Canada Transportation Act Review
Submission by:
Association of Canadian Port Authorities
November 15, 2000
Ottawa, Ontario.EXECUTIVE SUMMARY
The ACPA has been in existence for since 1959, operating under the moniker of
the Canadian Ports and Harbours Association until a year ago. In 1999 the
name was changed to reflect the new status of Canadian ports as new
commercial entities operating under the rubric of the Canada Marine Act. The
ACPA consists of the 20 ports in Canada that have Canadian Port Authority
(CPA) status. It also includes more than 30 Associate members comprising both
port users and government entities.
The Association of Canadian Port Authorities (ACPA) groups together ports and
harbours and related marine interests into one, national association. The name
of the Association was changed on September 1, 1999 at its 41st Annual
Meeting in Quebec City where it developed a new Vision, Mission and Goals
Statement. The Association also decided to restructure itself and take an
increasingly active role in government relations recognizing that much of what
government does - or fails to do - greatly impacts port operations.
Over half of all trade in Canada goes through Canadian ports. Ports have a
strong interest in the health of the Canadian transportation system. The ACPA
develops national policy and programs on critical marine interests for Canadian
Port Authorities with a special focus on the interface between marine and
surface modes of transportation.
The ACPA wishes to provide its comments on national transportation policy in
Canada. Specifically, we wish to focus on the Panel's mandate related to the
review of "federal policy and legislative framework governing transportation in
Canada." We believe this broad mandate gives the Panel a unique opportunity
to finally look at the need for a national transportation policy for this country.
Canadian ports are especially concerned with the strong competition from ports
in the United States and the need to create a level playing field.
In fact, Section 53 (1) of the Canada Transportation Act (CTA) gives the Minister
of Transport the power to "carry out a comprehensive review of the operation of
this Act and any other Act of Parliament for which the Minister is responsible that
pertains to the economic regulation of a mode of transportation and
transportation activities under the legislative authority of Parliament." It would
appear that the Minister is ready - and the port community is definitely ready for
a review of the Canada Maine Act (CMA).
First and foremost, in that process, is the pressing need to address some of the
deficiencies in the Canada Marine Act and, the sooner the better. Given the
importance of the transportation system to Canada's competitiveness we urge
the Review Panel - and the Minister of Transport - to move expeditiously to also
review the Canada Marine Act (CMA), to ensure that ports are put on an equal
footing with global competitors. It may also be prudent to consider the impact of.all other legislation and regulation impacting all modes of transportation in order
to have a coherent national transportation policy for the 21st century.
Canadian Port Authorities are competitive. They have proven that they can
compete with other modes of transportation and with US ports. However, there
are a number of areas that require improvement such as a better regulatory
environment for ports; better public policy for other economic sectors that use
ports to transport goods; a more level playing field with that of certain US port
competitors; and recognition by governments that an integrated approach to
transportation policy will make ports - and other modes of transportation - much
more competitive. The port community has much to be thankful for, but there is
much work to be done to enhance the competitiveness of Canadian ports.
I. IMPORTANCE OF TRANSPORTATION.A recent government publication 'poetically' pointed out the historical importance
of our transportation system. It eloquently outlined that, "The history of Canada
is closely tied to the history of transportation, and to the gradual triumph of
transportation over geography. Throughout the life of the country and even
before, Canadians have met the challenges of a vast and rugged environment to
build one of the largest, most sophisticated transportation networks in the world."
Today, it is true, Canada’s transportation infrastructure extends over some nine
million square kilometers and includes almost one million kilometers of road;
50,000 kilometers of rail lines; 646 certified airports; and over 300 commercial
ports and harbours.
This network involves millions of components and thousands of people, all
working together to keep the system running smoothly, one of the best among G-7
countries according to a recent Global Competitiveness Report. Does Canada
intend to keep it that way, and how? The port community, and other intermodal
players must seek answers to this important question.
Canada has one of the most modern and highly developed transportation
infrastructures in the world. In fact, according to the World Economic Forum’s
1997 Global Competitiveness Report, Canada’s transportation infrastructure
ranked first among G-7 countries. This ranking, based on the extent to which a
country’s transportation infrastructure meets the requirements of an
internationally competitive business, measures the adequacy of roads, railroads,
air transport and port access. This achievement is truly remarkable given the
sheer size of Canada’s landmass and its challenging landscape.
