By Alex Binkley
More than a year has passed since Transport Canada closed its public consultation on the future of the 17 Port Authorities across the country, but no one has any inkling of what the next step might be. The last item in the November 2019 mandate letter from Prime Minister Justin Trudeau to Transport Minister Marc Garneau instructs him to “complete the Ports Modernization Review with an aim to update governance structures that promote investment in Canadian ports.”
Back in 2018, Transport Canada called for submissions from the ports, their users and other interested groups. The submissions closed in December 2018. The consultation documents noted the Authorities are supposed to be financially self-sufficient companies that support economic development while following sound and accountable business practices.
More than 80 organizations filed briefs with the Department on many port topics outside of how they should be operated and governed. The Shipping Federation of Canada said ports need the flexibility to operate as commercial entities while remaining accountable to the government for their activities and operations. That principle “continues to represent the optimal means of ensuring that CPAs serve the needs of the Canadian economy in the most efficient manner possible.
“This being said, it is also our view that the current governance structure should be part of a broader national transportation policy that considers ports from a trade corridor perspective and views them as essential elements that contribute to that corridor’s ability to efficiently channel trade to and from domestic and international markets. Such a policy would provide a much-needed framework for guiding infrastructure and investment decisions related to future port development in a manner which ensures that the larger national interest is appropriately factored into all such decisions, and for assessing the roles that the various elements of any trade corridor play relative to one another, whether as partners or competitors.”
Mary Brooks, Professor Emerita at the Rowe School of Business at Dalhousie University, and long-time commentator on ports and marine issues, said, “Canada doesn’t have the population to justify 17 Port Authorities. “There is not adequate evidence to conclude that privatization is better, or will meet the government’s objectives. The Port Modernization Review should lead to greater clarity of port purpose, less political control through Board appointments, and better reporting standards for the citizens of Canada.”
The Western Grain Elevator Association also opposed privatization of the ports. Executive Director Wade Sobkovich said privatization would change the focus of ports from facilitating the flows of goods to maximizing shareholder returns.
Running ports on a cost recovery basis isn’t the answer either, he said. Rather than acting in the best interest of Canadians, a cost recovery business operates “in a way that generates the most revenue for itself.”
The Forest Products Association of Canada said port usage fees increased more than 5 per cent a year during the first 15 years of the Authorities, and along with pilotage and Seaway fees, are among the reasons Canadian ports aren’t competitive with American ones.
It called for the Authorities to be run on a not-for-profit basis as Nav Canada is, which would reduce “the cost of international trade for all of Canada’s exporters.”
Jim Quinn, the current Chair of the Association of Canadian Port Authorities (ACPA) and President and CEO of Port of Saint John, said the ports are waiting to hear from the Department on what the next step will be.
The 2016 review of the Canada Transportation Act, headed by former cabinet David Emerson, called for changes in the structure of the Port Authorities. In an appearance before the Senate transport committee in April, 2017, he called for a thorough review of the governance arrangements for Port Authorities. “I think there is inadequate governance in relation to deployment of capital, there’s inadequate governance when it comes to making sure that there is a recourse to a regulator where there is abuse of monopoly power … frankly I wouldn’t give them any more access to money until you clean that up.” The current system provides “no clear guidance against abusive pricing power or limiting preferential arrangements with tenants that may undermine the common user principles that are so critical to well-run public facilities,” he said. A dissatisfied port user can’t complain to the Canada Transport Agency as it could over rail or air service and “because the agency is not empowered to deal with it, and appealing to the minister is generally not practical.”
As part of the public consultation, Transport Canada said it wanted ideas on “optimizing governance and accountability, including with respect to financial management.”