9

TRANSPORTATION INFRASTRUCTURE

Marine Transportation Infrastructure

Ports and Harbours

Canada's ports and harbours play a crucial role in linking economic activities to markets that otherwise would not be accessible. Canada's major ports are vital gateways in the national transportation system. Their links with the railway and road systems are essential for transporting both exported and imported goods, especially goods that are going to or coming from other continents. The major ports are also important in sustaining employment; generating local economic activities; providing local people with access to essential resupply services; and assisting with activities related to business or pleasure travel.

Ports are supported by infrastructure, such as marine terminals, that is directly related to the type of traffic they handle (e.g. facilities and organizations related to the loading and unloading of vessels berthed at the wharf). Port Authorities operate some of these marine terminals but, often they are owned and operated by independent companies renting space from the port.

Canada's Port and Harbours System

In December 1995, with the announcement of the National Marine Policy, Canada's ports system began a process of reorganization. The federal government moved out of the direct operation of ports, giving local users more say in port services. The National Marine Policy was implemented under the Canada Marine Act, which received Royal Assent on June 11, 1998. The policy calls for three categories of ports: (1) Canada Port Authorities, (2) regional/local ports and (3) remote ports.

The Canada Marine Act has created a National Ports System made up of independently managed Canada Port Authorities (CPAs). The authorities are considered self-sufficient ports that are critical to domestic and international trade. They include former Ports Canada local port corporations, most of the former Canada Ports Corporation's major divisional ports, and most former harbour commissions. On May 1, 2001, the Hamilton Port Authority was established, bringing the total number of CPAs to 19 designated ports. In addition, the Minister has approved the initiation of the CPA implementation process for the Oshawa Harbour Commission. The Port of Oshawa is expected to complete the letters patent process and receive Canada Port Authority status in 2002.

Further details about this reorganization can be found in previous annual reports, accessible on the Transport Canada Web site at http://www.tc.gc.ca/pol/en/anre/transportation_annual_report.htm. A status report on the divestiture of ports by the federal government can be found at www.tc.gc.ca/programs/ports/menu.htm.

A review of the Canada Marine Act is mandated under section 144 of the Act to be completed by the Minister during the fifth year after the Act was granted assent. As a result, a review of the Act must be completed by June 2003, and a report of the findings must be presented to each House of Parliament. The review of the CMA will commence in 2002.

Transport Canada's operational role in Canada's National Ports System includes enforcing regulations for public port and public port facility use, monitoring port operations, and collecting user fees. Port services, such as cargo handling, are supplied by the private sector.

Transport Canada began commercializing its public ports in April 1996 within the appropriate statutory framework. Under the National Marine Policy, regional/ local ports are being transferred to other federal departments, provincial governments, municipal authorities, community organizations or private interests over a six-year period scheduled to end on March 31, 2002. Public ports are also being deproclaimed once Transport Canada has relinquished the last of its ownership interests, including the harbour beds, as appropriate, to a new owner. Once a public port has been deproclaimed, Transport Canada no longer has the authority to regulate activities in these waters. Therefore, federally appointed harbour masters, whose prime responsibilities are to administer public port regulations, will be removed once the ports are deproclaimed.

By the end of December 2001, 420 of the 549 public ports and port facilities that were under Transport Canada's control and administration before the National Marine Policy came into force had been transferred, deproclaimed or demolished, or had Transport Canada's interests terminated. As of December 31, 2001, 129 regional/local and remote ports and port facilities remained under Transport Canada control, 19 sites where facilities have been divested, remain to be deproclaimed because the harbour bed has not yet been divested.

Table 9-9 summarizes the classification of major ports and harbours as of December 31, 2001.

Table 9-10 summarizes the provincial distribution of the ports administered by Transport Canada from 1995 to 2001.

