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Port devolution revisited: the case of regional ports and the role of lower tier governments
Journal of Transport Geography 15 (2007) 455–464 www.elsevier.com/locate/jtrangeo
Port devolution revisited: the case of regional ports and the role of lower tier governments Jean Debrie a
a,¤
, Elisabeth Gouvernal a, Brian Slack
b
Institut National de Recherche sur les Transports et leur Sécurité, 2 avenue du Général Malleret-Joinville, F-94114 Arcueil, France b Concordia University, 1455 boul. de Maisonneuve O., Montréal, Canada H3G 1M8
Abstract Most models of port governance have been developed to Wt the largest ports, and tend to simplify the devolution process as one involving the transfer of jurisdiction from the State to the private sector. The devolution of smaller ports has been largely ignored as have transfers involving transfers from upper levels of government to lower tiers of public administration. Yet in many countries this has been the experience of port governance, where complex structures have arisen, many of which involve public control, in contrast to the strongly privatised process covered in the literature. The objective of this paper is to examine the process and consequences of changing port governance involving small and medium size ports where lower tiers of government are involved. It examines the recent devolution process in Canada and the decentralization policy in France. It brings to light the diversity of actors, public and private, who have come into play. The paper goes on to examine the challenges that have come about as a result of devolution that face the new port administrations. The paper concludes that existing models of port governance are incomplete and that the role of public administration in port governance is greater, albeit in a diVerent form, than claimed in the existing literature. © 2007 Elsevier Ltd. All rights reserved. Keywords: Devolution; Small Ports; Governance; France; Canada
1. Introduction Port governance involved public control for much of the Twentieth Century. Public control extended through a range of roles: as regulator, as provider of infrastructures and superstructures, as provider of port services including cargo handling and port labour. In the last two decades of the past century, however, a great deal of devolution has taken place. In many jurisdictions ports have been transferred from state ownership and control to more Xexible governance regimes involving private actors in varying degrees. This process of devolution has drawn the attention of international agencies and academic researchers. The World Bank in its Port Reform Toolkit (World Bank, 2001) placed the process as a continuum from on one extreme, the *
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06. E-mail address: [email protected] (J. Debrie). 0966-6923/$ - see front matter © 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.jtrangeo.2007.01.003
service port model – the classic public port, to a fully privatised port, where all actions are determined by private owners. Other authors (Baird, 1995, 1999, 2000; Baltazar and Brooks, 2001; and Brooks, 2004) have elaborated and extended this devolution continuum. In the majority of cases the focus of devolution in the literature has been on the transfers of responsibilities from a state authority towards the private sector, either directly through a sale or concession or through a sharing of responsibilities (Cullinane and Song, 2002; Hochstein, 1996; HoVman, 2002; Thomas, 1994). In few instances only is devolution in the academic literature seen as a transfer from one level of government to another. Yet in many countries, such as Argentina, China, Canada and France recent devolution is involving transfers from the national governments to lower tiers. In the case of France the primary devolution has taken place from the State to the régions, while in Canada the provinces, regional municipalities and municipalities have been among the ‘beneWciaries’
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in most cases. In a sense, therefore these are still ‘public’ ports, but their changing status exposes a range of issues poorly represented in the present literature. At the same time, the literature on devolution is heavily biased towards the largest ports. In Brooks’s work on Canada (2004), for example, the focus is on the 19 ports that have become Canada Port Authorities, with little mention of more than 500 smaller ports transferred to other agencies. In the case of Argentina, where all but one port were devolved to the provinces, Serebrinsky and Trujillo (2005) explore in depth the one that was retained by the national government, Buenos Aires. Devolution of smaller ports involves a very diVerent set of conditions and problems than those that confront the major ports, so that the issues and challenges confronting the new agencies are not directly comparable with those already described in the literature. When these agencies are lower tiers of government a further range of issues are precipitated. The goal of this paper is to Wll a lacuna in the existing literature by bringing into focus the questions raised by the process of divestiture of small and medium size ports, questions that relate not only to the maintenance of port activities but also to the ability of the new agencies to carry out their new responsibilities. While devolution may be seen as a
means of invigorating the port sector by moving towards a more Xexible and commercial organization, governments are also pursuing devolution as a means of reducing the Wnancial burden on the State. For smaller ports the reduction in funding imposes a much more severe burden than the larger ports which are capable of generating higher revenues. When these Wnancial obligations are transferred to a lower tier of government, many questions arise, not just about the ability to Wnance the activity, but also how to establish partnerships with actors in the port industry, how to manage conXicts between other ports under the same jurisdiction, how to coordinate relationships with other jurisdictions: police, environment, maritime security etc., and how to respond to legal issues relating to property rights, concessions etc. Evidence is drawn from divestiture in Canada and France. In the case of the former, the process has been taking place over the last decade during which time over 500 ports have been transferred from Transport Canada to other bodies, mainly public (Dion et al., 2002). In France a process of regionalization is taking place in which 19 Ports d’intérêt national are being transferred to lower tiers of government (see Fig. 1). Information was obtained primarily through government reports and audits as well as interviews. While we were interested in the general trends in
Fig. 1. Ports d’intérêt national and ports autonomes in France.
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457
Fig. 2. Selected ports and Canadian Port Authorities in Maritime Provinces.
Canada, we focused mainly on the Maritime Provinces, where the devolution was largely completed by 2001. It was possible therefore to investigate the kinds of challenges and opportunities the new port administrators faced. Five ports with diVerent types of new administrative structures (Bayside NB, Hantsport NS, Mulgrave NS, Pictou, NS, and Sydney NS) were selected for detailed examination (see Fig. 2). ProWles were built from government documents and press reports. Site visits were made in September 2005, and the local managers and operators were interviewed in depth. Questions focused on the process of bidding for the port, relations with other actors, commercial operations and traYc trends, and a wide ranging discussion of postdevolution problems and issues. In addition, interviews were held with Transport Canada oYcials responsible for the implementation of the divestiture policy. In France the task has been more diYcult, because the regionalization policy still has to be fully implemented. A general overview was obtained from government reports and press statements. Interviews with port managers, municipal, local and regional government oYcials involved in the negotiations were undertaken in 2005 and 2006 in three French régions Bretagne, Haut-Normandie and Bas-Normandie where a total of six ports are being transferred (Brest, Lorient, Saint Malo, Caen, Cherbourg and Dieppe). Here the questions focused on issues surrounding sources of investment, subventions, port operations and market trends, as well as relations between the various territorial governments.