While the marine sector is, indeed, impressive it cannot function without strong
connections to the road and rail sectors. Canada has more than 900,000
kilometres of public roads. The 7,300-kilometre Trans Canada Highway is the
country’s major east-west route, linking all 10 provinces. The road network
includes a large number of crossing points with the US, 18 of which are major
trade gateways.
In recent years, the increase in truck traffic generated by the growth in Canada-US
trade - and just-in-time manufacturing - have placed added demands on the
road system and have focused greater attention on road safety, including the
quality of infrastructure. As a result, Canada invests a large amount of money on
road maintenance and upgrades; and many stakeholders are crying out for much
larger sums to be invested in our road system to maintain our ability to compete.
The United States has recognized the importance of a world class road system.
It has committed a whopping $128 billion highway infrastructure and other
surface transportation programs. The way in which our roads are maintained will
be critical to the effective movement of goods around Canada and to our largest
trading partner, the US.
Clearly, railways are the backbone of Canada’s transportation system, providing
the most economical method of moving containers over great distances.
Canadian railways move some 270 million tonnes of freight annually. They also.have easy access to Canada’s major ports and to interior communities, either
directly or indirectly, through truck-rail intermodal service. Ports have a vested
interest in a strong railway system in this country.
II. TRENDS IN TRANSPORTATION
It's a time of great change in the port community and transportation in general. It
can be a time of great opportunity if the port community seizes the moment and
helps shape the competitive environment of the Canadian transportation system.
The newly minted Canadian Port Authorities (CPA) are not homogeneous,
varying widely in terms of the size of their respective port operations, type and
size of market served, and, consequently, their financial and staff resources.
Unlike departments and other agencies of the federal government, the new
CPAs do not receive appropriations from the federal government. In an era of
corporate streamlining and harsh competition, the CPAs must concentrate on
fulfilling their primary commercial functions - and specific administrative
regulations - imposed upon them by the terms of the Canada Marine Act. At the
same time they must function as a viable business. No easy feat for ports given
that they are now using new muscles to compete!
The Association of Canadian Port Authorities (ACPA) represents the interests of
the Canadian Port Authorities (CPA) in matters of common interest to the Ports.
Currently, the ACPA members are most concerned with ensuring that the
application of the Canada Marine Act to the new CPAs is fair and equitable.
After more than two years of operating under the CMA, the ports are now ready
to pass judgment on its merits, and to actively seek changes that are necessary
for maintaining port competitiveness. The ACPA members are also dealing with
many important issues such as cost-recovery and user fees; environmental
stewardship; privacy and access to information; payments in lieu of taxes;
infrastructure development; productivity and competition matters; corporate
taxation; international trade; and other social and regional issues as dictated by
the local circumstances of the various Port Authorities. These are the new
realities faced by the CPAs and all impact ,one way or another, port
competitiveness.
As noted above, there are many determinants of Canadian ports' ability to
compete. Nothing impacts this ability to compete more than the effect of
legislation and regulation on port activities. The Canada Marine Act - and other
legislation - will determine to a large extent ports' ability to effectively compete
domestically and on a global scale. This is not to suggest that 'regulators' or
officials in Ottawa consciously set out to hamstring the ability of ports to
compete; quite the opposite. It is incumbent upon officials, and members of the
port community as well, to work closely together to ensure that an important
mode of transportation continues to be one of the best in the world. Recently an
Ottawa protagonist was heard to say that, "Time and time again, it is the private
sector that determines national transportation policy in this country, and not the.government." The CTA Review Panel must look to the private sector to devise
better national transportation policy for Canada.
The Minister of Transport has identified five 'big challenges' related to the future
of transportation in Canada: sustainable transportation; increased ease of
border crossings; building infrastructure; applying new technology; and safety.
There may be a few others that could be added to that list, such as: better and
more streamlined regulations; improved trade policy; a more competitive tax
system; an integrated approach to transportation policy; and, of course, more
money. The Minister has put out the challenge to everyone when he poses two
key questions: "What role does policy play in responding to these challenges?
And, what can government do to help?" The ACPA has worked hard to help
provide some of the answers.
The Numbers Speak for Themselves
Transport Canada's Millennium Transportation Conference noted that:
Transportation has always been critical to the development and growth
of Canada and the Canadian economy.... In the recent past, the
transportation sector has been the subject of sweeping reforms in terms
of privatization, commercialization, de-regulation and subsidy reduction.