As of December 31, 2001, 188 public ports and public port facilities have been transferred, 39 to provincial governments, 64 to other federal departments, and 85 to local interests. Of the 188 sites, 19 did not yet have their public port status deproclaimed. In addition 21 sites have either been demolished or have had Transport Canada's interest terminated (through lease or licence terminations).

On the whole, 262 public ports have been deproclaimed. Archival research identified an additional 26 harbours (in addition to the original 549 port sites identified in the National Marine Policy), 25 of which were adjacent to port facilities already transferred.

The federal government will continue to maintain remote ports that serve the basic transportation needs of isolated communities, unless local interests express a willingness to assume ownership of them. While no remote ports were divested in 2001, 27 remote ports have been divested since 1996. As a result, Transport Canada continues to administer 34 remote ports nation-wide (ten in Quebec, three in Ontario, one in Manitoba and twenty in British Columbia).

Table 9-11 shows the divestiture status of regional/local and remote ports as well as the number of ports remaining, on a regional basis.

At the end of 2001, there were 164 other ports in Canada, including 82 private, 41 provincial and 41 municipal ports. These include sites such as Port Cartier, Quebec, and Nanticoke, Ontario, used to ship large volumes of cargo; and Quyon, Quebec, used for an interprovincial ferry service on the Ottawa River.

Financial Performance

Audited financial statements for 2001 were not available for this report. Consequently, results for 2000 are provided for the 18 ports designated as Canada Port Authorities (CPAs) as of December 31, 2000.

Table 9-12 shows revenues, expenses and some key ratios for Canada Port Authorities in 2000. In that year, the CPAs posted total revenues of $256.2 million, with a net income of $34.2 million and an operating cash flow of $92.4 million. Among the 18 designated CPAs, Vancouver and Montreal accounted for approximately 58 per cent of total revenues generated. Four CPAs accounted for 64 per cent of total cargo, by volume: Vancouver handled 34 per cent, while Montreal, Saint John and Sept-les each handled ten per cent.

The overall operating ratio for the Canada Port Authorities was approximately 84 per cent in 2000, with the individual ratios ranging from 60 to 136 per cent. The return on assets was three per cent in 2000. Saguenay had the highest return on assets (21.4 per cent), followed by Trois-RiviËres (16.7 per cent) and Quebec City (6.8 per cent).

Table 9-13 shows revenues, expenses and net incomes of all the Harbour Commissions and Ports Canada ports from 1996 to 2000, while Table 9-14 compares revenues, expenses and net incomes of all ports that have CPA status as of December 31, 1999, and 2000, respectively.

At first glance, the figures in Table 9-13 indicate that the total operating revenues jumped from $238 million in 1999 to more than $256 million in 2000, while expenditures rose by $6.3 million, a situation partly attributable to Belledune gaining CPA status in 2000. In comparing the same ports in 1999 to 2000, Table 9-14 shows that revenues increased from approximately $244 million to $256 million, or five per cent. Eleven of the 18 CPAs reported an increase in revenues ranging from $0.02 million to $9.62 million, while eight of them reported decreases in expenditures ranging from $0.05 million to $1.8 million. This results in a total decrease of $4.6 million. In terms of revenues, Vancouver and Montreal reported the highest increases, at $9.6 million (12.5 per cent) and $3.12 million (5.3 per cent), respectively. Saguenay and Halifax reported the largest per cent increases, at 23 per cent ($0.28 million) and 14 per cent ($2.2 million), respectively. Increases in expenses at ten ports ranged from $0.07 million to $4.3 million, for a combined increase of $8.6 million. The net effect was a total increase in expenditures in 2000 of $4 million over those in 1999.

For major ports with CPA status as of December 31, 2000, net income decreased by $1.7 million from 1999. In contrast, 11 of the 18 ports reported increases ranging from $0.01 to $6.5 million, for a combined increase of $15.5 million. The seven ports that reported a decrease in net income had a combined loss of $17.5 million, with ranges from $0.09 million to $15.9 million. Prince Rupert's net income of -$14.7 million can be attributed to a $15.2 million write-down on certain capital assets whose net recoverable value was less than the recorded carrying value.

