Alberta businesses are being asked to support a drive to remove regulatory barriers that prevent Canada’s largest West Coast port from expanding and competing with its U.S. counterparts.

More than 9,000 jobs in this province are linked to port activity in Vancouver, and about 37 per cent of tonnage handled by the port authority originates in Alberta, including petro-chemicals, grain, coal and agricultural and forest products.

But the Vancouver port authority says its resources are stretched to the limit, and that without additional investment from the federal government and the removal of a cap on commercial borrowing, it is at risk of losing business to more efficient, and profitable, U.S. ports including Seattle and Tacoma.

“Alberta’s primary industries use the port of Vancouver as a gateway when they’re selling (goods) internationally. It’s important for them to understand that the cost and existence of the transportation chain depends very much on them getting involved in this process,” said Gordon Houston, president and CEO of the Vancouver port authority.

Vancouver Port Authority CEO Gordon Houston

Houston was in Calgary last week to rally support in the business community for changes to the Canada Marine Act, legislation that governs 19 government-owned ports, which together handle an estimated 220 million tonnes of goods annually valued at about $100 billion.

A federal panel recently concluded cross-country hearings into the issue as part of a required review of the act, and recommendations are expected to be issued to Transportation Minister David Collenette by the end of this month.

“Governments use ports as revenue generation. They should be used as economic generators, as drivers of the economy,” Houston said in an interview following a speech at the Calgary Chamber of Commerce.

“People in the United States do just that – they put public money into the port system. And it brings back investments, it brings back jobs, it brings back taxes and it stimulates the economy. Our system here does the exact opposite, it represses the economy.”

The Port of Vancouver is Canada’s largest port, moving more than 70 million tonnes of cargo each year and acting as a critical gateway to the Pacific Rim. It hosts four major North American railways as well as being a stopping point for 26 cruise ships and 331 sailings each year.

But Houston says the port’s growth is being hamstrung by federal rules capping the amount it can borrow to $225 million, which greatly limits its access to private capital for expansion. Mandated by legislation to operate on a cost-recovery basis, the port – which has an annual operating income of about $26 million – is prohibited from fully reinvesting its operating profits and must pay an annual $4- million stipend to the federal government.

Houston told the Calgary business audience that Vancouver’s competitive position is eroding compared to U.S., which treats its transportation industries as enablers of economic activity, rather than simply revenue generators. Vancouver’s largest competitor, the Port of Seattle, spends more than $500 million a year on capital projects, he noted.

But recent federal budget surpluses in Canada have put the government in a better position to stimulate the port’s economy than in the mid-1990s, when the Marine Act was first implemented, Houston said.

Port authorities operate on a “user-pay” basis, leasing their land to terminal operators and other businesses, and collecting fees paid by leaseholders, shipping lines and other companies.

But with a vacancy rate of only three per cent, Vancouver’s port is also running out of land, and its ability to attract new business is virtually exhausted at the same time key U.S. ports are making major new investments in improving infrastructure, said Houston.

“I don’t think there’s anybody in this room who would argue that maintaining the Port of Vancouver’s position as the largest and most successful port on the west coast of North America is not in our country’s – or Alberta’s – best interests,” Houston said.

This view is shared by Peter Wallis, president and CEO of the Calgary-based Van Horne Institute, which promotes research and education of transportation issues.

“Once the slide begins, it’s very difficult to reverse the process,” said Wallis.

“The shipping lines may not be inclined to pick up (Alberta goods) in Vancouver, because the facilities won’t be as efficient as they would be in Seattle or Tacoma. The ports down there can finance through tax-free bonds, and they can build the infrastructure to make it a pretty logical and economically attractive place for our shippers of bulk products and containers.”

Alberta also relies on Vancouver’s port for incoming container shipments of consumer goods, added Wallis. “This port really is a critical element in our supply chain.”

The Vancouver port authority is asking the government to scrap limits on private-sector borrowing, as well as eliminate the annual stipend. Under the current act, port authorities are prohibited from applying for or receiving federal infrastructure grants available to other public and private-sector industries in Canada.

“The federal government must acknowledge that Canada’s ports are a strategic national asset whose long-term success or failure will have a tremendous impact on our country’s economic and trade development,” Houston told the Calgary audience.

To finance planned expansion, the authority wants to invest about $1.1 billion in new port land and infrastructure over the next 10 years. Even if the proposed changes to the Marine Act are implemented, said Houston, the port still will need a direct injection of funds from Ottawa to finance a massive new container facility planned for the Delta area.

“If we are lucky enough to achieve those changes, our next chore will be to convince the federal government to commit $500 million in infrastructure funds to our port,” Houston said.

“We believe our government needs to invest in the port industry. And their return on a half-billion investment would be about $6.4 billion,” he added. “It’s a significant return.”