NATIONAL MARINE STRATEGY:
MINORITY REPORT
REFORM PARTY OF CANADA
On the whole, there has been good cooperation between all committee members in putting
together the National Marine Strategy report. It should not come as a surprise, however, that each
party involved viewed some areas of the strategy slightly differently.
While we are generally in agreement with a large portion of this report, those areas where we disagree are important enough to require that we write a minority report on our concerns.
On page 8, in the paragraph above recommendation 1, the report states that the overwhelming weight of testimony was in favour of the federal government continuing to play a direct role in commercial port administration.
We in the Reform Party did not see it that way. The impact of the testimony that we heard was that the ports wanted to maintain a "connection" to the federal government because of the prestige associated with the Canadian government when dealing with foreign entities. As such, we believe that the National Airports Program model would have dealt with those concerns while minimizing government interference; therefore, recommendation 1 should be so modified.
Recommendation 3: This recommendation states that there be provisions made for performance-based special audits or examinations at the discretion of the Minister.
We believe that as long as the government intends to maintain an administrative role in port operations, these operations should be subject to review by the Auditor General.
Recommendation 4: This states that any new legislation should require ports to pay annual dividends, as well as include a provision which would serve to protect ports from further ad hoc demands for cash contributions.
We believe that the existing formula for dividend calculation as set out on page 10 should be included in the recommendation to ensure that the government does not simply build the former "cash grab" amounts into a new dividend formula.
Recommendation 6A: This recommendation suggests that ports should negotiate with their respective municipalities appropriate fees for the services that they use.
What the recommendation touches on less clearly is that this new entity will not be required to pay municipal taxes in any form and that some municipalities may suffer significant revenue losses from this new model. The main argument put forward by ports who did pay taxes is that they were paying for all municipal services when the Canada Ports Corporation required them to purchase services such as policing from them. Under Recommendation 2, these ports will be free to utilize municipal services. But elderly and childless couples, for instance, do not have the right to negotiate school taxes. We believe that ports must be required to pay their "fair share" of local taxes, keeping in mind that the bulk of these are paid for by tenant companies.
Recommendation 6B: It should go without saying that it is incumbent upon municipal taxation authorities to recognize that ports are not the "cash cows" that the federal government is accustomed to treating them as. As such, taxes must be levied at a rate which ensures the economic viability of the port rather than its demise. It does seem a bit hypocritical for the federal government to be commenting on the burden placed on port infrastructure by municipal taxes at a time when Ottawa itself is devastating the entire transportation industry with federal taxes and fees that, as is stated when referring to municipal taxes in the paragraph following recommendation 6A, "do not compare at all favourably with those" (sic) in the United States.
Recommendation 7: This recommendation provides for the appointment of the majority of the members of the port boards by the federal government.
We have two problems with this recommendation. First, the government is maintaining an unnecessary amount of control over the new port entities. The wording in the paragraph above recommendation 7 states that "the federal government should appoint, at least, the majority of Board members." This suggests that notwithstanding the wording of Recommendation 7, they may decide to appoint all of the Board members. Under the airport model that we referred to in Recommendation 1, the government would have two of fifteen board members. This is quite sufficient to keep the government in touch with board activities. Absolute control is not only unnecessary, it is undesirable. We find it interesting that the government's intent in continuing to control ports is in direct contradiction to its attitude with regard to the St. Lawrence Seaway (see the last paragraph on page 30).
If the government were to adopt something similar to the airport model, we would be less concerned with the second problem, which is the method in which federal appointments are to be carried out. Although patronage appointments are wrong in any numbers, two out of fifteen, or something based on that ratio could possibly be tolerated. Patronage can either be real, or it can be something perceived by the public. Either way, it is not desirable.
If the government intends to "appoint, at least, the majority of port boards," or any other boards for that matter, a new method of appointment must be created to remove any elements of patronage from the process. The report's only rebuttal to this is contained in the last paragraph on page 12, which states that current boards are satisfied with the existing appointment process. We would certainly expect this to be the case. After all, it is, for the most part, the existing patronage process which appointed those very people.
Recommendation 10: This recommendation provides for the creation of a Ports Capital Assistance Program. The intention of this fund is best explained in the last paragraph on page 15, which states that "this program would be established to assist non-commercial ports to build and upgrade their infrastructure so that they could become self-sufficient and join the national ports system."