In 1999, tonnage for the CPA ports decreased to 204.9 million tonnes from 207.3 million tonnes the year before. Based on this tonnage, the revenue per tonne increased from $1.13 in 1998 to $1.17 in 1999, while expenses per tonne increased from $0.94 to $1.03.

Transport Canada Ports

Ten per cent of the ports remaining under Transport Canada's control generated 73 per cent of the total revenues in fiscal year 2000/01. As Table 9-15 shows, numerous factors have caused revenues to fluctuate year over year, including tariff increases implemented in 1996 and 2000; a reduction in the number of Transport Canada ports as a result of divestiture; and various utilization factors of Transport Canada's ports and port facilities.

For 2000/01, gross revenues at the remaining facilities were $12.9 million, while expenses were $22 million. This left an operating income shortfall of $9.1 million and an operating ratio of 170 per cent. Capital expenditures for 2000/01 were $10.4 million. An additional $45.4 million in grants and contributions was expended during this year for costs related to transfers associated with port divestitures.

Since the National Marine Policy came into effect, some unforeseen maintenance expenses and capital expenditures were incurred to maintain safety standards. In some cases, capital projects were carried out in remote sites for which Transport Canada will continue to maintain full responsibility. A few port transfers of substantial value were concluded during this reporting period, accounting for the increase in grants and contributions.

Between 1996 and 2000, revenues per tonne decreased from $0.28 to $0.17, or by approximately 64 per cent, while expenses per tonne decreased from $0.39 per tonne to $0.30 per tonne. (These tonnage statistics include cargos moved across private facilities within Transport Canada public harbours.)

Port Traffic

The following data show the actual traffic (cargo handled) at some Canada Port Authorities in 2000:

• Halifax: 13.6 million tonnes
• Montreal: 20 million tonnes
• Prince Rupert: 7.2 million tonnes
• Quebec: 15.7 million tonnes
• Saguenay: 0.414 million tonnes
• Saint John: 19.2 million tonnes
• Sept-les: 23.3 million tonnes
• Thunder Bay: 8.8 million tonnes
• Toronto: 1.7 million tonnes
• Vancouver: 75.3 million tonnes
• Windsor: 5.4 million tonnes

Based on preliminary data provided by Statistics Canada (available only up to 2000), Canada's ports handled 404.5 million tonnes of cargo in 2000, an increase of approximately five per cent over 1999.

Figure 9-2 shows traffic shares by port groups in 2000, based on port classification as of December 31, 2000.

Traffic data presented for 2000 are based upon port classification as of December 31, 2000, while 1999 traffic data have been restated to reflect the change of former Canada Port Corporation (CPC) ports and Harbour Commissions ports to Canada Port Authority status in 2000.

In 2000, Canada Port Authorities handled 53 per cent of all traffic, the largest share. The ports still classified as divisional ports of the Canada Port Corporation or as Harbour Commissions as of December 31, 2000, transported three per cent of the total cargo, while Transport Canada facilities moved another 18 per cent. The remaining 26 per cent were handled by other facilities, including those managed privately and those managed by or on behalf of the Department of Fisheries and Oceans and provincial and municipal governments.

Canada Port Authorities' traffic in 2000 showed an increase of approximately five per cent over 1999, from 205 million tonnes to 214 million tonnes. This can be partially attributed to Belledune gaining CPA status.

At those declared public ports where Transport Canada has no facilities and cargo is transported across private wharves, cargo shipments totalled 28 million tonnes, or 38 per cent of the total traffic handled by Transport Canada ports. Approximately 105 million tonnes of cargo crossed the "other" ports. In this category, Port Cartier, Quebec, with approximately 19.1 million tonnes, handled the most cargo, followed by Nanticoke, Ontario, which carried 13.7 million tonnes. The remaining 154 ports that reported cargo tonnage to Statistics Canada carried the balance of cargo.

