2008 Port Metro Vancouver Economic Impact Study FINAL REPORT

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2008 Port Metro Vancouver

Economic Impact Study

FINAL REPORT strategic

transportation & tourism solutions

Prepared for

Prepared by InterVISTAS Consulting Inc.

12 January 2009

121January1212121 2008 Port Metro Vancouver Economic Impact Study – Final Report ii

Executive Summary

As of 1 January 2008, the Lower Mainland Port Authorities - Vancouver Port Authority, Fraser River Port Authority and North Fraser Port Authority - had amalgamated. This led to the creation of the Vancouver Fraser Port Authority (VFPA), the new entity responsible for overseeing the operations of the three Lower Mainland ports. In June 2008, VFPA announced their decision to market the Lower Mainland port system as Port Metro Vancouver.

Prior to this, the possibility of combining the three Lower Mainland ports had long been discussed. In June 2006, the Federal Minister of Transport, Infrastructure and Communities invited the individual port authorities to examine port amalgamation. A report was commissioned to examine this possibility and the results showed that it would be beneficial to carry out the port amalgamation process. As a result, the federal government issued the “Certificate of Amalgamation” that integrates the Vancouver Port Authority, the Fraser River Port Authority and the North Fraser Port Authority. The provincial government also demonstrated support for this initiative. This led to the creation, on 1 January 2008, of the VFPA, which remains the company’s legal name. Port Metro Vancouver was later announced as the entity’s name to the industry and general public.

With existing offices in New Westminster and in Vancouver, Port Metro Vancouver’s jurisdiction includes the combined properties and assets formerly under the jurisdiction of the individual port authorities. Figure ES-1 illustrates the jurisdiction of Port Metro Vancouver after its amalgamation in 2008. Port Metro Vancouver anticipates that synergies generated from amalgamating the separate entities will enhance both the efficiency and effectiveness of a single representative gateway to global trade, while creating “greater resources for land acquisition, river management and strategic infrastructure investments.”

Port Metro Vancouver is one of the most visible contributors to the economy of the Metro Vancouver region. It is also a major economic generator that contributes to each provincial economy in Western Canada and to the nation as a whole. This is partly due to the fact that the Port is served by such large employers, but more importantly, it is because the Port provides the necessary infrastructure to connect Canada’s domestic markets to markets around the world, particularly in the Asia Pacific region. As such, Port Metro Vancouver identified that it would be necessary to conduct an economic impact study for the amalgamated ports to establish a baseline of its combined economic impact. Conducting an economic impact study allows Port Metro Vancouver to demonstrate its significant employment and economic impacts provincially and nation-wide, particularly to the communities that surround the Lower Mainland and the provincial and federal governments.

In 2008, Port Metro Vancouver commissioned InterVISTAS Consulting Inc. to conduct an economic impact study based on 2007 Port operations for the integrated port system in the Lower Mainland.

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Figure ES-1: Port Metro Vancouver Post-Amalgamation Jurisdiction Map

On-going operations at Port Metro Vancouver make considerable contributions to local employment and the provincial economy.

This study found that the Port Metro Vancouver’s on-going operations support 47,700 direct jobs, representing 40,600 direct person years (PY)1 of employment in British Columbia (B.C.). In round numbers, the direct economic impact of this employment on the B.C. economy is estimated at: $4.1 billion in gross domestic product (GDP); $9.8 billion in economic output; and $2.2 billion in wages.

Including indirect and induced effects, in round numbers, the total British Columbia impacts of on- going operations at businesses related to Port Metro Vancouver are: 106,100 jobs; representing 90,100 person years of employment,

1 Person years are also referred to as FTEs (full-time equivalents).

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$7.9 billion in GDP; $17.1 billion in economic output; and $4.8 billion in wages.

The British Columbia economic impacts of on-going operations at Port Metro Vancouver are summarised in Table ES-1.

Table ES-1: 2008 Economic Impact of Port Metro Vancouver (B.C. Impacts Only)

Economic Person Wages GDP Type of Impact Jobs Output Years ($Millions) ($Millions) ($Millions)

Direct 47,700 40,600 2,200 4,100 9,800

Indirect 40,300 34,500 1,700 2,800 5,500

Induced 18,100 15,000 900 1,000 1,800

Total 106,100 90,100 4,800 7,900 17,100

Port Metro Vancouver’s economic impacts extend deep into B.C., the Prairies and the rest of Canada

Port Metro Vancouver has an economic impact throughout Western Canada, and beyond. Since the Port’s major bulk and breakbulk commodities are all produced outside the Lower Mainland, this project has examined the logistics chains that depend on Port Metro Vancouver.