It would not be an exaggeration to say that the transportation system in
Canada has undergone a 'quiet revolution'. We are now going through a
period of transition where the focus of public policy in transportation
will need to shift to address the adjustments that might be required as a
result of the reforms that we have put in place in the recent past and to
cope with new challenges in the context of globalization ... globalization
will force all of us to do things better; at the same time, it is a constraint
on what we can do.
Transportation, including all facets of maritime transportation, is indeed, in
transition. It is encouraging to see the forgoing words, put in writing by Transport
Canada. It is now incumbent upon on all in the marine community to ensure that
it helps shape public policy that will determine the way it does business for years
to come. Ports cannot simply concern itself with the shape of marine public
policy because the intermodal dependence is quickly increasing as trade
increases; and as new technology is applied to business-to-business
transactions.
At the recent Transportation Week held in Windsor, it was accurately noted that
"The connection with other modes of transportation generally happens at our
Nation’s ports. Trucks and rail meet marine at these central locations and carry
all manner of goods in an efficient and economical transportation system." The
importance of water borne trade continues into this millennium as more than half
the value of Canada’s overseas trade depends on, and flows through Canada’s
port communities. Public policy in all its forms will factor greatly in the way ports
compete. This points to the need for a comprehensive national transportation.policy and the CTA Review Panel has a unique opportunity to be a catalyst for
this necessary initiative.
The Transportation in Canada 1999 Annual Report contains relevant statistics
which show the importance of Canada's ports to Canada's growing trade
numbers. In 1998, marine freight traffic in Canada totaled 329.7 million tonnes.
When considering the movement of goods in, out, and around Canada by water,
freight traffic has three components - domestic movements between Canadian
ports; trans-border trade with the US; and international/overseas traffic.
Between 1988 and 1998, Canada’s marine traffic with the US increased by 19%
to 100 million tonnes. In 1998, LOADINGS at Canadian ports destined to the US
amounted to 59 million tonnes, up 3.5 per cent from 1997. UNLOADINGS at
Canadian ports of shipments originating in the US rose from 37 million tonnes in
1997 to 41 million tonnes in 1988, a 10 per cent increase. There were two main
corridors in 1998: from the (Canadian Atlantic) to the (US Atlantic) with 42 per
cent of total loadings to the US; and from the (Canadian Great Lakes) to (US
Great Lakes Ports), with 23 per cent of total loadings. Indicators from last year
show that for the first time, Canada/US marine trade will be greater than internal,
domestic movements and all arrows are pointing upward for the future. How far
upward will depend on the things we do in Canada to facilitate increased trade
around the world.
The value of Canadian INTERNATIONAL marine trade in 1998 reached 279.6
million tonnes of international cargo volume which was 1.1 percent LESS than
the record quantity handled in 1997. The total monetary value was in the order
of $79.7 billion (excluding shipments by U.S. ports) which was 5.2 per cent LESS
than in 1997. Marine exports were valued at $41 billion and imports at $39
billion. The value of exports DECREASED by 11 percent, caused by reduced
cargoes bound for Asia and Oceania, the Middle East and South America. The
value of marine imports INCREASED by 2 percent. Of all the international
tonnage handled at Canadian ports, 64 per cent is export-oriented.
This trade is vital to the economic prosperity of communities across Canada.
What happens in the United States and with our main trading partners
internationally greatly influences the competitiveness of marine trade. By
comparison, domestic flows accounts for only 47 million tonnes of cargo traffic.
The majority of domestic marine movements (62%) in Canada takes place in the
Great Lakes-St. Lawrence Waterway with the West Coast handling 25% and
Atlantic ports seeing a little more than 11% moving over their docks.
In terms of the modal split, trucking and rail were the main modes of
transportation for transborder trade. In 1998, the trucking mode dominated
Canada's trade with the US, at 63 per cent of exports and 80 per cent of imports.
This is followed by rail, at 21 per cent of exports and 9 per cent of imports. From
1992 to 1998, the trucking and air modes registered a slight increase in their
shares (mainly in exports), while rail and marine experienced a DECLINE, both
growing at a slower pace than trucking and air..The port community must be vigilant and recognizes the importance of its role in
the continuing prosperity of Canada due to this burgeoning trade. As such it
must be mindful of its role in helping shape public policy in critical economic
areas such as: grain reform; rail policy and mergers; road and other
infrastructure development policy; tax policy; trade policy; environmental policy;
and the list goes on. The way in which some of these issues are resolved in the
coming months will directly impact the competitiveness of Canadian ports. Many
of these issues cannot be resolved in isolation, but must be looked at through
the prism of a national transportation policy.