Table 9-16 compares details of tonnage handled in Canada's port system.

Small Craft Harbours

Fisheries and Oceans Canada

During 2001, the Small Craft Harbours (SCH) program of Fisheries and Oceans Canada (DFO) continued to make progress in divesting recreational harbours and derelict/low-activity fishing harbours from its inventory. At the end of the exercise, all recreational harbours will have been transferred and the number of fishing harbours under DFO/SCH responsibility could be as low as 750.

Fishing Harbours

Since the late 1980s, the SCH program has supported the creation of local harbour authorities to take over management of commercial fishing harbour facilities in their communities. Harbour authorities are local non-profit organizations, composed of fishers and other harbour users, to which SCH leases the management of the harbour. The harbour authorities provide services, maintain the facilities, and manage the harbour operations on a day-to-day basis. As of January 3, 2002, harbour authorities managed 635 sites across Canada. This represents close to 85 per cent of the SCH program's target. Fishing harbours not able to generate enough community interest to form and manage a harbour authority will be disposed of or, if necessary, demolished. Such harbours are usually low or no-activity and have a negligible impact on the commercial fishing industry or the community at large. The SCH has fully divested 223 of these to date, with a further 86 in the final stage of divestiture.

Table 9-17 shows the fishing harbours remaining in the SCH portfolio as of January 3, 2002, by region and type of management.

Recreational Harbours

The SCH program is committed to the divestiture of all recreational harbours in its inventory. Since 1994/95, it has achieved 73 per cent of its target, with 615 recreational harbour sites transferred or in the final stage of divestiture. Recipients are mainly municipalities, local non-profit organizations, First Nations or other federal departments. In Ontario and Quebec, municipalities are the main recipients of SCH federal recreational harbours. The disposal strategy adopted by the SCH complies with the Program Transfer Flexibilities approved by Treasury Board in 1995. Disposals done under these flexibilities (i.e. for $1.00 consideration) contain conditions that include a requirement to maintain public access for at least five years. Recreational harbours are offered to potential recipients in a preset order of priority, consistent with federal policy. Prior to transfer, environmental assessments of the sites are conducted, and necessary repairs undertaken by the SCH to ensure that facilities are transferred in safe and reasonable conditions. In the absence of a public body interested in acquiring the facilities, they are offered at market value. As a last resort, if there is neither public nor private interest in the facilities, they are demolished. The recreational harbour divestiture program is expected to continue for several more years.

Tables 9-18 to 9-20 summarize, by region, the status of the SCH recreational harbour divestiture program (Table 9-18), recipients of harbours divested (Table 9-19) and type of management of the remaining harbour sites in the SCH inventory (Table 9-20).

St. Lawrence Seaway

Background

A unique inland waterway, the St. Lawrence Seaway serves the industrial heartland of North America. It serves 15 major international ports and about 50 regional ports along the US and Canadian shores.

The Seaway is divided into two main sections. The Montreal-Lake Ontario (MLO) section runs from Montreal to Lake Ontario and contains seven locks over the 300 kilometres of the section, five in Canada and two in the United States. The Welland Canal section runs from Lake Ontario to Lake Erie and contains eight locks over 42 kilometres.

The locks, and the channels that connect them, can accommodate vessels up to 225.5 metres long, 23.8 metres wide and eight metres in draft. Combined, these 15 locks raise vessels to the height of a 60-storey building above sea level. (www.greatlakes-seaway.com: 80/en/ home.html).

Third Year Under New Management

The year 2001 marked the third year that the St. Lawrence Seaway Management Corporation (SLSMC) managed the Canadian section of the Seaway. The SLSMC is a private-sector, not-for-profit corporation established by Seaway users and other interested parties. After negotiating a management contract with the federal government, pursuant to Part 3 of the Canada Marine Act, the SLSMC assumed management of the Canadian portion of the Seaway on October 1, 1998. SLSMC's contract will expire on March 31, 2018.

