Transport Committee on Oct. 18th, 2023

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

I want to drill down a bit deeper and get a bit more granular on the business of ports.

Mr. Hamilton, I'm going to ask you to speak about port competitiveness as outlined in the bill and about managing assets, your financial management plans as per your submitted business plan, and the whole-of-government approach, especially as it relates to public safety and the capacities or lack thereof of CBSA.

I'm going to concentrate on section 39 as amended by clause 114, as well as section 30.1 as amended by clause 109. Section 30.1 does identify that directors of a port authority “must submit its borrowing plan to the Minister”. I can only assume that the borrowing plan would be capital as well as operating in nature and that it would include asset management and returns on the investments that both would make.

Section 39 says that a “port authority must, within three months after the end of each fiscal year, submit to the Minister, in respect of itself and each of its wholly-owned subsidiaries, a five-year business plan”.

With all that said and identified within the bill, I have two questions for Mr. Hamilton.

As part of the business plan you submit, there's this financial plan, somewhat of a secondary plan, that's going to add the infrastructure capacities to support that business plan and capital needs—future investments to satisfy the future direction that the port might take or will take. As well, there is the existing asset management plan that would support the existing infrastructure.

Mr. Hamilton, do you feel that modernizing the port's financial flexibility as outlined earlier will be an enabler for the ports to reach the capacities contained within your business plan, but more importantly that it would actually give you the ability to put in a proper financial plan to satisfy what you're actually identifying within your business plan?

[Ian Hamilton]

Thanks, Mr. Badawey.

We certainly believe that the exercise of putting together the financial plans is worthwhile. In most cases, we get positive feedback on what those financial plans look like and how we want to allocate capital in the future.

Where I think the limitation comes in is that the financial plan is submitted, but then there's no response to that financial plan to say, “Okay, how can we enable you in terms of having the right capital to execute on that plan?” That's where our biggest challenge comes.

Based on the Transport Canada comments, we believe they did hear our concerns on that issue and they said they were going to build more financial flexibility into the bill. Our biggest concern is that the flexibility wasn't actually built into the bill. It was an additional reporting requirement and they said that we would now report every three years, and they would review every three years, but in reality there's no prescription setting out what the criteria are going to be to create that flexibility, what the matrix is going to be for setting the borrowing limits and how quickly we are going to be able to respond to those requirements.

Hamilton is one example, but there are some other examples, in Montreal and on the west coast, of how the borrowing limit requests have carried on for two to three years. You have to put projects on hold. You can't respond. You can't do your job while you're waiting.

I really think what we would love to see would be, as was suggested, that we could go into the market and if people and companies were willing to make investments to support future projects, we would be allowed to take advantage of that. Today we can't. That's limiting our ability to really service Canadians.

[Vance Badawey, Liberal, Niagara Centre, ON]

It's also limiting your ability to satisfy the business plan that you're setting forward to give you the ability to not only regain that capital for existing infrastructure to manage your assets but also to grow the company. Is that correct?

[Ian Hamilton]

That's correct.

I think that growing the company is valuable for us, but the most important thing is making sure we can deliver additional capacity and sustainable supply chains. When we can't access capital to be able to do that, that hurts all Canadians and it results in inflation or shutdown of supply chains. We have seen how vulnerable we have been to those things in the last few years.

[Vance Badawey, Liberal, Niagara Centre, ON]

Can you speak a bit about CBSA and the need for CBSA to expand the services to areas that might provide new business for your port as well as to other ports across the supply chains?

[Ian Hamilton]

Yes.

Right now, we can't bring an uncleared container into any port in the Great Lakes, which prevents our ability to actually use marine transportation instead of ground transportation. The advantage of marine is that, as was discussed, it's probably the greenest form of transportation. It also can alleviate the pressure on the road network and the rail network.

CBSA's position is that there's a capital investment to equip the port facilities with the ability to handle uncleared containers coming in, and they don't believe there is a proven return on that investment. We think it's blatantly wrong, in that cargo is going to continue to grow. Our supply chains are already cracking at the seams. Although we're out of the acute problem we experienced during COVID, we still have the underlying legislative and infrastructure problems with the existing supply chains, and we need to take advantage of the marine capacity.

[The Chair, Liberal, Peter Schiefke]

Thank you so much, Mr. Hamilton.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Hamilton.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Badawey.

Mr. Strahl, I'll turn the floor over to you. You have five minutes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Chair.

I want to talk a bit with Mr. Gooch.

I noted Ms. Murray indicated some concerns with the Port of Vancouver. I'm sure that when they appear—I hope they're coming—they might have a different perspective.

A lot of what has happened in this bill.... There are two new board positions. One goes to local government and one goes to provincial government. These ports are located in communities, obviously, but the port of Vancouver is the most important port for Alberta, Saskatchewan and Manitoba. It serves the national interest.

Can you talk about perhaps the tension there and whether you see Bill C-33 actually watering down the importance of recognizing that federal ports are supposed to operate in the national interests? They do serve more than just the community in which the port facility is located.