There is a degree of diVerence between France and Canada in terms of the size of ports being transferred. The traYc of the selected French Ports d’intérêt national varies between 1,510,000 and 3,582,000 ton (see Table 1). In Canada, the divested ports are generally smaller, but with a greater variability of size. In the case of the the Wve ports selected for detailed analysis the range extended from 0 ton to 2,163,300 ton (see Table 1). The paper begins by reviewing the existing literature on port divestiture in order to provide a context for the study. It goes on to explain the process of divestiture in Canada and France by describing the policy process, and examines the diVerent new organizations that have come into being. Some of the main challenges confronting the new port administrations that have arisen out of the divestiture process are examined. By investigating the process and its consequences, the paper concludes by demonstrating how complexity invalidates the simple assumptions of general Table 1 TraYc at selected French and Canadian ports in 1000 ton French ports
TraYc in 2004
Canadian ports
TraYc in 2003
Dieppe Caen–Ouistreham Cherbourg Saint Malo Brest Lorient
1510 3582 3031 1858 2461 2678
Bayside Hantsport Mulgrave Pictou Sydney
1712 0 135 66 2163
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divestiture models, and suggests that national diVerences are key to understanding port governance. 2. Context The term ‘service’ port is a term that is applied to ports where the governments carry out the majority of functions necessary to operate the port. It is a term that has been used extensively by international agencies (World Bank, 2001). The service port model was prevalent in many parts of the world up until the 1980s, although there were many variants in the degree that local private companies could provide essential services such as towing and dredging. The term ‘tool’ port was applied to where private actors were given the permission to engage in cargo handling under a concession, but where the other functions and the superstructures remained under public provision and control. A ‘landlord’ port involved private investment in superstructures, as well as responsibility for carrying out cargo handling under a concession. A ‘private’ port was deWned as a facility entirely under private control, although the public authority could still carry out some functions, such as dredging and pilotage. Intended as a means to better understand port reform, it has been used also as a taxonomy by several academic researchers (Stevens, 1999) in the analysis of port governance. As more and more states have embarked on port reform, a growing body of academic literature provides evidence that the World Bank classiWcation is too limited, and a number of authors have been examining port reform as a process involving port-related activities (Baird, 1995, 1999, 2000; Baltazar and Brooks, 2001; Brooks, 2004). Here the focus is on the provision of port-related functions, activities that have been grouped by Baird (1995) into three groups: landowner, regulator, utility and by Baltazar and Brooks (2001) into a comparable groupings: regulatory, landlord, and operations. When matched with diVerent forms of governance (public, public/private and private) a 3 £ 3 matrix of port devolution is produced. Flexibility is introduced by the fact under diVerent regulatory regimes similar functions may be carried out by diVerent agencies. Thus, emergency services, classiWed as a regulatory function by Baltazar and Brooks (2001), and pilotage, an operational function could be carried out by private or public agencies in diVerent countries. These diVerences have been explored by Brooks (2004) in a study of devolution in the US, the UK, India, Australia, and Canada. Despite the growing body of literature on devolution, the focus has been almost exclusively on one of increasing privatization, i.e. a shift from the public port, or service port model, to one involving a greater degree of private sector involvement. Yet devolution also may imply a shift in governance from state control to one involving lower tiers of government, and involving no or limited private entry. The ‘downloading’ of central government responsibilities is occurring in many countries, and applies to many types of programs and services. For example, health care, regional
development and police have been chosen as targets for alternate service delivery in many jurisdictions. In several countries such as China and Argentina, ports too have been targets for downloading, where devolution involves maintaining ports as public entities, but where the responsible governments are those at a sub-national level. Questions arising from this type of port governance shift have been largely absent in the literature. 3. The devolution process On the surface Canadian and French port devolution policies appear to have many points in common. They are both framed by a central government wishing to transfer responsibility for smaller ports to other agencies. In its policy, the Canadian federal government spoke of the need to give a high degree of autonomy for local and regional management in order to be more responsive to local needs and priorities (Ircha, 1997). The French government’s decisions have been framed by the concept of ‘subsidiarity’ in which the aim is to place governance of public services at the appropriate level of service provision. It is a concept that has generated a great deal of discussion in Europe and has become a guiding principle in many EU policies. It is linked to the policy of decentralization because it suggests that local problems should be managed by local governments, and that the upper tiers of government (European Commission, States) should only intervene when the local governments do not have the means to carry out certain responsibilities (Brault et al., 2005). It may be noted, however, that subsidiarity is not a Wxed rule, but rather an instrument of reXection and political debate. Both countries saw ports as a means of downloading their Wnancial responsibilities, and of reducing expenditures. In fact, however, the Canadian and French port policies are strikingly diVerent in implementation. The Canadian devolution policy applied to all ports, with the exception of 30 ‘remote’ ports, where shipping was the only means of access (except by air). The 19 largest ports were treated as separate cases and were devolved to not-for-proWt local authorities (Brooks, 2004). The remaining 540 ports were targeted for transfer over a 10-year period. It is these we are concerned with. A fund was established to cover the costs of the transfers. Originally this fund was set at C$125 million, but was later increased to C$175 million, and an additional special fund of C$40 million was made available to cover study costs. The Canadian Transport Ministry was obliged to follow the policy relating to the disposal of federal properties. Under this process federal properties are oVered initially to other federal departments, then to the provincial governments, then to municipalities, and Wnally to private interests. In this instance however, the Transport Minister obtained a special exemption, by being able to approach the private sector before municipalities, because of a fear that municipalities might use waterfront land for non-transport functions.
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The French Law of August 13, 2004 called for the devolution of the 19 ports d’intérêt national (medium size ports, the smallest having already been divested to the départments in 1984), leaving the seven largest ports autonomes under state control. The process is to be completed January 1, 2007. No funding was allocated to the process itself. Under the French policy the ports were to be oVered to any public authority or a grouping of such authorities, be they regional, departmental, urban agglomeration or town. OVers had to be submitted by January 2006. In the case of multiple submissions the Regional state representative (the Préfet) would attempt an arbitration. In the event of no requests, the ports would be transferred automatically to the region. In all cases, the transfers would be completed by January 2007. The Canadian and French policies are diVerent in many respects: the length of time set for implementation, the budgets allocated for the process, the provision for private entry. In both cases the process has been complicated. In Canada, 65 ports have been divested to other federal departments, 40 to Provincial governments (mainly ferry ports), 123 to local interests, and 238 deproclaimed as public harbours or demolished. Seventy-four still have to be transferred by the end of the 10-year process. In France, there are great regional diVerences in the organizations seeking control of the divested ports. In Bretagne, for example, only the région has come forward with a proposal taking control of the three ports. In Languedoc– Roussillon, the municipality, the départment and the région have submitted their candidacies for the port of Sète. In Basse-Normandie the région initially indicated its desire to take control of the two ports, Caen and Cherbourg, and the départment of Calvados announced its candidacy for Cherbourg. A compromise joint management system is being arranged. 4. New governance structures in Canada and France The process of devolution in both Canada and France has involved several tiers of government below the national level. In Canada, multiple combinations and permutations of provincial, regional municipalities, municipalities, and private sector actors have emerged. Two distinct types of groupings may be observed: those that are “commercial” which operate as proWt generating entities, and those that are not-for-proWt organisations that must balance their accounts and re-invest any surpluses. In Fig. 1, the Canadian model includes many diVerent types of actors who have participated in the devolution process, and in individual ports they may be associated in a wide range of combinations. For example, in the case of Bayside, New Brunswick, the port has been taken over by the Bayside Port Corporation which is a commercial organisation made up largely of private interests, including three stevedoring companies, but also includes local municipal representatives on its board. In contrast, Mulgrave, Nova Scotia has been taken over by a not-for-proWt corporation, the Strait
459
of Canso Superport Corporation, whose board is made up of municipal, provincial representatives and local stevedoring Wrms. It is noteworthy that the distinction between forproWt and not-for-proWt may involve the participation of public bodies. In other cases a single entity may have come forward to assume control of the port, a private company alone as in the case of Pictou and Hantsport, or a regional municipality as in the case of Sydney, Nova Scotia. In the case of France a diVerent set of conWgurations has resulted, but always involving public agencies. A further distinction is that in France there exists a distinction between the agency issuing the operational licences and the concessionaires. This relationship has been complicated by the decentralisation policy, because it has introduced another level. Even if the responsibility for issuing licences has been transferred to another level of government (région, départments, and urban agglomerations), the central government has retained certain powers, over the police for example. Furthermore, under the French system the State is the law, and this principle has not been altered by the decentralisation policy. A new level of public authorities may have obtained the ownership of the ports, and will be responsible for infrastructure investments, and awarding operating concessions but the State still retains its overall regalian authority. The concessions have been held historically by the Chambers of Commerce and Industry (CCIs). These agencies have a particular status in France. They are oYcially public bodies of an administrative character. Part of their income is derived from an additional levy on the professional tax (Impôt Additionnel sur la Taxe Professionnelle (IATP)) While retaining the status as public bodies, the CCIs represent the interests of small and medium size businesses in the region and the IATP is collected from the member Wrms. In France, the majority of the smaller airports and ports are managed by the local or departmental CCIs. In the case of ports, the CCIs holding concessions receive additional income from the port charges levied. In future, the CCIs may bid for concessions, but private companies will no longer be excluded from bidding. In Fig. 1, several types of governance possibilities are indicated, involving combination between région, départments, and urban agglomerations. There may be also a role for the communes, but this is still unclear. These agencies are the new landlords, and contract out port operations to concessionaires. As in the Canadian case, a wide range of ‘public’ agencies are involved in port governance since the French decentralisation process has taken place. This diversity of governance emerges as one of the most distinctive features of port divestiture. In Canada, a very large number of combinations of provincial, regional municipalities, municipal as well as many diVerent types of private actors have come about. As mentioned above, some are not-for-proWt corporations, which must balance their accounts, others are proWt oriented, in which the dividends are distributed according to the Wnancial participation. The latter type fell into the category of ‘private’ ports in the previous port classiWcation systems. It is noteworthy that in