Under this contract, the SLSMC is responsible for managing, operating and maintaining the Seaway in accordance with a Management, Operation and Maintenance Agreement. This agreement requires the SLSMC to submit a new five-year business plan for the five years beginning April 1, 2003 to the Minister of Transport. The business plan is to include anticipated revenues and operating costs, and an "Asset Renewal Plan." To generate revenues operate and maintain the Seaway, the SLSMC is authorized to charge tolls and other charges. The agreement also provides for the SLSMC to recover additional funds from the Government of Canada to eliminate operating deficits, when required.

The SLSMC is using new technology to make Seaway navigation safer, more convenient and more efficient. In 1999, it introduced a modern, high-tech traffic control system to manage ship transits throughout the Seaway channels and allow it to pinpoint the location of every vessel in the Seaway. An automatic vessel identification system (AIS) will use traffic information to create a "virtual Seaway" on computer displays at the control centres and aboard ships. Beginning in the 2003 season, AIS will be mandatory for all commercial vessels on the Seaway.

In addition, a new, bi-national Web site was launched early in 2001 and is expected to be fully interactive by early 2002. The Web site will be a source for up-to-the-minute navigation, environmental and regulatory information and provide bill payment services and other e-business functions to Seaway users.

Traffic in 2001

During the 2001 season, combined traffic on the two sections of the Seaway was 41.6 million tonnes (based on preliminary traffic data). This was down by nearly five million tonnes from 2000 levels. This decline can be mainly attributed to sharp declines in steel industry-related cargoes -- with general cargo (primarily steel) down by nearly 40 per cent and iron ore down by about 24 per cent -- as mills coped with a glut of steel and a manufacturing sector in recession.

Table 9-21 shows cargo movements on the St. Lawrence Seaway from 1990 to 2001. Table 9-22 shows the distribution of Seaway traffic by commodity from 1993 to 2001.

Traffic in 2000

The 2000 navigation season lasted 275 days -- one of the longest in Seaway history. The Seaway opened to traffic on March 27, 2000, and closed on December 26, 2000. Despite low water levels in the upper Great Lakes (particularly Lake Huron and Lake Michigan), the Seaway was able to maintain its full draft for virtually the entire navigation season. (Numbers for the 2001 season were not available.)

For most of the 2000 season, traffic levels were higher than in 1999. However, a downturn in the last three months of 2000 resulted in an annual combined tonnage of 46.6 million tonnes -- a 2.6 per cent drop from 1999. Stronger steel imports were offset by lower Canadian and US grain exports.

In 2000, the number of vessel transits was down from 1999 levels on both sections of the Seaway. There were 2,978 vessel transits on the MLO section, down from 3,141 in 1999, and 3,351 vessel transits on the Welland Canal section, down from 3,626 in 1999.

In 2000, general cargo (mostly steel) was the only commodity to register an overall increase from 1999 (10.7 per cent on the MLO section, one per cent on the Welland Canal). However, the strong traffic in the early part of the year dwindled in the last three months, and the decrease continued into 2001. Grain, iron ore, coal and other bulk cargo registered slight overall decreases.

Rates and Tariffs

As part of the negotiated agreement with Seaway users, a two per cent toll increase for the Canadian section of the Seaway was implemented in 2001. This follows identical increases in 1998, 1999 and 2000. The increase implemented on June 1, 1998 was the first increase since 1993.

The 1998, 1999 and 2000 toll increases, with no discounts or reductions, were negotiated as part of the Seaway commercialization agreement. If the St. Lawrence Seaway Management Corporation had been unable to reach its financial goals, as set out in its business plan, it would have been required to implement toll increases higher than two per cent. However, because the SLSMC did meet or exceed its goals due to the successful 1998 and 1999 seasons, this was not necessary.

