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PORT DIVESTITURE PROGRAM
The National Marine Policy, announced in December 1995, outlines the Government
of Canada’s intent to modernize Canada’s marine transportation system. One
initiative within this policy framework is the Port Divestiture Program, under
which Transport Canada transfers the ownership and operation of regional/local
ports and harbour beds to provincial or local interests.
As of March 31, 2005, Transport Canada had transferred, deproclaimed or
terminated its interest at 466 of the 549 sites identified at the outset of the
program and, in the process, has saved Canadian taxpayers more than $200 million
in operating, maintenance and other expenses directly related to the operation
of public ports. The program ended on March 31, 2006 and Transport Canada is
presently reviewing the future management of the regional and local ports
remaining under its administration and control.
The public port system supports the safe and efficient movement of vessels and
cargo and is integral to regional economic prosperity. Transferring
regional/local ports to local interests places decision-making responsibilities
in the hands of those best able to gauge local requirements. This allows for a
more effective and efficient port system with local accountability. The new
owners have the same rights and obligations of any property owner and are
subject to all applicable legislation.
Under the Port Divestiture Program, regional/local ports, including harbour
beds, owned by Transport Canada are first offered to other departments within
the Government of Canada and then to the provinces. If the province is not
interested in acquiring these facilities, Transport Canada then seeks
expressions of interest from local stakeholders, including municipalities. A
public tender may be used as a final option in the event that no expressions of
interest are received.
The Port Divestiture Fund was created to ease the transfer process. The fund
provides an incentive to local interests to assume ownership of the facilities
and to give operators flexibility to operate within the local business
environment. Contributions from the fund must be applied to eligible
expenditures directly related to the operation of the port or to eligible
capital projects designed to bring existing port property up to minimum safety
or operating standards.
Audits of contribution agreements help safeguard the efficiency and
effectiveness of the Port Divestiture Program. For each year of a contribution
agreement, the port operator must provide the Minister with evidence certifying
that the contribution funds have been applied to eligible expenditures directly
related to port operations. In addition, a port operator’s books and records
must be open for audit and inspection at the discretion of the Minister of
Transport, a requirement that continues for six years after the end of the
contribution agreement. The transfer documents also provide for the full
repayment of the contribution in certain instances, such as if the port operator
ceases to operate the port. Under the National Marine Policy, the vast majority of ports in Canada were
classified as regional/local. However, the policy also includes two other
categories not covered by the port divestiture program:
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Canada Port Authorities (CPAs): These 19 ports are vital to domestic and
international trade, financially self-sufficient and independently managed by
boards of directors nominated by user groups and various levels of government.
CPAs are governed by the Canada Marine Act (CMA), which enables them to operate
in a more commercial, efficient and timely manner.
- Remote ports: These 26 ports serve basic transportation needs of isolated
communities and rely on the presence of an existing Transport Canada wharf
structure. Remote ports will continue to be operated by Transport Canada unless
local groups express an interest in acquiring them.
While Transport Canada is transferring its property interests in the case of
regional/local ports, the Government of Canada retains jurisdiction over lawful
navigation on the water. As a result, the need for ships to obey all applicable
federal statutes such as the Canada Shipping Act remains unaffected.
July 2006
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