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many cases public bodies are represented on the boards of these for proWt ports, which further complicates distinctions between public and private/proWt and not-for-proWt ports. In these port corporations the public agencies hold seats on the board, but they do not have any Wnancial investments, nor do they receive dividends. The not-forproWt ports are particularly diYcult to classify, since in many cases the users are included in the corporations that own the facilities, and thus are not ‘landlord’ ports in the classical sense. As a result of the devolution policy in Canada there are few examples of true landlord ports among the divested facilities. One example is Sydney, Nova Scotia, where the regional municipality has purchased the port, and leases out the facility to a not-for-proWt corporation that includes a wide range of local public and private interests. In France too the diversity is represented by the permutations of lower tiers of government that have become port agencies. The transferred ports d’intérêt national remain landlord ports, although as mentioned above there exist the possibilities for concessionaires other than the CCIs to obtain operating contracts. 5. Challenges confronting small ports as a result of devolution Based on interviews conducted in both countries, a wide range of issues and problems for port governance have been identiWed as a result of devolution. Some of these were predictable, given the objective of downloading that the central governments implemented; others are unexpected. Despite the wide range of new administrative structures that have come about because of devolution, the challenges may be grouped into two groups: those of a Wnancial nature, and those that are engendered by the insertion of new tiers of government in port governance. 5.1. Financial The Canadian policy by its own criteria raises questions about the ability of the ports to survive. The 19 largest ports were given special independent status because there was evidence that they could be self-supporting, although even here access to funding for capital expenditures has been a major issue subsequently (Brooks, 2004). How may the smaller ports survive if by deWnition the federal government believed they would not have the same means to stand on their own? By downloading the ports the federal government has eVectively washed its hands of the problem and left it to the new managements to cope with their Wnancial futures. Their sources of revenue are limited. Three sets of fees are collected: harbour dues, which are based on the gross registered tonnage of the vessel per entry; wharfage, a variable cost depending on the type and volume of cargo lifted; and, berthage, a daily charge levied according to the length of vessel docked in the port. For ports with small traYc bases these sources generate only limited income. For sev-
eral ports even this limited revenue stream has been thrown into question since divestiture because of the issue of harbour beds. For many of the ports transferred to other bodies sea bed contamination has been an issue, and many of the new owners of the port infrastructures have been reluctant to obtain ownership of the water lots as well, until the matter of responsibility for liability is resolved. The result is that for many of the transferred ports in the Maritime Provinces the harbour beds still remain under federal control, and because of this the new owners cannot collect the harbour dues. Under the devolution policy most new owners received Wnancial compensation from the transfer fund. These payments were made based on the estimated cost of maintaining the existing infrastructure over the next 25 years, taking into account expected revenues based on present returns. The amounts transferred varied greatly, from a few thousand dollars to several million. Several transfers resulted in the new owners paying for the port. In the case of two ports mentioned above, Bayside and Sydney, the amounts paid were C$3.0 m and C$1.5 m, respectively. The calculations determining the amounts to be paid or awarded were based on 1995 data, the date of the introduction of the policy and are concerned with maintaining the status quo. Inevitably, the new owners seek to enhance traYc and revenues. In most cases this is impossible without some improvements to existing facilities: new wharfs, warehouses, equipment etc. Securing funding is a major challenge. Most port infrastructures are expensive, and given the limited revenue stream of most of the small ports, the new owners have little capacity to invest. Where lower tiers of government are involved as owners, they are almost universally limited in their capacity to contribute directly because they have to respond to increasing demands for the other public services they provide and because many of these services have been downloaded too. It becomes a vicious circle: without the ability to add new facilities, their opportunities to expand are limited. Ports that have developed new infrastructures and superstructures have been able to attract new traYc. Sydney (NS), which previously had been a bulk handling facility, has become an important regional cruise port destination since it undertook the construction of a C$6.5 m cruise terminal. The Strait of Canso Superport Corporation has constructed new sheds at Mulgrave (NS) to attract more forest products. In both cases the funding came from regional development funds. Few new port administrations have the ability to access such funding, and consequently their futures are in doubt. Similar Wnancial challenges are likely to confront the new French port administrations. The State is proposing to transfer funding based on the average of the last ten years, although the number of years and the actual base amounts still have to be determined. It should be noted that funding for the ports d’intérêt national had been declining for many years, and the lower tiers of governments are claiming that
J. Debrie et al. / Journal of Transport Geography 15 (2007) 455–464
these ports have been neglected by the state. Thus signiWcant new investments may be called for. In France, the concessionaires are expected to cover superstructure costs, but it will be the lower tiers of government who will have to pay the rest. Already there is concern that the largest ports, the Ports Autonomes will be unfairly advantaged, because in several cases they are in competition for the same traYc with the ports d’intérêt national. More importantly, perhaps, is that they will be in competition for Wnancing. For example, Haut-Normandie made a 52 million euros contribution to the Port 2000 expansion project of the port of Le Havre, but when that région becomes responsible for the ports d’intérêt national it will have to arbitrate between the Wnancial demands of very diVerent ports. At the same time, European infrastructure grants, FEDER, are likely to be more diYcult to obtain, since the focus in the EU is on improving the infrastructure of the new Eastern European entrants. In France the problem is complicated further because not only will the régions have to fund new infrastructures, but in many cases they will have to adjudicate between competing demands by ports. In Brittany and Normandy, for example, several ports will be administered by each région. In the past, decisions were made at the national level, but future requests for capital investments will inevitably produce strong local lobbying. It may be more diYcult for the lower tier governments to resolve conXicting claims that when the decisions were made by the central government. The Canadian experience demonstrates that other unexpected Wnancial issues are involved in the devolution. A major concern has been that as federal bodies, the ports paid no municipal taxes. Once divested, the new owners have become immediately eligible for assessment. Occupying extensive waterfront sites, ports are seen by some municipalities as an important new source of taxation. In many parts of Canada, the Maritime Provinces, for example, this came to light after the transfers took place, and it took a great deal of lobbying by the ports to reduce the levels of assessment. These experiences have helped to hold up divestiture in other parts of Canada, in Québec for example, until accommodations could be made. A further Wnancial headache has been insurance. As federal bodies, the ports paid no insurance premiums. Since devolution they have had to secure insurance coverage, mainly from private insurers. Rates have increased dramatically since 9/11, and this has been a serious unanticipated Wnancial drain on port administrations. In France, too, the issue of insurance threatens to be a major concern. As in Canada, the French state is its own insurer, so that airports and ports are not insured, and the state covers the bill if there is a loss or damage. Lower tiers of government, however, have to obtain coverage from professional insurers. With port decentralization they will have to insure the ports, but as yet they have no measure of the value of the facilities, nor the likely premiums.
461
5.2. The insertion of new levels of governance The devolution of the smaller ports also introduces problems of spatial planning and coordination, in particular the problems of articulation between the diVerent levels of government involved in the new organization of ports. The interests of the municipal, regional and national actors are divergent, and are sometimes completely contradictory, which raises the need for an arbitration between the parties around a range of port problems. Perhaps the greatest problems are centred on the potential conXicts between municipalities and the other higher levels of government. For the residents of the port cities issues related to the quality of life, the urban landscape, traYc congestion and noise etc are pre-eminent concerns and these are most likely to shape the positions of the urban politicians. For the higher levels of government, the port is an object of economic development, of employment, of enhancing the competitiveness of manufacturing chains, issues that are disconnected partially from problems of quality of life in cities. Furthermore, the regional governments may have to deal with problems arising from more than port under their jurisdiction. In Canada, as in France, municipalities seek to exploit the tourism potentials of waterfront sites. In terms of port functions, recreational boating needs and Wshing activity requirements may take precedence over industrial port activity. The port of St. Malo in France provides examples of where pressures for more the urban and tourist activity in the port zone are at the expense of industrial port functions. In Pictou, Nova Scotia, similar conXicts exist between the private port authority and the municipality seeking to expand the historico/tourist development of the waterfront. In the context of these scale conXicts, the Canadian devolution policy has indirectly resolved some of the issues. In the negotiations leading up to the transfers of the ports, Transport Canada sought wherever possible to exclude a municipality from acquiring sole ownership. In most cases where municipalities are involved, they share ownership with other agencies, public and private to ensure the urban interests do not override commercial activities. Furthermore, the acquiring parties have to agree to maintain the port site as public port facilities for a Wxed number of years in the future. In France, the situation at present is less clear. The involvement of municipalities in port decentralization is a priori negligible, except for Sète and Calais. Nevertheless the power of municipalities in the regional political structure of France is very strong, and they are responsible for land use and zoning around the perimeters of port land. The municipalities will, therefore, exert inXuence over the new port administrations, who will have to adopt port development plans that take into account explicitly urban concerns. Other scale conXicts between regional and central governments over port planning and development are likely to occur as a result of devolution. In France, there are presently signiWcant political diVerences between the régions
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Fig. 3. The evolution of French and Canadian Port Governance.