Outside of B.C., the largest direct employment impact is in Alberta, followed by Manitoba and then Ontario. This includes supporting 1,800 direct jobs in Alberta and in the order of 1,100 direct jobs in each of Manitoba and Ontario.

At a local level, the Port is a significant employment and economic activity generator in communities throughout the Lower Mainland from the North Shore to the US border and from the Georgia Strait to Hope. This is because the Port’s jurisdiction includes land in many Metro Vancouver municipalities. The employment and multiplier impacts were also calculated and are considerable.

Table ES-2 shows the estimated direct employment impacts on a community-by-community basis in Metro Vancouver, and totals for B.C., Alberta, Saskatchewan, Manitoba, Ontario and Quebec.

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Table ES-2: Direct Economic Impacts by Location (All Locations in Canada)

Person Wages GDP Output Jobs Years ($Millions) ($Millions) ($Millions)

Vancouver 18,300 14,300 870 1,290 3,380

Richmond 5,700 5,000 190 390 840

Surrey 4,000 3,700 220 440 1,010

Delta 3,500 2,900 140 430 1,030

North Vancouver 3,500 3,100 180 250 560 (District)

New Westminster 3,000 3,000 190 240 650

North Vancouver (City) 2,000 1,900 100 150 430

Port Coquitlam 800 700 30 60 180

Coquitlam 700 700 50 90 160

Burnaby 700 600 30 50 110

Maple Ridge 400 400 20 40 110

Port Moody 300 200 10 20 50

Pitt Meadows 300 300 10 30 60

Langley (Township) 200 200 10 20 40

Langley (City) 200 200 10 40 70

West Vancouver 100 100 0 10 10

Total Metro Vancouver 43,900 37,200 1,980 3,550 8,670

Other B.C. 3,800 3,400 220 550 1,100

Total B.C. 47,700 40,600 2,210 4,100 9,780

Alberta 1,800 1,700 130 220 380

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Person Wages GDP Output Jobs Years ($Millions) ($Millions) ($Millions)

Manitoba 1,100 1,100 80 140 230

Ontario 1,100 1,100 70 130 280

Saskatchewan 900 900 70 120 210

Quebec 500 500 30 60 90

Total 53,100 45,900 2,600 4,800 11,000

Note: Totals may not add up due to rounding

Although the figures in this report are not directly comparable to the combined results of the previous studies, it appears that the economic impact of Port Metro Vancouver has increased. Table ES-3 shows the total Canada impacts of all Port Metro Vancouver employment at all locations.

Table ES-3: 2008 Economic Impact of Port Metro Vancouver (All Locations in Canada)

Economic Type of Wages GDP Jobs Person Years Output Impact ($Millions) ($Millions) ($Millions)

Direct 53,100 45,900 2,600 4,800 11,000

Indirect 54,900 47,800 2,400 4,300 8,600

Induced 21,500 18,100 1,100 1,400 2,400

Total 129,500 111,800 6,100 10,500 22,000

Including indirect and induced effects, in round numbers, the total impacts of on-going operations at businesses related to Port Metro Vancouver across Canada are:

129,500 jobs; representing 111,800 person years of employment, $10.5 billion in GDP; $22 billion in economic output; and $6.1 billion in wages.

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The jobs supported by Port Metro Vancouver are high wage positions

The average annual compensation per direct person year across all industries directly related to the Port is just nearly $56,000. This is approximately 45% greater than the average wage in Canada of $38,000 in July 2008.2

Port Metro Vancouver supports direct employment in various sectors

Direct jobs associated with handling maritime cargo at Port Metro Vancouver amount to 40,900 (or 77% of all direct jobs in all locations across Canada) with wages totalling nearly $2.2 billion. Jobs sectors included in this category include stevedores, rail, trucking and tug.

Cruise activity is the Port’s second largest employment generator, directly contributing 6,400 direct jobs or 4,400 direct person years of employment. In 2007, Port Metro Vancouver handled 960,554 cruise passengers, equivalent to 68% of total cruise passengers in British Columbia. Port Metro Vancouver competes with the Port of Seattle to be the largest homeport serving the Alaska market.

Table ES-4 shows the direct employment and total payroll related to Port Metro Vancouver’s five main industry sectors.