In the fourth and fifth years of the plan (2001 and 2002), the SLSMC is allowed to make discounts or reductions to the tolls if financial results continue to exceed the business plan's requirements. SLSMC expenditures were lower than business plan targets for the third year in a row; accordingly, it increased the balance of its notional reserve account to $8.5 million as of March 31, 2001. While the SLSMC did implement the required two per cent toll increase for the 2001 season, the positive reserve account allowed it to give users a 1.5 per cent toll rebate, effective only for the 2001 season.

Financial Profile

This report does not compare SLSMC's financial statements with those of the St. Lawrence Seaway Authority because the latter exclude the revenues and expenses pertaining to the non-navigational assets, the income taxes relating to the St. Lawrence Seaway Authority, amortization expenses, and other expenses that are treated differently.

Seaway revenues in the 2000/01 fiscal year from tolls and other sources amounted to just over $76,031,000, up slightly from $76,026,000 for 1999/2000. At $73.4 million, toll revenues were up slightly from the previous fiscal year. This can be attributed to the increase in steel shipments through the Seaway during 2000. Revenues from other navigation activities and licence fees totalled $2.2 million in 2000/01, a 32.8 per cent increase over the $1.7 million for 1999/2000.

Operating expenses were 3.8 per cent below business plan targets. Although the business plan foresaw a $6.9 million operating deficit at the end of 2000/01, the SLSMC was able to reduce the shortfall to only $1.8 million. Operating expenses amounted to $53.5 million, with salaries, wages and benefits accounting for 85.8 per cent of the total. The asset renewal program totalled $25.1 million for the year, compared with $25 million for the previous year.

Table 9-23 compares the financial performance of the St. Lawrence Seaway for the fiscal years from 1999/2000 and 2000/01.

Maintenance Activities

A key component of the SLSMC's commercialization agreement with Transport Canada is the Asset Renewal Plan. This plan allows for the expenditure of $126 million in infrastructure maintenance and capital expenditures over the course of the first five-year business plan. The actual expenditure for 2000/01 was $25,075,000. During the first three years of the business plan, the SLSMC has spent $75.7 million on infrastructure, or 60 per cent of the overall allocation.

The Asset Renewal Plan is managed by the SLSMC and overseen by the Capital Committee (made up of two members from Transport Canada and two members of the SLSMC's Board). The Committee approves the asset renewal projects annually, and meets regularly to review and approve changes to the plan, as required, to ensure the reliability of the system.

In 2000/01, the majority of maintenance projects were carried out after the end of the navigation season as part of the winter maintenance program, as is the normal procedure.

Marine Pilotage

Marine pilotage services direct and control the navigation and/or ship handling of a vessel through coastal and inland waterways. In Canada, there are four regional pilotage authorities: Atlantic (APA), Laurentian (LPA), Great Lakes (GLPA) and Pacific (PPA). They report directly to the Minister of Transport and are mandated by the Pilotage Act to provide safe and efficient pilotage services that respond to the particular requirements of marine traffic and to the varied geography and climatic conditions of the waterways in their regions.

Financial and Operating Performance

In 2001, pilotage revenues, on a nation-wide basis, did not exceed expenditures. As Table 9-24 shows, none of the four pilotage authorities managed to generate enough revenues to cover their expenditures. The results for 2001 show a shift away from positive net incomes over the past several years.

Table 9-24 shows the financial results for each pilotage authority from 1996 to 2001.

Total revenues dropped to almost 1999 levels in 2001. At the same time, expenses decreased, but by less than total revenues.

The average number of assignments per pilot -- a commonly used measure of efficiency of pilotage services -- increased between 1996 and 1998, but declined in 1999, 2000 and 2001. Table 9-25 shows the number of assignments for each pilotage authority and the total for all authorities between 1996 and 2001. The variations among the authorities and the fluctuations over this period are due largely to differences in traffic levels. Overall, total assignments grew from 1996 to 2000, but dropped in 2001.