that are controlled largely by left wing political parties, and the State that is right wing. Basic diVerences in policy are likely to multiply the potential areas for disagreement, at least in the short term. Transfers of personnel, Wnancial transfers, and the application of environmental laws are also areas of potential conXict. For example, the decision to retain some employees by the central government, such as the Harbour Masters, when some of their functions impinge on activities carried out by the new agencies (région or Syndicat Mixte), are likely to give rise to diYculties. The State also retains its regalian powers, in security for example, the carrying out of which require the ports to provide space and facilities at no cost within the limits of the decentralized ports. Canadian port devolution has not given rise to the same types of problems. Under the Canadian constitution, the Provinces have distinct and speciWc powers and areas of jurisdiction that are not beholden to the central government as in France. However, this demarcation has led to signiWcant problems over port divestiture. A major diYculty has been that in most cases the water beds belong to the Provinces, which had ceded these sites to the federal government to maintain the ports. Once the federal government ceased to retain jurisdiction over the ports, the water beds are retro-ceded to the Provinces. As ownership of the harbour beds is linked to the collection of harbour dues, the issue is of vital concern to the economic prosperity of the new owners. Many Provinces resolved this issue quickly
and without diYculty, but the Provinces of British Columbia, Newfoundland and Quebec were extremely cautious, partly because of the fear of inheriting responsibility for environmental cleanup. As a result, devolution was delayed in British Columbia until agreement was reached, and has been seriously retarded in Newfoundland and Quebec. Because devolution in France and Canada has multiplied the number of interested parties in port governance as shown in Fig. 3, it is perhaps inevitable that jurisdictional and spatial conXicts should have increased. Regional ports are now managed by partners with many diverse interests and goals. If through subsidiarity local and regional conditions and needs are better reXected in port governance, the choices that have to be made are more complex, and it will be a challenge to resolve them. 6. The governance models reconsidered The evidence presented from the process of port devolution in Canada and France conWrms that the existing models of port governance are incomplete. Not only do they largely ignore the existence of lower tiers of government from port administration, but they fail to represent the range public/private linkages that are possible. At the same time the issues confronting port governance of small and medium size ports are fundamentally diVerent from those of the largest. If the distinctions between public, mixed, and private forms of governance suggested by the existing models
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463
Table 2 Devolution and changing port functions in France and Canada French “decentralisation” CCI/private/mix
Lower tiers 䊉
X
Governance functions 䊉 䊉 䊉 䊉 䊉 䊉 䊉 䊉 X 䊉
䊉 䊉 䊉 䊉 䊊 䊊 䊉 䊉
䊉 䊊 䊊
Canadian devolution
State
䊉 䊉 䊉 䊉 䊊
State 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007
Port policy Environment Customs/immigration Vessel safety Security Insurance Marketing Infrastructures Land Acquisition Dredging Superstructure Cargo handling
1995 2006 1995 2006 1995 2006 1995 2006 1995 2006 1995 2006
䊉
1995 2006 1995 2006 1995 2006 1995 2006 1995 2006 1995 2006
䊉
Lower tiers
Lower tier/private
Private
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X 䊉 䊉
䊉 䊉 䊉 䊉 䊉 䊉 䊉 䊉
䊉 䊉 䊉 䊉
䊉, carried out by; 䊊, shared; X, either.
are more complex in reality, the governance functions are not easily classiWed as regulatory, landlord or operator, as in the model of Brooks (2004). Are emergency services a regulatory function, for example? Indeed, two of the three terms appear inappropriate. The term ‘regalian’ is suggested instead of ‘regulatory’, since it refers to the constitutional authority of the State, and ‘land owner’, the term originally used by Baird (1995) is in many ways more appropriate than ‘landlord’, since the latter is also more narrowly applied to a particular type of port governance. In Table 2, we have done away with these distinctions and trace the changes in 12 port governance responsibilities that have taken place as a result of devolution in France and Canada. Table 2 identiWes three categories of possible transfers in Canada as against two in France. The recognition of lower tiers of government represents a major diVerence with existing models, but as suggested in the text it is a category that could embrace several levels of public administration: regional, local and municipal. The addition of a lower tier/ private for Canada is a further simpliWcation, since as discussed above, a range of public-private partnerships have come about. At the same time the involvement of the private sector in Canada is much greater than in France, as indicated by its role in many port governance functions such as cargo handling, marketing, infrastructure, dredging and land acquisition, activities that in France are carried out by the lower tiers of public administration. In France, only investments in superstructures and cargo handling could be undertaken by private actors. The CCIs, which until the present have been the sole actors in these domains,
will have to bid for the concessions when the present contracts expire in a process that may include private interests. The decision to open up the bidding will depend upon the individual policy decisions made by the new lower tier government owners. In both countries a few ‘regalian’ functions are retained by the central governments. Vessel security, customs and immigration and the environment remain under central government jurisdiction. However, port policy in France is devolved to the lower tiers of government, while in Canada planning port development has been essentially passed down to the individual port administrations, with no national or regional coordination. Table 2 clearly demonstrates that in all but some core regalian functions, devolution has produced vastly diVerent functional governance relationships than before. In Canada, a broad set of lower tier governments and private parties acting together or separately have assumed responsibility for small and medium size ports. In France, the State has also passed down most governance functions to the lower tiers. Here, it appears that the régions will the major actors that will shape future port development, except in the few cases where the départments have taken control. 7. Conclusions The paper demonstrates that the devolution of small and medium size ports in Canada and France has produced a very broad range of governance responses. In France, the
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policy has enforced the transfer of responsibility to lower tiers of public administration. In Canada, where transfers to private actors were permissible, a large majority involve the participation of public actors. Thus for the most part the ports remain ‘public’ entities, albeit at a local or regional level, a status that most of the literature on port devolution has ignored. In both countries no uniform model of governance has emerged. Instead a wide range of partnerships have appeared. This is particularly evident in Canada where public and private partnerships are prevalent in the new port administrations. In both countries devolution of the smaller ports has produced much greater diversity in governance than in the larger ports, where a one-Wt model has been applied in the case of the Canada Port Authorities in Canada, or retained as Ports Autonomes in the case of France. In the allocation of port functions the federal government has almost completely renounced its control over the smaller ports in Canada, while in France the State has downloaded many major functions to the lower tier governments. The complexity of this process again brings into question the appropriateness of the existing models of port governance. The distinctions between the three categories of functions identiWed in the literature as ‘regulatory’, ‘landlord’ and ‘operational/utility’, are unclear in the case studies examined here. Some are shared, others are no longer carried out, and most have been downloaded. However, it appears that national diVerences in the allocation of port functions are very strong. While the agencies administering small and medium size ports in Canada and France exhibit considerable diversity of structure, their roles reXect the degree to which downloading has taken place at the national level. The paper has also drawn attention to major problems confronting the new port authorities. It is too early to measure how these challenges are being met. However, it would be extremely useful to assess in the years ahead how successful the devolution policies have been. In both Canada and France the policies were introduced to reform port governance and to give local actors responsibilities for managing port development. Has decentralization worked? How have the issues of Wnancing and coordination been resolved? Given the range of administrative structures that have arisen, it would be useful to evaluate the commercial success of diVerent management groupings. In France, have the ports under the jurisdiction of the régions performed better than those under single authority? In Canada, how have the ports involving private interests fared compared with others that are under public control?
Just as ports have undergone a radical functional and technological transformation over the last 30 years, so too have they been exposed to administrative reforms. Devolution has been one of the most important elements in this reform. While academic research has provided a useful understanding of the changing governance of larger ports and the process of privatisation, it has not so far explained the consequences for smaller ports of downloading responsibilities to lower tiers of government. This paper has demonstrated that the forms of governance of smaller ports have become more varied as a result of devolution in Canada and France. This diversity is both an opportunity and a challenge, and it remains to be seen how and in what ways the challenges will be met. What is clear is that central government policies may bring about results and consequences far beyond what was originally expected. References Baird, A.J., 1995. Privatisation of trust ports in the united kingdom: review and analysis of the Wrst sales. Transport Policy 2, 135–143. Baird, A.J., 1999. Analysis of private seaport development in the port of Felixstowe. Transport Policy 6, 109–122. Baird, A.J., 2000. Port privatisation: objectives, extent, process and the UK experience. International Journal of Maritime Economics 2, 177– 194. Baltazar, R., Brooks, M.R., 2001. The governance of port devolution: a tale of two countries. Seoul World Conference on Transportation Research. Brault, P., Renaudineau, G., Sicard, F., 2005. Le principe de subsidiarité. La documentation française, Paris. Brooks, M.R., 2004. The Governance Structure of Ports. Review of Network Economics 3, 168–183. Cullinane, K.P.B., Song, D.W., 2002. Port privatisation principles and practice. Transport Reviews 22, 55–75. Dion, S., Slack, B., Comtois, C., 2002. Port and airport divestiture in Canada. Journal of Transport Geography 10, 187–193. Hochstein, A., 1996. Strategies for improving port system performance. In: Hakim, S., Seidenstat, P., Bowman, G. (Eds.), Privatising Transportation Systems. Praeger, New York, pp. 143–167. HoVman, J., 2002. Latin American ports: results and determinants of private sector participation. International Journal of Maritime Economics 3, 221–241. Ircha, M.C., 1997. Reforming Canadian ports. Maritime Policy and Management 24, 123–144. Serebrinsky, T., Trujillo, L., 2005. The assessment of port reform in Argentina. Maritime Policy and Management 32, 191–207. Stevens, H., 1999. The Institutional Position of Seaports. Kluwer, Dordrecht. Thomas, B.J., 1994. Privatisation of UK seaports. Maritime Policy and Management 21, 135–148. World Bank, 2001. World Bank Port Reform Toolkit. www.worldbank. org/transport/ports/toolkit.
