TORONTO PORT AUTHORITY

The birth of the Toronto Port Authority (TPA) is shrouded in controversy. The TPA is the federal government agency responsible for the Toronto Island Airport, the Port of Toronto and the Outer Harbour Marina.

In 1996 the federal government did a rather routine review effort to reorganize ports across the country. The resulting legislation came to be called the Canada Marine Act. As part of this work, ports were listed in the legislation that would remain under the jurisdiction of the Canadian government and be administered by a port authority. Those not on the list would be turned over to the local municipality. Toronto was not listed; the city was about to gain jurisdiction over its port.

Richard Byers, vice-president of Nesbitt-Burns justified the decision by saying:

In the case of Toronto, current operations do not generate cashflow sufficient to cover expected maintenance and capital spending. In addition, a significant portion of the port's revenue comes from a subsidy from the City of Toronto, a subsidy which is not commercially enforceable.

This decision did not please some powerful interests. In third reading of the bill in the House of Commons, Liberal MPs Dennis Mills and Tony Ianno, both members of the government party of the day, walked on an amendment to put the Port of Toronto under the jurisdiction of the Canada Marine Act and create the Toronto Port Authority.

Toronto's port has very little shipping activity. This is a sugar ship docked at Redpath's wharf on Queen's Quay.

Mayor Barbara Hall and other members of Toronto City Council were furious. In a Senate hearing on the bill Toronto City Councillor Dan Leckie said, “The Mayor’s office was given assurances right up to the night before third reading of the bill in the House of Commons [that the port would be turned over to the city]. We were shocked.” He went on to say that Toronto’s port was 46th in the level of activity of ports across the country, “just below Blubber Bay, Newfoundland.” In 1998 Toronto’s Metro Council passed a motion 36 to 1 asking the federal government to remove Toronto from its list of port authorities.

Regardless of the almost universal local opposition, the bill sailed through Parliament and was signed into law. Toronto had gained the Toronto Port Authority, and local people lost control of their port and the Toronto Island Airport.

Unnoticed at the start was a ticking time bomb in the legislation. The Canada Marine Act requires that all port authorities be financially self sufficient. That meant that they were not to receive subsidies from the federal government, and they would have to generate enough income from fees or other earnings to maintain their operations.

Once the legal niceties were concluded and the new TPA board was put in place, the first thing the board and management did was make an assessment of the economic reality of their operations. It did not look good. The TPA was bleeding money in both their airport and port operations. Because it could not rely on government grants, the TPA had to increase its revenue to survive. The only thing that was profitable was the Outer Harbour Marina, but no more money could be squeezed out of it. The port was steadily losing business, and it was unlikely more shipping could be attracted. That left two possible profit centres, the island airport and land.

With the Canada Marine Act, all of the assets of the former Toronto Harbour Commission had had been transferred to the TPA. During the Mulroney years some of the land then owned by the Harbour Commission had been conveyed to the city by the federal government. The new TPA board said that this was done unfairly and launched a $1 billion lawsuit against the city to recover some of the loss. This substantial sum won few friends on Toronto City Council and created a huge controversy. People in Toronto wondered why one level of government was suing another level of government. Didn’t all of the assets belong to the people?

The suit against the city for the land was one of the TPA’s efforts to raise money and pay for its financial losses, but the board also realized that if it could turn the airport into a money-making enterprise, it would have the financial resources to exist forever. One of the first things the TPA did was commission a report on the island airport by Sypher Mueller, a consulting firm that worked for the airline industry. This report was published in January 2002.

The key issue that Sypher Mueller addressed was the economic viability of the airport. It concluded that the airport could not continue at its present level of operations because it was losing substantial amounts of money. The airport either had to expand or close. Sypher Mueller recommended that the airport expand, but added that the expansion would be successful only if a fixed link were built to the airport across the Western Gap.

The TPA accepted the report and in the process the board accepted the recommendation that the airport be expanded. As far as can be determined, it never considered the option of closing the airport. The stage had been set for a clash between those who supported the expansion of the airport and those who opposed it.