The port community has not shirked its responsibility in this regard and has
struck a Competitiveness Review Task Force in anticipation of an early review of
the Canada Marine Act. Senior representatives of Canadian ports have already
dedicated much time and effort to the critical issues that will make ports more
competitive and this effort will only increase in the months ahead. As the
Minister of Transport noted in a number of speeches in recent months, we must
get down to business and fix what we need to fix in the realm of public policy for
the short- and long-term. The port community says: the sooner the better!
The U.S. Approach
You can't 'sleep' next to the elephant; the operative word is 'sleep'. The United
States is Canada's largest trading partner with over $1.4 billion in two-way trade
each day. Canada is the number one trading partner of 35 US states and the
number two for the other 15; 90 per cent of Canada's population live within 100
miles of the Canadian border; we all share in the economic boom being
experienced by the US; we all know that the US has a more attractive tax
environment for both individuals and corporations; and, it has a more free market
economy relying less on government regulation than Canada. For these and
many other reasons Canadians cannot sleep living in the shadow of this huge
elephant. We must ask - and be prepared to answer - how does US marine
policy impact the competitiveness of Canadian ports?
In its Report to Congress last September, the US Secretary of Transportation
noted that, "...this nation was built on its waterways and ports. So we must
make certain they are ready to compete, and win, in the global economy of the
21st century.... Our waterways, ports, and their intermodal connections must
meet the needs of a wide range of users. They must fulfill the public's
expectations." The volume of business handled by US ports exceed 2 billion
tonnes of foreign and domestic cargo. The top 50 ports handled 82 percent of
the cargo.
Even though highly concentrated, 148 ports still handled in excess of 1 million
tonnes of cargo. How much of that could have been handled by competing
Canadian ports? That is the unanswered question for Canadian ports and
whatever the answer there needs to be a competitive strategy to effectively
compete for - and win - more business for Canadian ports. This potential.business in the US, in addition to growing world trade in general of approximately
4 per cent annually, represents great opportunity for our ports in the future. The
future looks bright if we can ensure our regulatory house is in order to enable
ports to capture some of that business.
Due largely to the Canadian dollar, direct foreign investment in Canada is
skyrocketing and this too will give rise to the demand for multinational companies
to move its product worldwide. A recent Statistics Canada report on
Multinationals and the Canadian Innovation Process, revealed that as Canadian
companies become multinational they tend to become much more innovative.
That's simply because they have to be innovative if they wish to survive in an
intensely competitive global economy.
It is interesting to note the pivotal role government policies have played in
shaping many of Canada's leading multinationals in the past. Magna
International has prospered as a direct result of the Canada-US auto pact, which
required Canadian content in cars manufactured here. CAE Inc. got its start in
the flight-simulation business through a military-offset program. Bombardier Inc.
is a leading manufacturer of aircraft today because the Canadian government, at
great expense, kept Canadian and de Havilland Aircraft going after their foreign
owners wanted to close down operations. And Nortel Networks benefited from
Canadian regulatory policies and access to government research. What
governments do in the realm of public policy does impact the way we do
business in this country. The marine transportation sector now needs a similar
public policy push to bring it into the 21st century as a raging Tiger, ready to
compete. This push can only come from a comprehensive transportation policy.
Ports in particular have a real challenge. While other modes are increasing in
the share of the trade pie, loadings handled at ports are trending down for
international trade, that is, others are increasing at a faster rate. The US
government has embarked on an aggressive transportation renewal project that
is well underway and that will only increase the competitiveness of US ports.
Already, Canadian ports are hampered by cumbersome regulations, including a
heavy tax burden that will likely get even heavier. US ports do not have to
contend with gripping regulations, nor a grabbing tax regime. Furthermore, some
US ports are even in the unique position of being able to levy taxes similar to the
taxes now levied by airports in Canada. An overpowering regulatory system,
combined with a punishing tax regime, have placed Canadian ports at a
disadvantage with U.S. ports. The federal government needs to be made fully
aware of this uneven playing field as it works toward making the Canadian
transportation system - in particular Canadian ports - more competitive for the
21st century.
