Security, innovation focus of ports review
Arm’s-length groups run 18 largest sites
The federal government is launching the first review of Canada’s port authorities since they were established 20 years ago, with the aim of improving their efficiency and innovation, upgrading security, and strengthening consultations with local communities and Indigenous groups.
Ports are a crucial part of Canada’s trade infrastructure, handling almost $90 billion of Canada’s exports to world markets (or 17 per cent) and $110 billion of Canada’s total imports (21 per cent) in 2017.
The port authorities are arm’s-length corporations that run the 18 largest ports in the country, including busy container ports in Vancouver, Prince Rupert, Montreal and Halifax. They’re governed by boards of directors with one appointee each from the municipal, provincial and federal governments, along with up to seven federal appointments made in consultation with industry.
The government had earlier commissioned a report by investment bank Morgan Stanley Canada on the prospect of privatizing the port authorities, but this review will not consider privatization as an option.
Transport Minister Marc Garneau will announce the review on Monday in Delta, B.C., with a timeline of completing it by next year. It will be an internal review run by Transport Canada.
Toughening the rules for how port authorities consult with local communities on new projects will be a key aspect of the review and has been urged by Liberal MPs, according to an official who spoke on condition of anonymity ahead of the announcement. It is also part of the government’s broader reconciliation agenda with Indigenous communities.
The federal government established port authorities in 1998 to have the facilities be commercially oriented and financially self-sufficient, but to also maintain them under public ownership as strategic assets. They act as landlords in many respects, leasing land to private terminal operators and shipping companies.
The review will aim to modernize port operations to help them manage growth in traffic and adapt to the technology changes on the horizon, such as increased automation around verifying and tracking cargo. It will include an examination of rules for how port authorities can raise capital for new infrastructure. Currently, they raise revenue through leasing land and collecting user fees, and are allowed to borrow within certain limits from commercial banks.
In addition, the government already has legislation moving through parliament — Bill C-49 — that includes giving port authorities the ability to apply for Canada Infrastructure Bank loans. The $35-billion bank was created last year and aims to use public funds as seed money to attract private investment in infrastructure projects.
The governance structure and day-to-day management of port authorities will also be reviewed, including a consideration of whether some should be amalgamated into regional authorities.
Finally, the review will look at whether new security measures are needed to combat smuggling, terrorist threats and hacking. Currently, port security is handled by a combination of Transport Canada, the RCMP, the Canada Border Services Agency and local authorities. The review could include a consideration of whether specialized police forces are needed for ports.
This review follows a sweeping report on Canada’s transportation legislation conducted by former cabinet minister David Emerson, tabled in 2016. That report concluded the port authorities are on stable financial footing, but run the risk of falling behind on innovation without more flexible and responsive governance.
“Without this degree of adaptability and appetite for innovation, the Canadian industry runs the risk of losing customers and market share to U.S. and Mexican ports,” Emerson’s report said.
That report also specifically recommended looking at further amalgamation, noting “the success of the amalgamation of the three ports in Vancouver and surrounding area,” which was done in 2008.
Transport Canada will post a discussion paper for the review on Monday, and will take written feedback from stakeholders and the public until September. A report on the feedback will be posted later in 2018, with final recommendations due in 2019.