Journals of the Senate
47 Elizabeth II, A.D. 1998, Canada
Journals of the Senate
Issue 63 - Appendix
Tuesday, May 26, 1998
2:00 p.m.
The Honourable Gildas L. Molgat, Speaker
Standing Senate Committee on Transport and Communications
Minority Report Prepared
by
Progressive Conservative Senators
on
Bill C-9, The Canada Marine Act
Introduction
We, the Progressive Conservative Senators serving on the Standing Senate Committee on Transport and Communications, believe that Bill C-9, the proposed new Canada Marine Act, may have such a potentially devastating effect on Canada's port community that we felt it appropriate to place our concerns on the public record at the time of third reading of Bill C-9.
Bill C-9 divides Canada's port community into three groups: the larger ports which will become Canada Port Authorities; the smaller, community ports which will be divested; and remote ports which will remain under the aegis of Transport Canada. As well, Bill C-9 provides for the commercialization of the St. Lawrence Seaway and ferry services as well as making changes to the Pilotage Act.
The main problem with the Bill is that it does not establish and maintain a level playing field with regard to the ports in the first two categories; the proposed new port authorities and smaller ports subject to divestiture. Ports operating within Canada cannot be neatly bundled into two groups and then sent adrift from the relationship they have had with the federal government through Transport Canada. The problems and challenges faced by the Port of Halifax are not the same as those encountered by the Port of Prince Rupert or the Port of Vancouver even though they are all coastal ports.
When dealing with the smaller ports which come within the government's divestiture program the same argument can be made. Each one is unique, serving the many and varied needs of the surrounding community. Most of these ports survive because the capital improvements and the dredging required are invariably done of the expense of the federal government. While some of these ports actually do make an annual profit it is not large enough to begin to pay the cost of the necessary on-going capital improvements. These expenditures are necessary to keep these ports operating and through their operation the surrounding communities flourish.
In fact, section 5(d) of the Canada Transportation Act recognizes this necessity:
Transportation is recognized as a key to regional economic development and that commercial viability of transportation links is balanced with regional economic development objectives so that the potential economic strengths of each region may be realized.
One of the principles upon which this country was founded and has prospered is that wealth may be redistributed through the federal government to areas which have particular economic needs. While transportation and the maintenance of transportation links was crucial to bringing some provinces into confederation, now the maintenance and enhancement of these links through Canada's port system is vital to the future of many of Canada's coastal communities and those located on our inland waterways.
Therefore, we as Progressive Conservative Senators disagree with the governments' approach to Canada's ports which fundamentally ignores the unique nature and challenges that face each port as we enter the next century. A "one size fits all" policy for Canada's ports ignores the realities of this country.
Specific concerns regarding Bill C-9
In testimony before the Senate Standing Committee on Transport and Communications, many witnesses both from ports to be included in PART 1 as Port Authorities and those smaller port subject to the divestiture provisions of PART 2 raised numerous concerns.
Typical of the evidence given by the smaller ports that received from the Mayor of the City of Corner Brook, Newfoundland:
As I have reiterated throughout the course of this presentations, the City of Corner Brook has deep concerns over the potential negative impact the divestiture of our port could have on our City and our region. From an operating perspective the Corner Brook port is quite viable; however, the port is not self sufficient from a capital perspective. As previously mentioned over the past ten years, the federal government has spent approximately $17 million to upgrade the port. Despite these significant expenditures, more capital maintenance is still required to repair the wharf at the Corner Brook dock. It is highly unlikely that a private operation would be able to afford, or be willing to invest, expenditures of this magnitude.
Similar concerns were expressed in a written submission from a Councillor from the Town of Georgetown, Prince Edward Island.
The transferring of our Port away from the Federal Government is not something myself nor Georgetown Town Council wish to see happen.
We are not comforted by the fact that a $125 million fund has been made available to ports which need to be upgraded. While we realize the Minister of Transport has indicated that if this fund is exhausted he will ask Treasury Board for more money, this does not guarantee that money will be available when it is needed. Also, expenditures from the fund are to be made on a one time only basis and can only be used to bring the port to minimum standards, not commercial standards. The fact that ports will not be brought up to commercial standards is a particular concern of the Port of Sept Isles.
The problem with such a fund was illustrated in a written submission from the Pugwash Village Commission, Nova Scotia.
A $125 million Divestiture Fund is available to community groups to ease the divestiture process but our small community does not qualify for any funding under this program. The Pugwash wharf is disqualified because it was a profit-making facility. This fund will not assist us. Should a small village like Pugwash be discriminated against because the government made a profit from the wharf in our small community?
Therefore, while this program sounds great in theory, its practical application does not address the problems it was established to resolve.
Other concerns with the Bill were expressed by the Port Alberni Harbour Commission which argued that the stipend the new Port Authority will have to pay to the federal government, based on gross revenues, and grants-in-lieu of taxes, to be paid to the municipality by the Port when taken together threaten the economic viability of the Port. It was Port Alberni's position that the stipend to the federal government should be based on net revenues. This was a position supported by many other witnesses.
With regard to the grants-in-lieu of taxes, the Port of Nanaimo suggested that Bill C-9 not be passed until such time as a formula was devised for calculating these grants and the Ports would know their exposure.