Canadian Coast Guard

Responsibilities

Of the four key objectives of the Canadian Coast Guard's mission, three are directly related to transportation: to ensure safe and environmentally responsible use of Canada's waters; to facilitate the use of Canadian waters for shipping, recreation and fishing; and to provide marine expertise in support of Canada's domestic and international interests.

The Coast Guard fulfills its mission through five business lines: marine navigation services; marine communications and traffic services; icebreaking operations; rescue, safety and environmental response; and fleet management. It delivers these business lines in six regions across Canada under authority of the Department of Fisheries and Oceans (DFO). These business lines are linked to DFO's two key result commitments:

• the conservation and biological sustainability of fisheries resources, marine and freshwater habitats, and a protected environment; and
• the provision of safe, efficient and accessible waterways and harbours.

The Coast Guard business lines cover a range of marine programs, policies and services that deal with a broad cross section of clients within the marine community. These clients include commercial shipping interests; recreational boaters; the fishing industry; ferry services; tug and barge resupply operations in the North; cruise lines; private-sector shippers; provincial, municipal and territorial governments; and federal government departments. The Coast Guard also serves the general public by working to preserve ecosystems, to ensure that water supplies remain unpolluted by oil and chemical spills, and to protect recreational resources.

Marine Navigation Services

The Coast Guard's Marine Navigation Services (MNS) objective is to provide secure safe, efficient and accessible waterways. It fulfills this objective by providing, operating and maintaining a system of navigation aids; ensuring safe shipping channels; protecting the public right to navigation; and protecting the environment.

The MNS navigational infrastructure includes 248 automated light stations, 50 of which are staffed; five LORAN C communication stations; 20 Differential Global Positioning System (DGPS) transmitter sites; and more than 6,000 land-based fixed marine aids and more than 12,000 floating aids.

During 2001, the Marine Navigation Services pursued several initiatives to modernize navigational aids. This included continuing to modernize, maintain, implement and upgrade information systems such as the national services and databases on the condition and use of Canadian waterways; the Aids Program Information System (APIS); the Marine Aids Costing Model (SRAN); and the Navigable Waters Database System. The Marine Navigation Services also pursued amendments to the Navigable Waters Protection Act.

Marine Communication and Traffic Services

Marine Communications and Traffic Services (MCTS) derives its functions primarily from the Canada Shipping Act and the Safety of Life at Sea Convention. These functions are to provide distress and safety communications and coordination; ensure vessel screening to prevent entry of unsafe vessels into Canadian waters; regulate vessel traffic movements; and manage an integrated system of marine information and public correspondence services. MCTS also supports economic activities by optimizing traffic movements and port efficiency, and facilitating industry ship-shore communications.

Marine Communications and Traffic Services relies on staffed communications centres and on remote transmitter and receiver sites to support these functions.

The MCTS business line fully supports the Oceans Strategy by looking for ways to better monitor and manage marine protected areas. As such, it is a core element of the national movement toward sustainable development for oceans and marine resources.

This group is also improving its surveillance capability by developing implementation strategies for a universal Automatic Identification System (AIS). AIS is a leading-edge marine navigation technology that provides mariners and authorities with a more efficient and cost-effective means of service delivery. MCTS pursued the implementation of the Global Maritime Distress Safety System (GMDSS) to improve communication capabilities and also reviewed infrastructure to identify further potential efficiencies through the application of technological changes.

Icebreaking Operations

The Icebreaking Operations business line is responsible for providing icebreaking escorts, channel maintenance, flood control, harbour breakouts, and ice-routing and information services for marine traffic navigating through or around ice-covered waters. This group continued to advise the Government of Nunavut on the movement of cargo for the annual resupply of northern settlements, and provided resupply services to selected remote sites such as Eureka and Pelly Bay.