Strong US maritime policy is right around the corner and it will have an
immediate and direct impact on our ports. The United States has engaged in a
comprehensive study of its Marine Transportation System and it is not sleeping
when it comes to stronger public policy initiatives to ensure that it does not lose
market share in key sectors. Canada needs to get its initiatives in line with US.policies if all modes of transportation in this country are to remain competitive
and continue to grow in step with that of the US - and the world.
III. KEY PORT ISSUES
The comments made with respect to public policy decisions - or the lack thereof -is
not meant to slight public officials in the conduct of their duty, but to indicate to
public officials that the port sector is aware of certain deficiencies and wants to
work hard to correct them. As the Minister of Transport noted in a recent speech
in Windsor during Transportation Week: "I'm going to listen carefully ... as we
begin shaping the transportation agenda for the medium and long-term." The
port community is taking every means at its disposal to act responsibly and to
provide constructive input into public policy because the future depends on it.
Some of the critical factors impacting port competitiveness include:
•efficiency of port operations
•competitiveness of other modes of transportation
•competitiveness of US ports
•impacts of globalization
•public policy decisions related to ports
•public policy decisions related to other modes of transportation
•general economic and tax policy; and
•the regulatory framework for transportation modes in Canada
These issues - and others - will have to be dealt with, head on, as the port
community strives to compete, and win!
International and Interprovincial Trade
As a relatively small economy, Canada relies on foreign markets for its
prosperity. Trade allows Canadian firms to expand their businesses beyond the
national market, while giving Canadians access to the world's products and
services on the best terms. This fact of life directly challenges Canadian
businesses because "when we trade with other countries, we are obliged to
become more competitive." Given the fact that our Canadian market is only 2 per
cent of the global gross domestic product, we have to trade to gain access to the
economies of scale and scope that underlie competitiveness. We compete
when we trade and we trade to be able to compete. Nothing more, nothing less.
It is because of this that Canada is the largest per capita international trader of
the G-7countries and is one of the most open countries in the world. This also
means that we are most exposed to market forces and public policy in other
countries when it comes to our ability to compete, especially the US.
When one looks at the tremendous impact of the FTA on exports, one sees that
Canada reached the $100 billion milestone in exports 10 years ago (taking over
100 years to do so). In the short 10 years since the FTA that number has more.than doubled to a record level of $286.8 billion in 1999. Imports from the US in
the same year reached $215.1 billion which equates to over $1.4 billion a day in
two-way trade. What will happen in the next 10 years? Good question!
Whatever happens transportation policy will be critical.
International trade (trade other than with the US) declined slightly in 1998 from
what it was in 1997 due to competition from other modes. Marine and air were
the primary modes used in trade with countries other than the US. From 1992 to
1998 marine's share declined in both exports and imports. Over the same period,
air's share grew from 16 to 19 per cent in exports, and from 15 to 22 per cent in
imports. This trend reflects the increasing trade in high-valued commodities
such as electronic and telecommunications equipment. Air imports in electronic
and electric machinery/equipment grew at an average annual rate of 28 per cent,
jumping from $1.2 billion to $5.2 billion in value.
What governments and industry stakeholders do in the short-term will dictate the
kind of growth Canadian companies and, by extension, Canadian ports will have
over the longer term. A trade agreement is not a guarantee of increased trade.
There is an important role for government to play in creating a welcoming
environment for business. For example, there must be better trade rules in
Canada's Agreement on Internal Trade. Currently, interprovincial trade barriers
are estimated to impose an annual cost of $7 billion on the Canadian economy.
This is why Canada's trade is shifting and continues to shift from east-west to
north-south, with a full 20 per cent more trade internationally than domestically.
International trade now makes up a whopping 40 per cent of GDP in Canada.
The Global Competitiveness Report completed in 1997 placed Canada fourth
overall in the international ranking on competitiveness. However, Canada cannot
rest on its laurels given the rapid development of the marketplace to a
knowledge-based economy. It is widely recognized that our regulatory and
competition frameworks must change and adapt to the ever changing
circumstances. Commenting on the international dimension of transportation the
Minister of Transport noted that "these initiatives go far beyond our domestic
trade — shipping, by its very nature, is an international activity, and any changes
we make to how our goods move must be done with a view to enhancing
Canada’s ability to compete in the global context." The information technology
world is changing at the 'speed of thought' and no one is certain the kinds of
impacts it will have on economies around the world. All that is certain is that it
will have a dramatic impact in the way we conduct business in the transportation
sector.