Numerous witnesses expressed dissatisfaction with the method by which port users are to represented on the Board of Directors of a Port Authority. By virtue of Bill C-9 port users are specifically excluded from sitting on the Board of Directors of a Port Authority. Witnesses believed that users should be able to sit on these boards and if a conflict arises they would simply declare their interest in such a conflict.
A specific defect in the Bill was brought to our attention by Prince Rupert Grain and the City of Prince Rupert. While fees charged by ports are subject to review under Bill C-9 when the new Port Authority is established, leases are not. It was the position of these witnesses that the Bill be amended to allow such a review in general, and specifically of the long term lease held by Prince Rupert Grain.
The unfair result of the "one size fits all" theory for the government's establishment of Port Authorities is dramatically illustrated with reference to the case of the Port of Halifax. Bill C-9 precludes Port Authorities from obtaining government grants for projects and from obtaining government guarantees for the funds required for capital improvements. The Port of Halifax has a development plan in place which when completed would allow it to compete effectively with all eastern seaboard ports for the Post-Panamax marine container traffic. The evidence presented before the Senate Transport and Communications committee by the Halifax Port Development Corporation and the Halifax Shipping Association was that the annual revenues of the Port provide insufficient security to allow the borrowing necessary to complete this redevelopment.
It is no answer to this problem to suggest as did the Minister of Transport that the Port of Halifax simply pledge its fixed assets. The Minister of Transport was unable to explain why the St. Lawrence Seaway could continue to borrow from the Consolidate Revenue Fund for capital improvements while the Port of Halifax was precluded. The only reason offered for the difference in treatment was that the St. Lawrence Seaway is like a highway and must be treated differently.
The question of environmental protection also arose during the course of our hearings. Both Mr. Franklin Gertler from the Centre Québécois du droit de l'environnement and Professor Marie Anne Bowder, Associate Dean of Law at the University of Saskatchewan expressed grave reservations in relation to this Bill and the environment. The concern expressed is that under Bill C-9 there could be a period when the Navigable Waters Protection Act is repealed as it affects works within the Bill and regulations to be made under the Canadian Environmental Assessment have not come into force. This would leave the ports and their users in a precarious and perhaps unprotected position in relation to environmental matters.
Amendments proposed by Progressive Conservative Senators
It was for all of the above noted reasons that we submitted fourteen amendments to Bill C-9 during the clause by clause study of this Bill by the Transport and Communications committee. For greater certainty they are annexed to this report.
The amendments consisted of measures to broaden the objectives of the Bill to include "the promotion of marine transportation as a key to regional economic development" and the "protection of the economy of areas in which ports were to be disposed of".
A method was recommended whereby port users could be chosen to sit on the Board of Directors of Port Authorities. An amendment was proposed which would change the stipend payable by Port Authorities to the federal government from a charge on gross port revenues to a charge on net port revenues.
Another amendment would ensure that long term leases entered into between users and ports would be subject to review in the same fashion as fees are subject to review under the Bill.
An amendment proposed to give the Minister through regulations the power "to assist in cases where port authorities suffer from economic hardship". Similarly, in relation to the small ports we proposed that divestiture not take place until an economic impact study of the port and its surrounding area was completed and the port facilities were upgraded to commercial standards at the expense of the federal government.
An amendment which would require the Minister to consult with the province and municipalities affected by a change in ferry service was proposed.
We also proposed that the Bill not come into force until four weeks after such time as the Senate Transport and Communications committee has competed on the financial impact of port divestiture.
Finally, an amendment was sought that would repeal the ineffective environmental protection scheme proposed by Bill C-9.
All proposed amendments were defeated by the Liberal majority on the Senate Transport and Communications committee.
Letter from the Minister of Transport dated May 13, 1998
A day after the clause by clause review of Bill C-9 by the Senate committee at which time all amendments proposed by the Progressive Conservative Senators were defeated, a letter addressed to the Chair of the Senate Committee written by the Minister of Transport appeared. This letter attempted to give some comfort to those ports which are subject to the divestiture process.
We, the Progressive Conservative Senators on the Senate Transport and Communications committee take no comfort from this letter. The Minister and indeed, the Liberal Senators on this committee had the opportunity to amend Bill C-9 and put into law processes which would protect Canada's ports. They chose to reject those amendments. No comfort can be found in the letter from the same Liberal Minister who sponsored Bill C-9. While we believe the Minister's letter is of no comfort to Canada's small port community, it completely ignores the issues that confront some of the ports which will become Port Authorities, especially those brought forward by the Port of Halifax.
Conclusion
The Progressive Conservative Senators on the Senate Standing Committee on Transport and Communications are bitterly disappointed with the actions of the Liberal majority on the committee. To defeat positive amendments which would be of great help to Canada's port community and hide behind a letter from the Minister of Transport shows contempt for the views of the witnesses who appeared before the committee.
Bill C-9 contains an automatic review clause. We will diligently monitor the effect of Bill C-9 on Canada's ports so that we can constructively contribute to the review of this Bill. We trust that when the review required by clause 144 is complete and tabled in the Senate that it will be referred to the Senate Transport and Communications committee for study.
Respectfully submitted,
Senator J. Michael Forrestall, Deputy Chair, Transport and Communications
Committee
Senator John Buchanan
Senator Janis Johnson
Senator
Fernand Roberge
Senator Myra Spivak