There are both advantages and problems associated with this idea, yet the report dismisses those potential problems without mention. Our concern is with those problems. One of the most prevalent comments we heard from many ports, particularly in the Atlantic region, was that there are simply too many ports at present. They also stated that some new ports are receiving large amounts of free federal money to put into otherwise unprofitable facilities, in order to compete with established ports and reduce or remove their own viability.
If a port which would benefit from this program were within a reasonable trading area of an existing commercial port, this program could end up subsidizing the non-commercial (unprofitable) port with enough funds to allow it to compete against the unsubsidized commercial port. Having already identified unjustified federal spending as a large part of port problems, care must be taken that any funds provided under a Capital Assistance Program go only to those non-commercial ports which are necessary to the economic well-being of their communities, where no other reasonable shipping alternative exists.
We must take care not to create a system in which one port is subsidized either in the short or long term, to directly compete with a non-subsidized port.
Recommendation 22: We accept the spirit of this recommendation, but caution that great care must be taken to ensure that these incentives do not get carried away, and that each one is treated on its own merits as measured against net potential economic gain within the Seaway system. We are concerned that funding is being cut in all port sectors except the St. Lawrence Seaway, where the government appears prepared to not only continue on with a massive annual subsidy, but also add to it through this new incentive program.
Recommendation 28: This recommendation states that there will be no cost recovery for ice breaking services "unless" the costs can be attributed in a fair and equitable manner to commercial users as well as the public interest.
We would have been happier with this recommendation if it had exchanged the word "unless" with the word "until". Our concern on this issue is that the paragraph before the recommendation makes it clear that the committee on the whole believes this cannot be achieved, and that everyone should continue to provide funding for those ports which can only compete with ice-free ports in the wintertime by receiving this service.
We see two problems in this attitude. One is the obvious concern that the government is providing a form of economic advantage for some ports to compete against others that are not given similar consideration. If it is difficult to accurately discern the division between commercial advantage and public interest, err on the side of the ports. This may still allow them some amount of operational subsidy, but it will be fairer than the system that we have now-a system that the committee seems to be leaning toward continuing in the future.
The second problem is seen at the top of page 38. If we do not initiate a system of cost recovery for icebreaking services, we provide no incentive for responsible ship operators to use appropriate types of ice-strengthened hulls in our waters during the ice season.
The report clearly points out at the bottom of page 37 that there is cost recovery for icebreaking in Northern Europe. On the next page it is noted that the cost recovery regime in the Baltic Sea is based on the ship's ice-strength classification. I believe that we can do this as well, but that there may be a general lack of resolve to do so in this report. This issue cannot simply be shrugged away without undermining the whole concept of cost recovery in all the other areas that have been discussed in this report.
Recommendation 31: On the surface, this recommendation sounds quite valid. An advisory board made up of a cross-section of marine interests is a fair method for ensuring future input. The preamble in the two paragraphs preceding it supports this conclusion.
The problem comes from a break in the report style by adding a paragraph after the recommendation, which instead of being the beginning of a preamble for the next recommendation, becomes a form of postscript for the previous one.
This section proposes a national levy on all marine traffic to pay for the services that either cannot, or simply will not, be recovered under a user pay system. One can place any name whatsoever on this levy, but it still amounts to an Ad Valorem Tax. The term "Ad Valorem" is defined as an imposed percentage of value.
During the course of the committee's travels, the concept of an Ad Valorem Tax was not brought up by the committee nor was it brought up in any positive manner by the witnesses. The only time that we heard it mentioned was in a very negative manner by people representing certain Atlantic ports who were referring to the mention of it in the St. Lawrence Seaway Sub-committee Report. Those people were assured by the chair of that sub-committee that the intention was for it to apply only to those ports within the St. Lawrence system. The witnesses accepted that explanation.
There may or may not be some merit in considering such a national levy or Ad Valorem Tax, but we believe it would be irresponsible for the committee to recommend, by way of a formal suggestion, the potential implementation of such a charge, in light of the testimony we heard and the agreeable response which we gave to it.
Page 42: The last line of the second paragraph is written as if this were a partisan Liberal report. Three parties were involved in this study. The comments made upon it here are neither necessary nor appropriate.
CONCLUSION
Overall, the various concepts contained within the National Marine Strategy report are positive in nature. Any comments that we in the Reform Party have made here are intended to supplement and improve the recommendations contained in the report, rather than detract from the overall directions in which the report recommends the federal government should consider moving.