Port devolution revisited: the case of regional ports and the role of lower tier governments Jean Debrie a
a,¤
, Elisabeth Gouvernal a, Brian Slack
b
Institut National de Recherche sur les Transports et leur Sécurité, 2 avenue du Général Malleret-Joinville, F-94114 Arcueil, France b Concordia University, 1455 boul. de Maisonneuve O., Montréal, Canada H3G 1M8
Abstract Most models of port governance have been developed to Wt the largest ports, and tend to simplify the devolution process as one involving the transfer of jurisdiction from the State to the private sector. The devolution of smaller ports has been largely ignored as have transfers involving transfers from upper levels of government to lower tiers of public administration. Yet in many countries this has been the experience of port governance, where complex structures have arisen, many of which involve public control, in contrast to the strongly privatised process covered in the literature. The objective of this paper is to examine the process and consequences of changing port governance involving small and medium size ports where lower tiers of government are involved. It examines the recent devolution process in Canada and the decentralization policy in France. It brings to light the diversity of actors, public and private, who have come into play. The paper goes on to examine the challenges that have come about as a result of devolution that face the new port administrations. The paper concludes that existing models of port governance are incomplete and that the role of public administration in port governance is greater, albeit in a diVerent form, than claimed in the existing literature. © 2007 Elsevier Ltd. All rights reserved. Keywords: Devolution; Small Ports; Governance; France; Canada
1. Introduction Port governance involved public control for much of the Twentieth Century. Public control extended through a range of roles: as regulator, as provider of infrastructures and superstructures, as provider of port services including cargo handling and port labour. In the last two decades of the past century, however, a great deal of devolution has taken place. In many jurisdictions ports have been transferred from state ownership and control to more Xexible governance regimes involving private actors in varying degrees. This process of devolution has drawn the attention of international agencies and academic researchers. The World Bank in its Port Reform Toolkit (World Bank, 2001) placed the process as a continuum from on one extreme, the *
Corresponding author. Tel.: +33 0 1 47 40 72 35; fax: +33 0 1 45 47 56
06. E-mail address: [email protected] (J. Debrie). 0966-6923/$ - see front matter © 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.jtrangeo.2007.01.003
service port model – the classic public port, to a fully privatised port, where all actions are determined by private owners. Other authors (Baird, 1995, 1999, 2000; Baltazar and Brooks, 2001; and Brooks, 2004) have elaborated and extended this devolution continuum. In the majority of cases the focus of devolution in the literature has been on the transfers of responsibilities from a state authority towards the private sector, either directly through a sale or concession or through a sharing of responsibilities (Cullinane and Song, 2002; Hochstein, 1996; HoVman, 2002; Thomas, 1994). In few instances only is devolution in the academic literature seen as a transfer from one level of government to another. Yet in many countries, such as Argentina, China, Canada and France recent devolution is involving transfers from the national governments to lower tiers. In the case of France the primary devolution has taken place from the State to the régions, while in Canada the provinces, regional municipalities and municipalities have been among the ‘beneWciaries’
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in most cases. In a sense, therefore these are still ‘public’ ports, but their changing status exposes a range of issues poorly represented in the present literature. At the same time, the literature on devolution is heavily biased towards the largest ports. In Brooks’s work on Canada (2004), for example, the focus is on the 19 ports that have become Canada Port Authorities, with little mention of more than 500 smaller ports transferred to other agencies. In the case of Argentina, where all but one port were devolved to the provinces, Serebrinsky and Trujillo (2005) explore in depth the one that was retained by the national government, Buenos Aires. Devolution of smaller ports involves a very diVerent set of conditions and problems than those that confront the major ports, so that the issues and challenges confronting the new agencies are not directly comparable with those already described in the literature. When these agencies are lower tiers of government a further range of issues are precipitated. The goal of this paper is to Wll a lacuna in the existing literature by bringing into focus the questions raised by the process of divestiture of small and medium size ports, questions that relate not only to the maintenance of port activities but also to the ability of the new agencies to carry out their new responsibilities. While devolution may be seen as a
means of invigorating the port sector by moving towards a more Xexible and commercial organization, governments are also pursuing devolution as a means of reducing the Wnancial burden on the State. For smaller ports the reduction in funding imposes a much more severe burden than the larger ports which are capable of generating higher revenues. When these Wnancial obligations are transferred to a lower tier of government, many questions arise, not just about the ability to Wnance the activity, but also how to establish partnerships with actors in the port industry, how to manage conXicts between other ports under the same jurisdiction, how to coordinate relationships with other jurisdictions: police, environment, maritime security etc., and how to respond to legal issues relating to property rights, concessions etc. Evidence is drawn from divestiture in Canada and France. In the case of the former, the process has been taking place over the last decade during which time over 500 ports have been transferred from Transport Canada to other bodies, mainly public (Dion et al., 2002). In France a process of regionalization is taking place in which 19 Ports d’intérêt national are being transferred to lower tiers of government (see Fig. 1). Information was obtained primarily through government reports and audits as well as interviews. While we were interested in the general trends in
Fig. 1. Ports d’intérêt national and ports autonomes in France.
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457
Fig. 2. Selected ports and Canadian Port Authorities in Maritime Provinces.
Canada, we focused mainly on the Maritime Provinces, where the devolution was largely completed by 2001. It was possible therefore to investigate the kinds of challenges and opportunities the new port administrators faced. Five ports with diVerent types of new administrative structures (Bayside NB, Hantsport NS, Mulgrave NS, Pictou, NS, and Sydney NS) were selected for detailed examination (see Fig. 2). ProWles were built from government documents and press reports. Site visits were made in September 2005, and the local managers and operators were interviewed in depth. Questions focused on the process of bidding for the port, relations with other actors, commercial operations and traYc trends, and a wide ranging discussion of postdevolution problems and issues. In addition, interviews were held with Transport Canada oYcials responsible for the implementation of the divestiture policy. In France the task has been more diYcult, because the regionalization policy still has to be fully implemented. A general overview was obtained from government reports and press statements. Interviews with port managers, municipal, local and regional government oYcials involved in the negotiations were undertaken in 2005 and 2006 in three French régions Bretagne, Haut-Normandie and Bas-Normandie where a total of six ports are being transferred (Brest, Lorient, Saint Malo, Caen, Cherbourg and Dieppe). Here the questions focused on issues surrounding sources of investment, subventions, port operations and market trends, as well as relations between the various territorial governments.