Table ES-4: Direct Economic Impacts by Industry Sectors (All Locations in Canada)

Payroll Rank Industry Sector Jobs Person Years ($Millions)

1 Maritime Cargo 40,900 36,800 $2,190

2 Cruise 6,400 4,400 $220

3 Non-Marine Related 5,000 3,900 $130 Services

4 Construction, Vehicle, 600 500 $20 Building & Repair

5 Other Marine Related 200 200 $8 Services

Total 53,100 45,900 $2,600

Note: Totals may not add up due to rounding.

2 Statistics Canada Average Hourly Wages of Employees (Canada) for July 2008 multiplied by 1,832 hours worked by the average full-time equivalent worker in a year.

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Port Metro Vancouver supports direct employment both onsite and offsite

As shown in Figure ES-2, the majority of direct employment generated by the operations of Port Metro Vancouver is located within its jurisdiction. Direct employment attributable to onsite firms make up 73% of total direct jobs (or 76% of total direct person years), not including employment in the rail, trucking and cruise sectors. Most of this onsite employment is concentrated in seven municipalities: Vancouver, the City of North Vancouver, the District of North Vancouver, Delta, New Westminster, Richmond and Surrey. However, there are also more than 10,000 jobs supported by the economic activity of Port Metro Vancouver off-site.

Figure ES-2: Onsite Employment versus Offsite Employment

Jobs Person Years

24% 27%

73% 76% Onsite Offsite

On-going operations at Port Metro Vancouver generate more than $1,221 million per annum in government tax revenues.

This analysis also estimated the current contribution of Port Metro Vancouver business community to government revenues through various taxes to all levels of government, shown in Figure ES-3. On-going activity related to Port Metro Vancouver contributes approximately $1,221 million annually in tax revenue to all levels of government, including: Federal tax revenue of close to $648 million. Provincial tax revenue of approximately $391 million in British Columbia, over $14 million in Alberta and more than $11 million in Manitoba.3 Government revenue in Port municipalities of approximately $157 million in property taxes.4

3 Tax revenue accrued in provinces other than British Columbia, Alberta, and Manitoba was included in the provincial tax revenue calculation for B.C. due to its insignificant impact. 4 Municipal taxes include school taxes collected by local governments on behalf of the provincial government.

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Figure ES-3: Estimated Annual Tax Revenues to Government

Municipal 157.0 Millions Provincial 416.6 Millions

Federal 647.7 Millions TOTAL = $1,221.3 million

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Table of Contents

Executive Summary ...... ii

1. Introduction...... 1 1.1 Port Metro Vancouver: A Major Economic Generator for Canada ...... 2 1.2 Port Metro Vancouver as a Logistical System...... 3 1.3 What is Economic Impact?...... 4 1.4 Methodology for Estimating Current Economic Impacts...... 4 1.5 Outline of the Study...... 6

2. Traffic Through Port Metro Vancouver...... 7 2.1 Combined Port Traffic ...... 7 2.2 Combined Port Trade Value...... 10

3. The Methodology for Economic Impact Analysis...... 11 3.1 Introduction ...... 11 3.2 Surveying Direct Employment...... 11 3.3 Inferring Employment ...... 12 3.4 Formulaic Approach in Estimating Service Provider Direct Employment ...... 12 3.5 Study Time Frame...... 13 3.6 Jobs versus Person Years ...... 13

4. Direct Employment Impacts ...... 14 4.1 Introduction ...... 14 4.2 Direct Employment and Wages...... 14 4.3 Full-time versus Part-time and Seasonal Employment...... 15 4.4 Onsite versus Offsite Employment...... 16 4.4.1 Onsite Employment ...... 16 4.4.2 Offsite Employment ...... 18 4.5 Economic Impacts by Location...... 19 4.6 Employment by Industry Sector ...... 21 4.7 Employment by Job Trade ...... 24

5. Multiplier Employment Impacts...... 26 5.1 Introduction ...... 26 5.2 Methodology: Economic Multipliers...... 26 5.3 Indirect Employment ...... 27 5.4 Induced Employment ...... 27 5.5 Total Employment ...... 28

6. Other Economic Impacts ...... 29 6.1 Introduction: What are Economic Output and GDP?...... 29 6.2 Other Economic Impacts...... 29

7. Maritime Cargo: Economic Impacts by Cargo Sector ...... 31 7.1 Introduction ...... 31 7.2 Automobiles ...... 32 7.3 Bulk Cargoes...... 32

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7.4 Breakbulk Cargoes...... 33 7.5 Containerised Cargoes ...... 34