Sound Information is Necessary for Effective Transportation Policy
In a recent analysis of its information requirements related to marine policy
issues under the heading: "Examples of unsatisfied data needs arising from
current policy analyses," Transport Canada noted the following deficiencies in its
information banks:.Competitiveness of Canadian ports:
•shares of traffic handled by specific Canadian ports vs competing ports, by
market - i.e.commodity/ultimate
•freight flows by mode and routing, including intermodal transfers;
•relative prices for complete O-D movements in those markets using Canadian
and competing ports; relative user fees (including pilotage); relative productivity;
relative tax treatment;
relative subsidies.
Competitiveness of St Lawrence Seaway:
•shares of relevant commodity/O-D markets, compared to other modes and
intermodal movements;
•relative prices for complete O-D movements in those markets using Seaway
and alternative routes/modes;
•trends in Seaway productivity.
Development of intermodal freight traffic:
•commodity O-D flows by mode, including intermodal transfers.
Speaking to the recent assembly of the Canadian Industrial Transportation
Association, the Minister of Transport implied that efforts were under way to
address the deficiency of information when he said: "To better understand
where we can make improvements, Transport Canada is co-sponsoring — along
with the provinces — regional freight studies that include a multi-modal overview
of how our freight moves. These studies make a crucial point — that
transportation is more than the sum of its parts." The port community says the
sooner we get better information, the sooner we get better public policy related to
ports and transportation in general. The federal Government must give priority to
ensuring there is an effective data base on which to make future public policy
decisions related to transportation policy in Canada.
With this noted information deficiency, it is also interesting to note that the House
of Commons Standing Committee on Industry released a report in the Spring on
Canada's competitiveness and productivity stating: "The Committee's primary
objective is to provide the Government of Canada with guidance on industrial
policies that will boost the nation's productivity, innovation and international
competitiveness." The Committee's report provides an overview of productivity
and competitiveness in Canada by sector, including: agriculture; forestry; mining;
oil and gas; petroleum products; shipbuilding, automotive and aerospace
manufacturing; information and communications technologies; and
biotechnology. It is obvious that the increasing competitiveness of all those
sectors will contribute to the bottom line of transportation policy. The Committee
also notes that "...the industrious character of the United States provides a
perennial source of rivalry that challenges Canadian industry and spurs it.forward." This is no surprise to Canadian ports who must compete with US ports
regularly!
Anyone involved in the crafting of public policy would do well to heed the words
of Jayson Myers, Senior Vice-President of the Alliance of Manufacturers and
Exporters of Canada when he says of Canadian competitiveness: "Number one
is driving to greater cost-efficiency. This means that companies are aiming to
reduce all forms of overhead... contracting out goods and services that can be
provided at less expense, they're automating their systems; they're reducing
waste ... " It was encouraging to see that a recent decision by the Government
of Canada on commercial rents recognized the need for ports to act in a truly
commercial manner, in a highly competitive market. Canadian ports are
becoming ever mindful of these global challenges and must continue to
streamline operations and use sound business practices to be truly competitive.
IV. KEY DETERMINANTS OF CANADA'S TRANSPORTATION POLICY
The port community strongly believes that an early review of the Canada Marine
Act will be the single most important initiative that will contribute significantly to
the competitiveness of Canadian Port Authorities for years to come. There are a
number of specific issues under the purview of the CMA that must be addressed
post haste, such as: real property issues; gross revenue charges; payments in
lieu of taxes; corporate governance; management regulations; debt issues; and
others. In addition to these specific issues there are a number of national public
policy issues that will also directly impact the competitiveness of Canadian ports
as noted above, and specifically include the following:
Better Canada-US Border Crossings: New technologies to fast-track freight
across the Canada-US border are in the works. The key competitive issue is
NOT to delay in its implementation.
Monetary Policy: The evidence suggests that currency depreciation in the
context of a floating exchange rate is an effective strategy for promoting
competitiveness. However, many argue that a low Canadian dollar has lead to
low productivity and spawned lazy Canadian businesses. The key question is
what would happen to the competitiveness of some of our ports if the Canadian
dollar when to .90 cents or greater tomorrow? Can we wait until that happens.