There is a degree of diVerence between France and Canada in terms of the size of ports being transferred. The traYc of the selected French Ports d’intérêt national varies between 1,510,000 and 3,582,000 ton (see Table 1). In Canada, the divested ports are generally smaller, but with a greater variability of size. In the case of the the Wve ports selected for detailed analysis the range extended from 0 ton to 2,163,300 ton (see Table 1). The paper begins by reviewing the existing literature on port divestiture in order to provide a context for the study. It goes on to explain the process of divestiture in Canada and France by describing the policy process, and examines the diVerent new organizations that have come into being. Some of the main challenges confronting the new port administrations that have arisen out of the divestiture process are examined. By investigating the process and its consequences, the paper concludes by demonstrating how complexity invalidates the simple assumptions of general Table 1 TraYc at selected French and Canadian ports in 1000 ton French ports
TraYc in 2004
Canadian ports
TraYc in 2003
Dieppe Caen–Ouistreham Cherbourg Saint Malo Brest Lorient
1510 3582 3031 1858 2461 2678
Bayside Hantsport Mulgrave Pictou Sydney
1712 0 135 66 2163
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divestiture models, and suggests that national diVerences are key to understanding port governance. 2. Context The term ‘service’ port is a term that is applied to ports where the governments carry out the majority of functions necessary to operate the port. It is a term that has been used extensively by international agencies (World Bank, 2001). The service port model was prevalent in many parts of the world up until the 1980s, although there were many variants in the degree that local private companies could provide essential services such as towing and dredging. The term ‘tool’ port was applied to where private actors were given the permission to engage in cargo handling under a concession, but where the other functions and the superstructures remained under public provision and control. A ‘landlord’ port involved private investment in superstructures, as well as responsibility for carrying out cargo handling under a concession. A ‘private’ port was deWned as a facility entirely under private control, although the public authority could still carry out some functions, such as dredging and pilotage. Intended as a means to better understand port reform, it has been used also as a taxonomy by several academic researchers (Stevens, 1999) in the analysis of port governance. As more and more states have embarked on port reform, a growing body of academic literature provides evidence that the World Bank classiWcation is too limited, and a number of authors have been examining port reform as a process involving port-related activities (Baird, 1995, 1999, 2000; Baltazar and Brooks, 2001; Brooks, 2004). Here the focus is on the provision of port-related functions, activities that have been grouped by Baird (1995) into three groups: landowner, regulator, utility and by Baltazar and Brooks (2001) into a comparable groupings: regulatory, landlord, and operations. When matched with diVerent forms of governance (public, public/private and private) a 3 £ 3 matrix of port devolution is produced. Flexibility is introduced by the fact under diVerent regulatory regimes similar functions may be carried out by diVerent agencies. Thus, emergency services, classiWed as a regulatory function by Baltazar and Brooks (2001), and pilotage, an operational function could be carried out by private or public agencies in diVerent countries. These diVerences have been explored by Brooks (2004) in a study of devolution in the US, the UK, India, Australia, and Canada. Despite the growing body of literature on devolution, the focus has been almost exclusively on one of increasing privatization, i.e. a shift from the public port, or service port model, to one involving a greater degree of private sector involvement. Yet devolution also may imply a shift in governance from state control to one involving lower tiers of government, and involving no or limited private entry. The ‘downloading’ of central government responsibilities is occurring in many countries, and applies to many types of programs and services. For example, health care, regional
development and police have been chosen as targets for alternate service delivery in many jurisdictions. In several countries such as China and Argentina, ports too have been targets for downloading, where devolution involves maintaining ports as public entities, but where the responsible governments are those at a sub-national level. Questions arising from this type of port governance shift have been largely absent in the literature. 3. The devolution process On the surface Canadian and French port devolution policies appear to have many points in common. They are both framed by a central government wishing to transfer responsibility for smaller ports to other agencies. In its policy, the Canadian federal government spoke of the need to give a high degree of autonomy for local and regional management in order to be more responsive to local needs and priorities (Ircha, 1997). The French government’s decisions have been framed by the concept of ‘subsidiarity’ in which the aim is to place governance of public services at the appropriate level of service provision. It is a concept that has generated a great deal of discussion in Europe and has become a guiding principle in many EU policies. It is linked to the policy of decentralization because it suggests that local problems should be managed by local governments, and that the upper tiers of government (European Commission, States) should only intervene when the local governments do not have the means to carry out certain responsibilities (Brault et al., 2005). It may be noted, however, that subsidiarity is not a Wxed rule, but rather an instrument of reXection and political debate. Both countries saw ports as a means of downloading their Wnancial responsibilities, and of reducing expenditures. In fact, however, the Canadian and French port policies are strikingly diVerent in implementation. The Canadian devolution policy applied to all ports, with the exception of 30 ‘remote’ ports, where shipping was the only means of access (except by air). The 19 largest ports were treated as separate cases and were devolved to not-for-proWt local authorities (Brooks, 2004). The remaining 540 ports were targeted for transfer over a 10-year period. It is these we are concerned with. A fund was established to cover the costs of the transfers. Originally this fund was set at C$125 million, but was later increased to C$175 million, and an additional special fund of C$40 million was made available to cover study costs. The Canadian Transport Ministry was obliged to follow the policy relating to the disposal of federal properties. Under this process federal properties are oVered initially to other federal departments, then to the provincial governments, then to municipalities, and Wnally to private interests. In this instance however, the Transport Minister obtained a special exemption, by being able to approach the private sector before municipalities, because of a fear that municipalities might use waterfront land for non-transport functions.
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The French Law of August 13, 2004 called for the devolution of the 19 ports d’intérêt national (medium size ports, the smallest having already been divested to the départments in 1984), leaving the seven largest ports autonomes under state control. The process is to be completed January 1, 2007. No funding was allocated to the process itself. Under the French policy the ports were to be oVered to any public authority or a grouping of such authorities, be they regional, departmental, urban agglomeration or town. OVers had to be submitted by January 2006. In the case of multiple submissions the Regional state representative (the Préfet) would attempt an arbitration. In the event of no requests, the ports would be transferred automatically to the region. In all cases, the transfers would be completed by January 2007. The Canadian and French policies are diVerent in many respects: the length of time set for implementation, the budgets allocated for the process, the provision for private entry. In both cases the process has been complicated. In Canada, 65 ports have been divested to other federal departments, 40 to Provincial governments (mainly ferry ports), 123 to local interests, and 238 deproclaimed as public harbours or demolished. Seventy-four still have to be transferred by the end of the 10-year process. In France, there are great regional diVerences in the organizations seeking control of the divested ports. In Bretagne, for example, only the région has come forward with a proposal taking control of the three ports. In Languedoc– Roussillon, the municipality, the départment and the région have submitted their candidacies for the port of Sète. In Basse-Normandie the région initially indicated its desire to take control of the two ports, Caen and Cherbourg, and the départment of Calvados announced its candidacy for Cherbourg. A compromise joint management system is being arranged. 4. New governance structures in Canada and France The process of devolution in both Canada and France has involved several tiers of government below the national level. In Canada, multiple combinations and permutations of provincial, regional municipalities, municipalities, and private sector actors have emerged. Two distinct types of groupings may be observed: those that are “commercial” which operate as proWt generating entities, and those that are not-for-proWt organisations that must balance their accounts and re-invest any surpluses. In Fig. 1, the Canadian model includes many diVerent types of actors who have participated in the devolution process, and in individual ports they may be associated in a wide range of combinations. For example, in the case of Bayside, New Brunswick, the port has been taken over by the Bayside Port Corporation which is a commercial organisation made up largely of private interests, including three stevedoring companies, but also includes local municipal representatives on its board. In contrast, Mulgrave, Nova Scotia has been taken over by a not-for-proWt corporation, the Strait
459
of Canso Superport Corporation, whose board is made up of municipal, provincial representatives and local stevedoring Wrms. It is noteworthy that the distinction between forproWt and not-for-proWt may involve the participation of public bodies. In other cases a single entity may have come forward to assume control of the port, a private company alone as in the case of Pictou and Hantsport, or a regional municipality as in the case of Sydney, Nova Scotia. In the case of France a diVerent set of conWgurations has resulted, but always involving public agencies. A further distinction is that in France there exists a distinction between the agency issuing the operational licences and the concessionaires. This relationship has been complicated by the decentralisation policy, because it has introduced another level. Even if the responsibility for issuing licences has been transferred to another level of government (région, départments, and urban agglomerations), the central government has retained certain powers, over the police for example. Furthermore, under the French system the State is the law, and this principle has not been altered by the decentralisation policy. A new level of public authorities may have obtained the ownership of the ports, and will be responsible for infrastructure investments, and awarding operating concessions but the State still retains its overall regalian authority. The concessions have been held historically by the Chambers of Commerce and Industry (CCIs). These agencies have a particular status in France. They are oYcially public bodies of an administrative character. Part of their income is derived from an additional levy on the professional tax (Impôt Additionnel sur la Taxe Professionnelle (IATP)) While retaining the status as public bodies, the CCIs represent the interests of small and medium size businesses in the region and the IATP is collected from the member Wrms. In France, the majority of the smaller airports and ports are managed by the local or departmental CCIs. In the case of ports, the CCIs holding concessions receive additional income from the port charges levied. In future, the CCIs may bid for concessions, but private companies will no longer be excluded from bidding. In Fig. 1, several types of governance possibilities are indicated, involving combination between région, départments, and urban agglomerations. There may be also a role for the communes, but this is still unclear. These agencies are the new landlords, and contract out port operations to concessionaires. As in the Canadian case, a wide range of ‘public’ agencies are involved in port governance since the French decentralisation process has taken place. This diversity of governance emerges as one of the most distinctive features of port divestiture. In Canada, a very large number of combinations of provincial, regional municipalities, municipal as well as many diVerent types of private actors have come about. As mentioned above, some are not-for-proWt corporations, which must balance their accounts, others are proWt oriented, in which the dividends are distributed according to the Wnancial participation. The latter type fell into the category of ‘private’ ports in the previous port classiWcation systems. It is noteworthy that in