8. Cruise Economic Impacts...... 35 8.1 Introduction ...... 35 8.2 A Market in Recovery...... 35 8.3 Cruise Ship Expenditures...... 36 8.4 Direct, Indirect and Induced Economic Impacts...... 38

9. Tax Revenue Impacts of Port Metro Vancouver ...... 40 9.1 Introduction ...... 40 9.2 Taxes by Level of Government ...... 41

10. Capital Investment at Port Metro Vancouver ...... 43 10.1 Replacement Value of Port Metro Vancouver Capital...... 43 10.2 Replacement Value of Tenant Capital...... 43 10.3 Port Metro Vancouver Planned Capital Expenditures Through 2018...... 44 10.4 Port Metro Vancouver Tenant Planned Capital Expenditures Through 2018...... 44 10.5 Total Port Metro Vancouver Capital ...... 45 10.6 Economic Impact of Future Port Metro Vancouver Investments ...... 46

11. Economic Impact Summary...... 48

APPENDICES ...... 55

Glossary of Terms...... 56

Appendix 1: Traffic Through Individual Ports...... 58

Appendix 2: Estimating Port Metro Vancouver Trade Values for 2007...... 71

Appendix 3: Maritime Cargo Employment by Commodity...... 73

Appendix 4: Employment Survey...... 74

Appendix 5: Sample Survey ...... 77

Appendix 6: Calculation of Person Hours Per Year...... 78

Appendix 7: Employment Breakdown ...... 79

Appendix 8: Inferred Employment ...... 83

Appendix 9: Estimating Port-Related Rail Employment in 2007...... 84

Appendix 10: Estimating Port-Related Trucking Employment in 2007 ...... 85

Appendix 11: Tax Revenues Attributable to Employers and Port Users ...... 87

Appendix 12: Tax Revenues from Cruise Sector...... 100

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1. Introduction

With existing offices in New Westminster and in Vancouver, Port Metro Vancouver’s jurisdiction includes the combined properties and assets formerly under the jurisdiction of the individual port authorities. Figure 1-1 illustrates the jurisdiction of Port Metro Vancouver after its amalgamation in 2008. According to Port Metro Vancouver, the amalgamation is expected to generate “greater resources for land acquisition, river management and strategic infrastructure investments.”

Upon amalgamation, Port Metro Vancouver identified that it would be necessary to conduct an economic impact study for the amalgamated ports to establish a baseline of its combined economic impact. Conducting an economic impact study allows Port Metro Vancouver to demonstrate its significant employment and economic impacts provincially and nation-wide, particularly to the communities that surround the Lower Mainland and the provincial and federal governments.

Economic impact studies were previously conducted for the Vancouver Port Authority and the Fraser River Port Authority, but not for the North Fraser Port Authority. The Vancouver Port Authority commissioned InterVISTAS Consulting Inc. to conduct an Economic Impact Study for Port Vancouver in 2001, which was later updated by InterVISTAS Consulting Inc. in 2005. Fraser River Port Authority also retained InterVISTAS Consulting Inc. to conduct an Economic Impact Study for Fraser River Port in 2002, which was later updated by InterVISTAS Consulting Inc. in 2003 and in 2006.

In 2008, Port Metro Vancouver commissioned InterVISTAS Consulting Inc. to conduct an economic impact study based on 2007 Port operations for the integrated port system in the Lower Mainland.

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Figure 1-1: Port Metro Vancouver Post-Amalgamation Jurisdiction Map

1.1 Port Metro Vancouver: A Major Economic Generator for Canada

Port Metro Vancouver is one of the most visible contributors to the economy of the Metro Vancouver region. The Port is also a major economic generator that contributes to each provincial economy in Western Canada and to the nation as a whole.

Port Metro Vancouver is an economic generator in two ways:

The businesses serving Port Metro Vancouver are major employers. These include businesses involved in maritime cargo, cruise ship activity and support businesses supplying fuel, equipment, and food, as well as businesses involved in repair and maintenance of vessels and the construction of Port infrastructure.

Port Metro Vancouver provides the essential infrastructure linking Canada's domestic market to markets around the world (and those of other NAFTA countries). As such, it is a facilitator of other major sectors of Canada’s economy. The Port is a critical component of trade and commerce between Canada and other trading economies. Due to the Port’s geographic

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location, it is especially important to trade with nations in the Asia Pacific region, particularly China.