The answer is no!
Reforming Canada's Financial Services Sector: The federal government has
proposed new legislation which will lead to a more sound, stable and competitive
financial service sector that would, in turn, lead to an efficient transfer of private
savings to the corporate sector for investment purposes. More money for
investment in Canadian ports is a good thing, as long as ports are permitted to
borrow what they need to invest..Corporate Taxation: The corporate tax structure has been identified as the
WEAKEST link in our entire tax system . There are two basic problems with the
current corporate tax structure: (1) there is not a level playing field between
sectors; and (2) the tax rates are too high relative to those of our chief competitor
country, the US. The capital gains tax rate is much higher in Canada for both
corporations and individuals. This directly impacts a companies ability to
compete with U.S. companies.
Productivity and Competitiveness Report: This comprehensive Industry
Standing Committee report focused on the relationship between productivity and
the competitiveness of the Canadian business sector. The Report contained
many recommendations which, if accepted, will enhance the competitiveness of
Canadian businesses, including ports.
Cost-Recovery: In June the Finance Standing Committee issued its formal and
comprehensive report on cost recovery. It noted that "since the implementation
of this policy (in 1994) dissatisfaction has only increased." No wonder when one
considers that the federal government now raises over $6 billion in revenue
annually from user fees. The ports are subject to a number of user fees for
which it receives NO service. It is interesting to note that in its Report the
Standing Committee singled out a case study related to the Canadian Coast
Guard fees to make its point.
Strong Intermodal Systems: In Canada, we already have an extensive system
in place to move freight intermodally. Increased innovation strengthens
competitiveness; the more the better.
ITS Technology: Transport Canada is developing a strategy to promote the
deployment of ITS across all modes of transportation in Canada. Priority must
be given to this important technology initiative to enhance competitiveness.
Infrastructure: As noted earlier, in Canada we’re seeing the dramatic difference
NAFTA is making. Statistics show that this continental relationship translates into
an exchange of over $1.4 billion each day between Canada and the U.S. (the
Prime Minister likes to say a million a minute!) — a number that is expected to
rise substantially over the next ten years. The key to deriving the maximum
benefit from this new north–south orientation is our transportation infrastructure.
In fiscal 1998/99 total annual government spending on transportation was $15.7
billion. Provincial governments spent $7.9 billion. While both are impressive
amounts the question is how much is enough and what is the total requirement
for transportation infrastructure to ensure the competitiveness of all modes of
transportation? In this case more is better for improved competitiveness of all
modes of transportation, including ports.
Trade and Transportation Corridors: The strategic development of trade and
transportation corridors is one way to promote Canada’s transportation
advantage and keep our freight moving expeditiously and smoothly throughout
the continent. Transport Canada is actively involved in the Interdepartmental.Working Group on Trade Corridors, which co-ordinates federal initiatives
affecting corridors, and consults with both provinces and industry on related
issues. Again, the sooner the better.
Harmonization: Developing trade corridors also means making Canadian
processes, regulations and standards compatible with those of our
trade partners. The federal government has also been active on the Land
Transport Standards Subcommittee to promote greater compatibility of
standards among our three nations. This initiative has the potential to be one of
the most important initiatives for the marine sector and the port community will
have to become more involved in the discussions on increased harmonization.
Safety and the Environment: Developing and enhancing Canada’s
transportation safety practices through various activities and comprehensive
programs is a fundamental activity for Transport Canada. It is important to have
a realistic legislative and regulatory regime in place, one that does not place
increased burdens on intermodal transportation in Canada while at the same
time maintaining safety.
Sustainable Transportation: The Government of Canada has made
environmental sustainability a high priority. There are a number of ongoing
initiatives that will directly impact the port community including the new Species
at Risk Act; recent amendments to the Canadian Environmental Assessment
Act; amendments to the Marine Liability Act; the Canadian Environmental
Protection Act; new guidelines for ballast water management; and the list goes
on. It is incumbent upon government to fully consider the business impact of
regulations flowing from such regulatory activity, with a view to minimizing the
disruption to competitiveness of ports and other sectors. It must be recognized
that shipping represents one of the most - if not the most - environmentally
friendly modes of transportation.
