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 C-23, 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 C-23 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.