[Daniel-Robert Gooch]

Well, certainly we see that reflected in the structure of some of the ports versus others in terms of additional seats on the board. I think what I'm struck with is that our ports definitely see themselves as part of corridors and systems so, yes, there is a balance between, and yes, the community impact...but they also understand their role and how it fits into the rail networks and the road networks in other parts of the country.

I believe that Vancouver is going to present to you, so I'm not going to speak on their behalf, but I was impressed and surprised to learn that they do board meetings in the western provinces, because they understand that's an important stakeholder for them. Definitely, ports see themselves.... They're definitely in the heart of the community and, in many cases, literally in the heart of the community downtown, but they also have a great sense of their role in the broader Canadian economy.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I want to talk to Mr. Hamilton and Mr. Paquin.

You both mentioned that the bill doesn't actually do enough to encourage or facilitate integration or co-operation between port authorities. Did the bill just fail to add sections that would allow that, or does the bill actually actively prevent that from happening?

Is it an error of omission or addition? What is stopping you from integrating as much as you would like to? Are there specific changes to Bill C-33 that could be made to address those concerns?

[Jacques Paquin]

Ian?

[Ian Hamilton]

Thanks. I'll start.

Yes, it's an error of omission. It's very interesting, of course, that when the bill was described to us, it talked about an encouragement for further collaboration amongst ports, but there was nothing inside of the bill that actually supported that claim or that encouragement.

The reason it's important is.... Particularly on smaller ports, but certainly on all ports, there are ways in which we can share and collaborate, but the way the legislation currently reads is that we're designed to be competitive against each other. I think we really have to—this ties into another piece of work that's going on—create a Canadian transportation strategy that talks about how we tie together all of our transportation assets. That requires much closer collaboration.

Jacques might have some really good examples of what they're doing with the Quebec ports, but in Ontario, what we've seen is how much more positive it is to have HOPA, Hamilton and Oshawa amalgamated together. That has resulted in Oshawa handling more cargo and about $35 million in investment over the last couple of years. This is something that could never have happened with Oshawa acting independently, unfortunately, with their small revenue stream and three staff members.

[Jacques Paquin]

I can add to that.

Mr. Hamilton's example is interesting. It shows what can be done within the existing legislative provisions. Essentially, the provisions allow for two extreme scenarios. One, we each work on our own things separately and compete with one another; or, two, we amalgamate.

The fact is, we need to be able to work together more without necessarily ending up in one of those two extreme situations. The current legislative provisions are an impediment to that.

Based on our experience on the St. Lawrence, I think the facilities we have there are interdependent and complementary. It's very hard to build new ones, so if we want to be able to do more, we have to make the best possible use of what we already have. That means we need to work together more and see each facility as part of an integrated network.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Strahl.

Thank you, Mr. Paquin.

Ms. Koutrakis, you have the floor for five minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for joining us even though it's so late.

We've heard quite a bit about a borrowing limit process. I'm wondering if I can ask the port authorities.... I'd like to learn more about the approach that is being used to balance between borrowing money for growth and financial responsibility. Do you think there are any measures in Bill C-33 that can help support that balance?

[Daniel-Robert Gooch]

Perhaps I'll suggest that our chair and Jacques speak to that.

[Ian Hamilton]

Thanks.

We don't believe there's anything inside Bill C-33 that improves our access to capital. There's a commitment around additional reporting, which suggests that there should be.... That additional reporting should make the process of changing borrowing limits and accessing that capital more streamlined and easier. However, the bill doesn't actually go that far. It gets to the reporting side of it.

As we talked about earlier, some of it is a financial burden or, I guess, a red-tape burden. The reality of it is that we're being asked in the bill to report as if we're a publicly traded company, but at the same time, we're not able to take advantage of any of those investment vehicles made available to publicly traded companies. I think that's the contradiction of the crossed threads.

I'll pass it over to Jacques. He has some real examples of where.... Nothing is going to help him get his projects completed.

[Jacques Paquin]

I can add to Mr. Hamilton's answer.

Bill C‑33 introduces greater uncertainty about our borrowing capacity. In dealings with financial institutions and business partners, the last thing anyone wants is uncertainty, so this bill does not create conditions conducive to getting projects done.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you very much.

This question is for Mr. Hamilton.

Do you feel that strategic sections of the St. Lawrence Seaway shores should be structured like a port authority, and if yes, why?

[Ian Hamilton]

I certainly believe that, under the management of the St. Lawrence Seaway, there are parcels of property that would benefit from being managed as a port authority. Port authorities have a different mandate. They're mandated to be economic drivers. We have the ability to invest in those assets and be self-sustaining. I think that we are much better equipped and that a port authority structure is much better equipped to allow these parcels of land owned by Transport Canada to be developed and used to create supply chain capacity...and as economic drivers. So, to answer your question, yes.

[Annie Koutrakis, Liberal, Vimy, QC]

Mr. Chair, do I still have some time?

[The Chair, Liberal, Peter Schiefke]

You do. You have two minutes, Ms. Koutrakis.

[Annie Koutrakis, Liberal, Vimy, QC]

I had better start reading slower.