V. CRITICS OF CANADIAN TRANSPORTATION POLICY
It is clear from the above that a number of things have to be done to make
Canadian ports more competitive. The solutions are not all simple. Since the
ACPA has outlined a number of the ongoing initiatives of government and
posited some of the views of the port community for consideration by
government, it is necessary to give the 'other view' of Canada's national
transportation system. A number of academics and opposition politicians have
argued that Canada must have a formal, national transportation policy in order to
compete.
On May 30, 2000 the Conservative Party's Transportation Critic introduced a
supply motion in the House of Commons: "That this House recognize the urgent
need to address the serious transportation problems facing the Canadian people
and calls upon the government to immediately establish a comprehensive
national transportation policy that demonstrates leadership on this issue and.which provides solutions to the problems shared coast to coast by all
Canadians." Others have argued vehemently that the federal government cuts
to transfer payments have contributed to the provinces' inability to do road repair
and maintenance. Furthermore, a decrease in rail service has added a further
strain on our highways infrastructure and traffic flow.
Many have argued that we are not seeing a strong commitment to upgrading our
transportation system like that of the US. In fact, in his 1998 Report to
Parliament the Auditor General noted that the federal government had poorly
managed the federal-provincial agreements related to transportation. The
Auditor General stated that: "These agreements were poorly enforced and
monitored... and that he was concerned that Transport Canada has not done
much of what it was supposed to do under the terms of the 24 highway cost-sharing
agreements it signed." These programs have now disappeared.
Opponents of current transportation policy have pointed out a view held by many
that Canada, perhaps more than any other country, needs a transportation policy
due to our size and population distribution. We want to grow. We want to
compete. We want to be in the global market, but we cannot be a true competitor
without a transportation policy which aligns all the transportation modes. It is
argued that provincial governments, shippers, manufacturers, producers and
others need to have a clear vision of where the country is going on transportation
policy in order to develop their business plans.
The port community - via the ACPA , other associations, and individually - is
working tirelessly with government to have input into all these weighty public
policy issues. As the Minister of Transport recently noted: "We must constantly
remind ourselves — whatever mode we’re involved in — that with the increasing
levels of freight and trade activity we’re experiencing, the company that can ship
goods in the most efficient and cost-effective manner is the one that will get the
business over the long haul. Using the best possible combination of modes is
key to meeting the rising demands of our customers to provide "just-in-time"
service.'" The ports must not - will not - be left on the sidelines when matters of
important public policy are debated.
VI. RECOMMENDATIONS
1. There is a need for a comprehensive national transportation policy in
Canada. Once again this CTA Review is focusing on one segment of the
transportation system. This cannot lead to a cohesive plan that
encompasses all modes and their interrelated impacts. The Canadian
government must take a hard look at where trade is headed; Canada's
role in international trade vis-a-vis transportation; and how all modes are
to be treated in this review.
2. Government must view transportation infrastructure as an 'investment'
rather than a 'cost'. The United States has taken an aggressive.approach to investing in its transportation system. How can Canada
compete if the US is way out ahead of Canada on transportation policy?
The Canadian Government must recognize that transportation
infrastructure is an engine of growth for the economy and is vital to the
country's ability to compete globally.
3. We must have a 'level playing field' with our international competitors. If
Canada is not competitive we will lose business to US and other
competitors due to their more streamlined transportation system and
higher investment ratio.
4. Canada must now consider new low-cost financing mechanisms for
transportation infrastructure. Canada needs to consider providing
access to revenue bonds or interest-free bonds that would permit key
sectors to build and maintain transportation infrastructure to enhance
competitiveness.
5. The federal Government must undertake a comprehensive review of the
Canada Marine Act (CMA) as part of the overall focus on renewing
transportation policy in Canada. The CMA is flawed in a number of
critical areas and is preventing Canadian ports from competing on a
level playing field with other countries, especially the US.
CONCLUSION
Much of what is outlined above - while not exhaustive - points to the need for
more COORDINATION in transportation policy and KEY initiatives that need to
be taken . Clearly, many good things are being done and many good things are
in the planning stages. What the CTA Panel can do now is to use its mandate to
review transportation policy in Canada and be the catalyst for real change in
transportation policy. We can no longer take a piecemeal approach to
transportation policy for practical reasons: as all modes of transportation are
obviously interconnected; ongoing developments in information technology; and
most importantly, continued global competition. All of this points to the need for
a seamless, national transportation policy for Canada.