1.2 Port Metro Vancouver as a Logistical System

A key question to address before beginning the economic impact study is where exactly the boundaries of the Port are to be set when measuring economic influence. Below, the selected approach to dealing with the Port’s boundaries in this study is outlined: 1. Consider Port Metro Vancouver from the perspective of a logistical chain or logistical system for: moving goods and resources from their sources to export markets through the Port; and moving imports through Port Metro Vancouver to consumers and industrial users in North America.

Three alternative approaches in measuring economic influence were evaluated: 2. Define the Port as the land and water areas it manages, and measure the jobs and economic activities on these specific sites. A problem with this approach is that a number of directly related Port jobs are not located on Port lands. Shipping agents, for example, might reside in office buildings in the downtown cores of Vancouver, North Vancouver, Richmond or other municipalities located near Port lands. As these jobs are dedicated to serving the Port, it seems reasonable to include them in the analysis. 3. Broaden the boundaries of the Port to include all relevant jobs in the Metro Vancouver region. However, this approach is still quite narrow. There are a number of jobs directly related to Port operations located outside of the Metro Vancouver region. These include grain transportation managers for major shippers located in the Prairies, train dispatchers at various locations in the West, or truck drivers who reside elsewhere in British Columbia, but who primarily service containers and cargo moving in and out of Port Metro Vancouver. 4. The broadest approach would be to include jobs at primary resource companies or manufacturers whose goods pass through Port Metro Vancouver. For example, a number of the mines in the south-eastern B.C. coal fields ship their entire production to the coal terminal at Roberts Bank. Some would argue that these jobs are totally dependent on the successful operation of Port Metro Vancouver. This viewpoint has a significant degree of support from the emerging business management discipline of supply chain management (SCM). However, applying the all-encompassing SCM approach to this study would result in attributing much of the total Canadian economy to Port Metro Vancouver. While in many ways this attribution may be appropriate, this study did not want to confuse the contribution of the direct activities of the Port with the resource and other sectors of our economy.

Port Metro Vancouver lands and waters themselves are nodes in this logistical network. The Port logistical system reaches beyond these nodes into the network of the transportation companies (rail and truck), the major terminal operators (including, for example, grain elevators on Port lands and elsewhere on the rail network), and the indispensable human resource network of transportation agents, customs officers and other inspectors, etc. This study measures the

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economic impact of that portion of Canadian rail and trucking activity which brings goods to the Port. In general, it does not include the economic impact associated with the actual production of goods heading to export markets, although manufacturing on Port land is included as part of the economic impact.

1.3 What is Economic Impact?

Economic impact is a measure of the spending and employment associated with a sector of the economy, a specific project (such as the construction of a new facility), or a change in government policy or regulation. Economic impact can be measured in various ways. Two of the most popular ways to assess economic impact are in terms of the dollar value of industrial output produced, or in terms of person years (full-time equivalents (FTEs)) of employment generated. Other measures include value-added (GDP), or the value of capital used and/or created. All of these are used to express the gross level of activity or expenditure from a sector of the economy, a specific project or a change in policy or regulation. Although, they are not “net” measures that weigh benefits against costs, these measures can be useful in developing an appreciation of projects, investments and economic sectors.

1.4 Methodology for Estimating Current Economic Impacts

First, the direct employment base of the Port business community is measured and described.

Direct Employment: Direct employment is employment that can be directly attributable to the operations in an industry, firm, etc. In the case of Port Metro Vancouver, all of the jobs involved in moving goods to or through Port Metro Vancouver or located on Port land would be considered direct employment. Port Metro Vancouver direct employment includes all jobs at businesses situated on land administered by Port Metro Vancouver and jobs at all off-site businesses directly related to Port Metro Vancouver trade and shipping.

On-site direct employment includes employees of terminal operators, tug operators, ship pilots, and other firms that are situated on or operate on land administered by the Port Authority.

Off-site firms that facilitate and monitor Port Metro Vancouver trade and shipping are included in the direct employment impact of Port Metro Vancouver. Examples of these off-site firms would include freight forwarding firms, government agencies, truckers and rail carriers that operate in the surrounding community.

Employment figures are generally more understandable by the public than more abstract measures such as economic output or GDP. Employment figures also have the advantage of being a more accurate measure, both because the firms are more likely to provide data on employment, as opposed to information on revenues, wages and other monetary amounts, and because there is less chance of double counting economic activity. Port Metro Vancouver business community’s measure of direct employment and wages forms the basis for the rest of this study on Port Metro Vancouver’s contribution to the regional economy.

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The study then assesses the indirect and induced (or “multiplier”) employment supported province wide by port operations.