The icebreaking program has moved to a more client-focused, demand-driven service. As a result, commercial users now pay a percentage of the allocated costs in the form of an icebreaking service fee.

During 2001, Icebreaking Operations continued to work with the US Coast Guard, the North Atlantic Ice Patrol and other governments involved with icebreaking activities to maintain international expertise and recognition. It also continued to strengthen its collaboration with Transport Canada's Marine Safety Branch for the Harmonization of Polar Ship Rules to protect Canada's position and to proactively deal with issues related to icebreaking operations or ships operating in ice-covered waters.

Rescue, Safety and Environmental Response

The Rescue, Safety and Environmental Response (RSER) business line includes three main activities: maritime search and rescue (SAR); environmental response; and operating the office of boating safety, which regulates recreational boaters, recreational boats and recreational boating activities. The main objective of this business line is to save lives and protect the marine environment.

The RSER group relies on rescue centres, SAR stations with in-shore rescue boats and several spill-response equipment depots to support its activities.

In 2001 the RSER group implemented major new regulating measures to improve boating safety. These measures covered mandatory operator competency; age and horsepower restrictions; and modernization of small vessel regulations. The RSER group also worked to improve the effectiveness of the oil spill preparedness and response regime by reviewing regulations, standards and guidelines.

In addition, this group continued dialogue with major stakeholders with a view to defining a Canadian marine hazardous and noxious substances (HNS) spill preparedness and response regime.

During 2001, the Canadian Coast Guard once again provided an effective maritime search and rescue service for Canadians.

Fleet Management

The Fleet Management business line supports all Department of Fisheries and Oceans strategic outcomes by providing safe, cost-effective and efficient sea and air support to program areas. This includes acquiring, maintaining and scheduling Canadian Coast Guard vessel and air fleets that sustain the Marine Navigation Services, Icebreaking Operations, Rescue, Safety and Environmental Response, Fisheries Management, and Fisheries and Oceans Science and Hydrography. Fleet Management also addresses any required increases in fleet capabilities by arranging with other government departments and the private sector to provide additional sea and air support to the programs.

During 2001, Fleet Management developed a pricing strategy, client service agreements and a concept of operations, as well as a strategic plan and a performance measurement framework. It also pursued the implementation of the fleet safety management system to meet the standards of the International Management Code for the Safe Operation of Ships (ISM) Code.

The Canadian Coast Guard manages a fleet of 108 major ships (operating) and more than 500 small craft.

Financial Situation

Through a combination of efficiency measures and reduced operations, the Coast Guard has reduced its net expenditures on all of its services to $140 million, or 30 per cent, over the four-year period ending 1998/99.

Table 9-26 shows the Coast Guard's financial results for its five major business lines for the last four fiscal years.

The Coast Guard has implemented three fees for commercial users of specific programs. The Marine Navigation Services Fee, was introduced in June 1996. This fee is intended to collect $27.7 million annually, which includes administration costs. In 1998, a transit-based Icebreaking Services Fee was introduced. This fee is intended to collect $6.9 million annually, which includes administrative costs. The Maintenance Dredging Services Tonnage Fee was established in September 1997. This fee was intended as an interim measure to cover the full costs incurred by Coast Guard to provide maintenance dredging services in the St. Lawrence Ship Channel. The Coast Guard is continuing to work with representatives of the commercial marine transportation industry to arrive at a long-term arrangement, including the transfer of responsibilities to industry for these dredging services.

Table 9-27 shows a breakdown of the Coast Guard's revenues and expenditures by its five main business lines for fiscal year 2001/02.

TRANSPORTATION INFRASTRUCTURE

Rail Transportation Infrastructure

Road Transportation Infrastructure

Marine Transportation Infrastructure

Air Transportation Infrastructure

Appendix 9-1 Airports Capital Assistance Program ­ Projects Approved in 2001