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many cases public bodies are represented on the boards of these for proWt ports, which further complicates distinctions between public and private/proWt and not-for-proWt ports. In these port corporations the public agencies hold seats on the board, but they do not have any Wnancial investments, nor do they receive dividends. The not-forproWt ports are particularly diYcult to classify, since in many cases the users are included in the corporations that own the facilities, and thus are not ‘landlord’ ports in the classical sense. As a result of the devolution policy in Canada there are few examples of true landlord ports among the divested facilities. One example is Sydney, Nova Scotia, where the regional municipality has purchased the port, and leases out the facility to a not-for-proWt corporation that includes a wide range of local public and private interests. In France too the diversity is represented by the permutations of lower tiers of government that have become port agencies. The transferred ports d’intérêt national remain landlord ports, although as mentioned above there exist the possibilities for concessionaires other than the CCIs to obtain operating contracts. 5. Challenges confronting small ports as a result of devolution Based on interviews conducted in both countries, a wide range of issues and problems for port governance have been identiWed as a result of devolution. Some of these were predictable, given the objective of downloading that the central governments implemented; others are unexpected. Despite the wide range of new administrative structures that have come about because of devolution, the challenges may be grouped into two groups: those of a Wnancial nature, and those that are engendered by the insertion of new tiers of government in port governance. 5.1. Financial The Canadian policy by its own criteria raises questions about the ability of the ports to survive. The 19 largest ports were given special independent status because there was evidence that they could be self-supporting, although even here access to funding for capital expenditures has been a major issue subsequently (Brooks, 2004). How may the smaller ports survive if by deWnition the federal government believed they would not have the same means to stand on their own? By downloading the ports the federal government has eVectively washed its hands of the problem and left it to the new managements to cope with their Wnancial futures. Their sources of revenue are limited. Three sets of fees are collected: harbour dues, which are based on the gross registered tonnage of the vessel per entry; wharfage, a variable cost depending on the type and volume of cargo lifted; and, berthage, a daily charge levied according to the length of vessel docked in the port. For ports with small traYc bases these sources generate only limited income. For sev-
eral ports even this limited revenue stream has been thrown into question since divestiture because of the issue of harbour beds. For many of the ports transferred to other bodies sea bed contamination has been an issue, and many of the new owners of the port infrastructures have been reluctant to obtain ownership of the water lots as well, until the matter of responsibility for liability is resolved. The result is that for many of the transferred ports in the Maritime Provinces the harbour beds still remain under federal control, and because of this the new owners cannot collect the harbour dues. Under the devolution policy most new owners received Wnancial compensation from the transfer fund. These payments were made based on the estimated cost of maintaining the existing infrastructure over the next 25 years, taking into account expected revenues based on present returns. The amounts transferred varied greatly, from a few thousand dollars to several million. Several transfers resulted in the new owners paying for the port. In the case of two ports mentioned above, Bayside and Sydney, the amounts paid were C$3.0 m and C$1.5 m, respectively. The calculations determining the amounts to be paid or awarded were based on 1995 data, the date of the introduction of the policy and are concerned with maintaining the status quo. Inevitably, the new owners seek to enhance traYc and revenues. In most cases this is impossible without some improvements to existing facilities: new wharfs, warehouses, equipment etc. Securing funding is a major challenge. Most port infrastructures are expensive, and given the limited revenue stream of most of the small ports, the new owners have little capacity to invest. Where lower tiers of government are involved as owners, they are almost universally limited in their capacity to contribute directly because they have to respond to increasing demands for the other public services they provide and because many of these services have been downloaded too. It becomes a vicious circle: without the ability to add new facilities, their opportunities to expand are limited. Ports that have developed new infrastructures and superstructures have been able to attract new traYc. Sydney (NS), which previously had been a bulk handling facility, has become an important regional cruise port destination since it undertook the construction of a C$6.5 m cruise terminal. The Strait of Canso Superport Corporation has constructed new sheds at Mulgrave (NS) to attract more forest products. In both cases the funding came from regional development funds. Few new port administrations have the ability to access such funding, and consequently their futures are in doubt. Similar Wnancial challenges are likely to confront the new French port administrations. The State is proposing to transfer funding based on the average of the last ten years, although the number of years and the actual base amounts still have to be determined. It should be noted that funding for the ports d’intérêt national had been declining for many years, and the lower tiers of governments are claiming that
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these ports have been neglected by the state. Thus signiWcant new investments may be called for. In France, the concessionaires are expected to cover superstructure costs, but it will be the lower tiers of government who will have to pay the rest. Already there is concern that the largest ports, the Ports Autonomes will be unfairly advantaged, because in several cases they are in competition for the same traYc with the ports d’intérêt national. More importantly, perhaps, is that they will be in competition for Wnancing. For example, Haut-Normandie made a 52 million euros contribution to the Port 2000 expansion project of the port of Le Havre, but when that région becomes responsible for the ports d’intérêt national it will have to arbitrate between the Wnancial demands of very diVerent ports. At the same time, European infrastructure grants, FEDER, are likely to be more diYcult to obtain, since the focus in the EU is on improving the infrastructure of the new Eastern European entrants. In France the problem is complicated further because not only will the régions have to fund new infrastructures, but in many cases they will have to adjudicate between competing demands by ports. In Brittany and Normandy, for example, several ports will be administered by each région. In the past, decisions were made at the national level, but future requests for capital investments will inevitably produce strong local lobbying. It may be more diYcult for the lower tier governments to resolve conXicting claims that when the decisions were made by the central government. The Canadian experience demonstrates that other unexpected Wnancial issues are involved in the devolution. A major concern has been that as federal bodies, the ports paid no municipal taxes. Once divested, the new owners have become immediately eligible for assessment. Occupying extensive waterfront sites, ports are seen by some municipalities as an important new source of taxation. In many parts of Canada, the Maritime Provinces, for example, this came to light after the transfers took place, and it took a great deal of lobbying by the ports to reduce the levels of assessment. These experiences have helped to hold up divestiture in other parts of Canada, in Québec for example, until accommodations could be made. A further Wnancial headache has been insurance. As federal bodies, the ports paid no insurance premiums. Since devolution they have had to secure insurance coverage, mainly from private insurers. Rates have increased dramatically since 9/11, and this has been a serious unanticipated Wnancial drain on port administrations. In France, too, the issue of insurance threatens to be a major concern. As in Canada, the French state is its own insurer, so that airports and ports are not insured, and the state covers the bill if there is a loss or damage. Lower tiers of government, however, have to obtain coverage from professional insurers. With port decentralization they will have to insure the ports, but as yet they have no measure of the value of the facilities, nor the likely premiums.
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5.2. The insertion of new levels of governance The devolution of the smaller ports also introduces problems of spatial planning and coordination, in particular the problems of articulation between the diVerent levels of government involved in the new organization of ports. The interests of the municipal, regional and national actors are divergent, and are sometimes completely contradictory, which raises the need for an arbitration between the parties around a range of port problems. Perhaps the greatest problems are centred on the potential conXicts between municipalities and the other higher levels of government. For the residents of the port cities issues related to the quality of life, the urban landscape, traYc congestion and noise etc are pre-eminent concerns and these are most likely to shape the positions of the urban politicians. For the higher levels of government, the port is an object of economic development, of employment, of enhancing the competitiveness of manufacturing chains, issues that are disconnected partially from problems of quality of life in cities. Furthermore, the regional governments may have to deal with problems arising from more than port under their jurisdiction. In Canada, as in France, municipalities seek to exploit the tourism potentials of waterfront sites. In terms of port functions, recreational boating needs and Wshing activity requirements may take precedence over industrial port activity. The port of St. Malo in France provides examples of where pressures for more the urban and tourist activity in the port zone are at the expense of industrial port functions. In Pictou, Nova Scotia, similar conXicts exist between the private port authority and the municipality seeking to expand the historico/tourist development of the waterfront. In the context of these scale conXicts, the Canadian devolution policy has indirectly resolved some of the issues. In the negotiations leading up to the transfers of the ports, Transport Canada sought wherever possible to exclude a municipality from acquiring sole ownership. In most cases where municipalities are involved, they share ownership with other agencies, public and private to ensure the urban interests do not override commercial activities. Furthermore, the acquiring parties have to agree to maintain the port site as public port facilities for a Wxed number of years in the future. In France, the situation at present is less clear. The involvement of municipalities in port decentralization is a priori negligible, except for Sète and Calais. Nevertheless the power of municipalities in the regional political structure of France is very strong, and they are responsible for land use and zoning around the perimeters of port land. The municipalities will, therefore, exert inXuence over the new port administrations, who will have to adopt port development plans that take into account explicitly urban concerns. Other scale conXicts between regional and central governments over port planning and development are likely to occur as a result of devolution. In France, there are presently signiWcant political diVerences between the régions
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Fig. 3. The evolution of French and Canadian Port Governance.
