways, sliding on the road. If it had electronic stability control, which is going to be mandatory in a bit of time here in Canada, then the accident wouldn't have happened. In fact, it happened so quickly there wasn't even time to put on the brakes.
It wasn't a situation where the van flipped. It was a situation where there was just no time. It slid sideways and the truck hit it square-on and that's why it was such a mess. It would've happened to just about any vehicle.
Notwithstanding that, I would suggest that what we should do is put this off until such time as a provincial study's been done. I think the RCMP are doing an investigation. After that's been done, it would make more sense, I think, simply because it's not our jurisdiction in the first place. I will by that time have a copy of this in French so that I can circulate it to all the members so they can see the preliminary issues of the study. As I say, it's about five pages long, so it has some good information on it.
Thank you, Mr. Chairman.
Thank you for allowing this kind of preliminary discussion on the motion. Some of my colleagues have made some really good points. I appreciate that everyone feels as I did when I prepared the motion.
I think Mr. Jean is indicating to us that we may be rushing to some conclusions prior to actually having studied the issue thoroughly enough. I don't want to fall prey to that myself.
As for Mr. Masse's case, I have found myself in the same position as the driver of that van. I used to coach basketball teams. Teenage boys are a tough crowd to handle at the best of times, and when they go to basketball tournaments it's the worst of times. I drove precisely those types of vehicles. Those vehicles became outlawed in my city quickly enough, but it was done in indirect fashions. For example, school boards required the drivers to hold a particular licence and take out additional insurance prior to getting behind the wheel. Well, if you're the coach and driver and have to absorb the responsibility and costs, I think the lawyers around the table will tell you that sort of puts a chill on enthusiasm for doing other things. Of course, the school boards couldn't afford to assume the additional transportation costs, so programs were curbed.
That didn't stop many operators from engaging in after-sales market development of the vehicle. As I understand it, that is now banned in several places, at least for the kind of use I used to engage in, like many other coaches.
Notwithstanding the fact that this might seem strange to others, now that we've put it on the table I would like us to give this the thorough attention it requires. With all due respect to Monsieur Laframboise, I'm not sure that I'd be able to get that thoroughness of examination by slotting in Transport Canada at the next session when we have an hour of free time. I really think we need to spend much more time getting Transport Canada officials on this and getting the kinds of answers we need.
If Transport Canada is providing the guidelines and regulations, I don't want anybody to come here and try to pull the wool over my eyes—I'm not sure they would. I want to make sure that our effort is as genuine as the people who are the most immediate victims of that tragedy would like parliamentarians to be.
In that spirit, let's defer it until we have what the examination by people who are in the field gives us, so we can more appropriately ask Transport Canada the kinds of questions we want answers to. I wanted to make sure we got it on the table, but I'm asking for a deferral so our judgment of the responses will be much more studious.