The C.D. Howe Institute makes some compelling arguments in its recent report on privatizing the operations of Canada’s major seaports.
Casting Off: How Ottawa Can Maximize the Value of Canada’s Major Ports and Benefit Taxpayers estimates, for example, that involving private capital investment in the country’s four major ports alone could generate between $2.6 billion and $3.4 billion for the federal government.
Report author Steven Robins argues, among other things, that the private sector, with its own dollars at stake, is best equipped to make major investment decisions and less willing to gamble on projects the market deems unnecessary.
His report also maintains that port profits could be invested in infrastructure priorities elsewhere in the country rather than exclusively being reinvested in the originating port as is the case now.
Robins points to the Port of Vancouver’s planned $2 billion Terminal 2 container terminal expansion as an example of a project that warrants a more critical eye and whose infrastructure investment dollars could be put to better use elsewhere.
However, the argument runs counter to Robins’ rationale that the private sector is often more astute than government in wagering investment dollars on major business infrastructure projects.
Canada’s ports are fundamental to trade in a country with a vast geography and a relatively small population. Their responsibilities go far beyond local and regional economic interests. Private capital’s priorities reside with investors and shareholders. In some cases, those might align with the national interests and the mandate of ports to advance Canada’s trade objectives, but in many cases they will not. Abdicating control to the federal government over earnings generated in well-run ports like Vancouver would leave investment decisions at the mercy of federal politics rather than regional port business imperatives.
That would be a poor trade-off in a global port sector that faces major technological changes and unprecedented competitive challenges.
