Submission to the Transportation Committee of the House of Commons

February 5, 2008

By Brian Iler, Lawyer and Past Commodore of Alexandra Yacht Club, Toronto

I appear before you today as a resident of Toronto, a lawyer, and an active recreational user of Toronto’s waterfront – a sailor and Past Commodore of Alexandra Yacht Club, Toronto.

Mr. Freeman has outlined some of the history, and consequences, of the unfortunate last-minute decision in 1998 to include Toronto’s port in the list of those ports of “strategic significance to Canada’s trade” in the Schedule to the Canada Marine Act.

He has also demonstrated, in the Community AIR brief, the dire effects that decision has had on Toronto and its waterfront.

I will speak to some of the governance issues that have arisen from that decision.

Mandated Criteria for Ports

As you are aware, s. 8(1) of the Canada Marine Act sets out the criteria for a port to be subject to the Port Authority regime: that it

“(a) is, and is likely to remain, financially self-sufficient;

(b) is of strategic significance to Canada’s trade;… and

(d) has diversified traffic.”

 The Port of Toronto satisfies none of these criteria, and never has.

Ports are to be “of strategic significance to Canada’s trade”

Toronto handled only 0.4% of the 2003 total cargo volume through ports in Canada. Most of  this volume relates to bulk loads delivered directly to private shippers’ wharves – sugar, salt, and gravel.

Although there many shipping containers stacked in Toronto’s port, The CEO of the Port Authority admitted at its 2006 AGM that none had arrived by ship, and none left by ship .

Ports are to be Self-sufficient

The Port Authority has never achieved self-sufficiency.

Its last annual financial statements, for the period ending December 31, 2006, indicated a net loss for the year of $4,610,000 (2005: $3,366,000), on income of only $9,913,000 (2005: $9,686,000). These losses were incurred from the actual operation of the port, and from the Toronto Port Authority’s airport operation. Losses of this magnitude have been consistently incurred every year since the Toronto Port Authority was established.

Losses Funded by Taxpayers

As these losses are funded from public assets, the result is an effective subsidy of the private businesses using the port, and operating out of the airport. This is contrary to the intention underlying the Canada Marine Act, and a serious misuse of public funds.

The Port Authority has only able to continue in business through stratagems directed at generating direct or indirect taxpayer subsidies, primarily from the City of Toronto, which has always been fundamentally opposed to the Port Authority’s existence, and recently, from the $35 million paid to it by the federal government in 2005.

Why does Toronto have a Port Authority?

I ask the committee – if the Port of Toronto is not “of strategic significance to Canada’s trade”, and has been unable throughout its entire existence to come close to the required self-sufficiency, why should it continue to be governed by the Act you are reviewing today?

Governance and Accountability Problems

Because Port Authorities are intended to be only for ports “of strategic significance to Canada’s trade”, the governance structure established for Port Authorities under the Act reflects that national interest – of the seven directors of the Toronto Port Authority, five are appointed by the federal government, and one each from the City of Toronto, and the Ontario government. That degree of federal control makes sense from a governance perspective only  where that strategic significance exists, and where that might justify a resultant disregard for more local concerns.

In the absence of that strategic significance, that overwhelming control of the TPA board by the federal appointees creates potential for serious accountability problems – if there is no national interest to respond to, and local interests are not incorporated effectively into the governance structure, the potential for an utter lack of accountability is created. That potential has been realized in spades, in Toronto.

Absence of Representatives of Port Users Exacerbates the Problem

This potential problem of lack of accountability to local interests is addressed, even where that strategic significance exists, by the explicit obligation placed on the Minister of Transport to appoint, as four of his five appointees, representatives of port user groups as defined in the Letters Patent of the Port Authority. These representatives are to be identified through consultation with those user groups.

However, for Toronto, even that potential for accountability has been ignored by the current government – to the best of our knowledge, none of the appointees are in any  way representative of port user groups. Most have, as one of their qualifications, some connection to the Conservative Party.

First Step toward Resolution – Amendment Proposed

In my view, as a first step in addressing the ongoing lack of accountability of the TPA is to allow the citizens of Toronto to regain control over their Port, and the Toronto Port Authority, by amending the Act to allow a majority of its directors to be appointed by the City of Toronto.

I therefore propose, for your committee’s consideration, an amendment to the Canada Marine Act, the following:

1. Revise s. 8(2)(f): to read:

Subject to s. 8(2)(f.1) the number of directors, between seven and eleven, to be appointed under section 14, to be chosen as follows:…

1. Insert a new s. 8(2)(f.1) to read

The number of directors of the Toronto Port Authority shall be seven, to be appointed under section 14, to be chosen as follows:

1. one individual nominated by the Minister,
2. five individuals appointed by the City of Toronto, and
3. one individual appointed by the Province of Ontario