that are controlled largely by left wing political parties, and the State that is right wing. Basic diVerences in policy are likely to multiply the potential areas for disagreement, at least in the short term. Transfers of personnel, Wnancial transfers, and the application of environmental laws are also areas of potential conXict. For example, the decision to retain some employees by the central government, such as the Harbour Masters, when some of their functions impinge on activities carried out by the new agencies (région or Syndicat Mixte), are likely to give rise to diYculties. The State also retains its regalian powers, in security for example, the carrying out of which require the ports to provide space and facilities at no cost within the limits of the decentralized ports. Canadian port devolution has not given rise to the same types of problems. Under the Canadian constitution, the Provinces have distinct and speciWc powers and areas of jurisdiction that are not beholden to the central government as in France. However, this demarcation has led to signiWcant problems over port divestiture. A major diYculty has been that in most cases the water beds belong to the Provinces, which had ceded these sites to the federal government to maintain the ports. Once the federal government ceased to retain jurisdiction over the ports, the water beds are retro-ceded to the Provinces. As ownership of the harbour beds is linked to the collection of harbour dues, the issue is of vital concern to the economic prosperity of the new owners. Many Provinces resolved this issue quickly
and without diYculty, but the Provinces of British Columbia, Newfoundland and Quebec were extremely cautious, partly because of the fear of inheriting responsibility for environmental cleanup. As a result, devolution was delayed in British Columbia until agreement was reached, and has been seriously retarded in Newfoundland and Quebec. Because devolution in France and Canada has multiplied the number of interested parties in port governance as shown in Fig. 3, it is perhaps inevitable that jurisdictional and spatial conXicts should have increased. Regional ports are now managed by partners with many diverse interests and goals. If through subsidiarity local and regional conditions and needs are better reXected in port governance, the choices that have to be made are more complex, and it will be a challenge to resolve them. 6. The governance models reconsidered The evidence presented from the process of port devolution in Canada and France conWrms that the existing models of port governance are incomplete. Not only do they largely ignore the existence of lower tiers of government from port administration, but they fail to represent the range public/private linkages that are possible. At the same time the issues confronting port governance of small and medium size ports are fundamentally diVerent from those of the largest. If the distinctions between public, mixed, and private forms of governance suggested by the existing models
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Table 2 Devolution and changing port functions in France and Canada French “decentralisation” CCI/private/mix
Lower tiers 䊉
X
Governance functions 䊉 䊉 䊉 䊉 䊉 䊉 䊉 䊉 X 䊉
䊉 䊉 䊉 䊉 䊊 䊊 䊉 䊉
䊉 䊊 䊊
Canadian devolution
State
䊉 䊉 䊉 䊉 䊊
State 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007 2003 2007
Port policy Environment Customs/immigration Vessel safety Security Insurance Marketing Infrastructures Land Acquisition Dredging Superstructure Cargo handling
1995 2006 1995 2006 1995 2006 1995 2006 1995 2006 1995 2006
䊉
1995 2006 1995 2006 1995 2006 1995 2006 1995 2006 1995 2006
䊉
Lower tiers
Lower tier/private
Private
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X 䊉 䊉
䊉 䊉 䊉 䊉 䊉 䊉 䊉 䊉
䊉 䊉 䊉 䊉
䊉, carried out by; 䊊, shared; X, either.
are more complex in reality, the governance functions are not easily classiWed as regulatory, landlord or operator, as in the model of Brooks (2004). Are emergency services a regulatory function, for example? Indeed, two of the three terms appear inappropriate. The term ‘regalian’ is suggested instead of ‘regulatory’, since it refers to the constitutional authority of the State, and ‘land owner’, the term originally used by Baird (1995) is in many ways more appropriate than ‘landlord’, since the latter is also more narrowly applied to a particular type of port governance. In Table 2, we have done away with these distinctions and trace the changes in 12 port governance responsibilities that have taken place as a result of devolution in France and Canada. Table 2 identiWes three categories of possible transfers in Canada as against two in France. The recognition of lower tiers of government represents a major diVerence with existing models, but as suggested in the text it is a category that could embrace several levels of public administration: regional, local and municipal. The addition of a lower tier/ private for Canada is a further simpliWcation, since as discussed above, a range of public-private partnerships have come about. At the same time the involvement of the private sector in Canada is much greater than in France, as indicated by its role in many port governance functions such as cargo handling, marketing, infrastructure, dredging and land acquisition, activities that in France are carried out by the lower tiers of public administration. In France, only investments in superstructures and cargo handling could be undertaken by private actors. The CCIs, which until the present have been the sole actors in these domains,
will have to bid for the concessions when the present contracts expire in a process that may include private interests. The decision to open up the bidding will depend upon the individual policy decisions made by the new lower tier government owners. In both countries a few ‘regalian’ functions are retained by the central governments. Vessel security, customs and immigration and the environment remain under central government jurisdiction. However, port policy in France is devolved to the lower tiers of government, while in Canada planning port development has been essentially passed down to the individual port administrations, with no national or regional coordination. Table 2 clearly demonstrates that in all but some core regalian functions, devolution has produced vastly diVerent functional governance relationships than before. In Canada, a broad set of lower tier governments and private parties acting together or separately have assumed responsibility for small and medium size ports. In France, the State has also passed down most governance functions to the lower tiers. Here, it appears that the régions will the major actors that will shape future port development, except in the few cases where the départments have taken control. 7. Conclusions The paper demonstrates that the devolution of small and medium size ports in Canada and France has produced a very broad range of governance responses. In France, the
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policy has enforced the transfer of responsibility to lower tiers of public administration. In Canada, where transfers to private actors were permissible, a large majority involve the participation of public actors. Thus for the most part the ports remain ‘public’ entities, albeit at a local or regional level, a status that most of the literature on port devolution has ignored. In both countries no uniform model of governance has emerged. Instead a wide range of partnerships have appeared. This is particularly evident in Canada where public and private partnerships are prevalent in the new port administrations. In both countries devolution of the smaller ports has produced much greater diversity in governance than in the larger ports, where a one-Wt model has been applied in the case of the Canada Port Authorities in Canada, or retained as Ports Autonomes in the case of France. In the allocation of port functions the federal government has almost completely renounced its control over the smaller ports in Canada, while in France the State has downloaded many major functions to the lower tier governments. The complexity of this process again brings into question the appropriateness of the existing models of port governance. The distinctions between the three categories of functions identiWed in the literature as ‘regulatory’, ‘landlord’ and ‘operational/utility’, are unclear in the case studies examined here. Some are shared, others are no longer carried out, and most have been downloaded. However, it appears that national diVerences in the allocation of port functions are very strong. While the agencies administering small and medium size ports in Canada and France exhibit considerable diversity of structure, their roles reXect the degree to which downloading has taken place at the national level. The paper has also drawn attention to major problems confronting the new port authorities. It is too early to measure how these challenges are being met. However, it would be extremely useful to assess in the years ahead how successful the devolution policies have been. In both Canada and France the policies were introduced to reform port governance and to give local actors responsibilities for managing port development. Has decentralization worked? How have the issues of Wnancing and coordination been resolved? Given the range of administrative structures that have arisen, it would be useful to evaluate the commercial success of diVerent management groupings. In France, have the ports under the jurisdiction of the régions performed better than those under single authority? In Canada, how have the ports involving private interests fared compared with others that are under public control?
Just as ports have undergone a radical functional and technological transformation over the last 30 years, so too have they been exposed to administrative reforms. Devolution has been one of the most important elements in this reform. While academic research has provided a useful understanding of the changing governance of larger ports and the process of privatisation, it has not so far explained the consequences for smaller ports of downloading responsibilities to lower tiers of government. This paper has demonstrated that the forms of governance of smaller ports have become more varied as a result of devolution in Canada and France. This diversity is both an opportunity and a challenge, and it remains to be seen how and in what ways the challenges will be met. What is clear is that central government policies may bring about results and consequences far beyond what was originally expected. References Baird, A.J., 1995. Privatisation of trust ports in the united kingdom: review and analysis of the Wrst sales. Transport Policy 2, 135–143. Baird, A.J., 1999. Analysis of private seaport development in the port of Felixstowe. Transport Policy 6, 109–122. Baird, A.J., 2000. Port privatisation: objectives, extent, process and the UK experience. International Journal of Maritime Economics 2, 177– 194. Baltazar, R., Brooks, M.R., 2001. The governance of port devolution: a tale of two countries. Seoul World Conference on Transportation Research. Brault, P., Renaudineau, G., Sicard, F., 2005. Le principe de subsidiarité. La documentation française, Paris. Brooks, M.R., 2004. The Governance Structure of Ports. Review of Network Economics 3, 168–183. Cullinane, K.P.B., Song, D.W., 2002. Port privatisation principles and practice. Transport Reviews 22, 55–75. Dion, S., Slack, B., Comtois, C., 2002. Port and airport divestiture in Canada. Journal of Transport Geography 10, 187–193. Hochstein, A., 1996. Strategies for improving port system performance. In: Hakim, S., Seidenstat, P., Bowman, G. (Eds.), Privatising Transportation Systems. Praeger, New York, pp. 143–167. HoVman, J., 2002. Latin American ports: results and determinants of private sector participation. International Journal of Maritime Economics 3, 221–241. Ircha, M.C., 1997. Reforming Canadian ports. Maritime Policy and Management 24, 123–144. Serebrinsky, T., Trujillo, L., 2005. The assessment of port reform in Argentina. Maritime Policy and Management 32, 191–207. Stevens, H., 1999. The Institutional Position of Seaports. Kluwer, Dordrecht. Thomas, B.J., 1994. Privatisation of UK seaports. Maritime Policy and Management 21, 135–148. World Bank, 2001. World Bank Port Reform Toolkit. www.worldbank. org/transport/ports/toolkit.