Indirect Employment: Indirect employment is employment at a supplier industry that is supported by expenditures by port businesses. For Port Metro Vancouver, it would include that portion of employment in supplier industries, which are dependent on sales to the Port business sector. For example, a repair company at one of the three Lower Mainland ports supports indirect employment at scrap yards and shipping companies.

Induced Employment: Induced employment is employment generated from expenditures by individuals employed indirectly or directly. For example, if a longshoreman decides to expand or re- model his/her home, this would result in additional (induced) employment hours in the general economy. The home renovation project would support hours of induced employment in the construction industry, the construction materials industry, etc.

While the direct employment impact of Port Metro Vancouver is measured by survey, the indirect and induced employment and labour income effects are estimated using economic multipliers for the provincial and national economies. Multiplier impacts depend on certain economic conditions and are not always fully realised. Therefore, indirect and induced employment impacts should be interpreted with caution.

Total employment is the sum of direct, indirect and induced employment. Using economic multipliers, the study infers the direct economic activity generated by the Port community in terms of economic output and GDP. Statistics Canada’s economic multipliers are also used to translate the number of direct person years of employment into the associated monetary measures of economic activity – direct, indirect and induced.

The employment survey was confined to measuring direct employment and the results are reported in Chapter 4. Chapter 5 shows how one infers indirect and induced employment with the help of economic multipliers. Although there are limitations with using multipliers, their popularity and usefulness is recognised for some situations.

The tax revenues generated annually by employers and employees in the Port community are also estimated. Figures for annual revenues for all tax envelopes and levels of government (federal, provincial and municipal) are provided.

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1.5 Outline of the Study

The existing and potential economic impacts of the Port are then examined in the following chapters: Chapter 2 discusses historical traffic trends for Port Metro Vancouver. Chapter 3 explains the methodology for estimating current direct employment related to Port Metro Vancouver operations. Chapter 4 measures and describes the current direct employment base by means of a survey of employers within Port Metro Vancouver business communities. Chapter 5 introduces the concept of multipliers and uses them to infer indirect and induced employment related to operations of Port Metro Vancouver. Chapter 6 estimates the monetary economic impacts of the employment using Statistics Canada economic multipliers for B.C. Chapter 7 provides a breakdown of maritime cargo employment by major commodity sector and determines the economic impacts associated with the sectors. Chapter 8 discusses the economic impacts generated from Port Metro Vancouver’s cruise sector. Chapter 9 measures the tax contribution of Port Metro Vancouver business communities. Chapter 10 discusses the current and anticipated future capital investments made by Port Metro Vancouver and by Port tenants. Chapter 11 summarises the total economic impacts generated by Port Metro Vancouver.

A set of report appendices containing detailed explanations of the methodologies, assumptions and calculations used in this study are also attached.

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2. Traffic Through Port Metro Vancouver

This section provides an overview of the combined performance of Port Vancouver, Fraser River Port and North Fraser Port prior to amalgamation in 2008. This will serve as a benchmark for Port Metro Vancouver for measuring post-amalgamation traffic volumes in upcoming years. Appendix 1 provides further detail on historical traffic trends for the individual ports.

2.1 Combined Port Traffic

Together, the Lower Mainland ports handled more than 127.8 million metric tonnes of cargo in 2007. Figure 2-1 shows combined cargo volumes for the past five years. Despite the slight downwards fluctuation in total tonnages handled in 2007, Port Metro Vancouver’s total cargo volume in 2007 is 9% higher than 2003.

Figure 2-1: Port Metro Vancouver Cargo Volume (2003-2007)

135,000 131,708

130,000 128,904 127,931 127,846

125,000

120,000 117,733 Tonnes (thousands) Tonnes 115,000

110,000 2003 2004 2005 2006 2007

Source: Vancouver Fraser Port Authority 2007 Annual Report

The bulk component is the largest component of cargo traffic for Port Metro Vancouver, making up 58% of total cargo tonnages in 2007. Bulk cargo has also been a particularly strong sector in 2007, having increased 16% in 2007 over 2003. Figure 2-2 shows the trend in bulk tonnages handled by Port Vancouver, Fraser River Port and North Fraser Port combined from 2003 to 2007.

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Figure 2-2: Volume of Port Metro Vancouver Bulk Cargo (2003 – 2007)

76 75 74 73 72 72 72

66 64

Tonnes (millions) 64

58 2003 2004 2005 2006 2007

Source: Vancouver Fraser Port Authority 2007 Annual Report

Breakbulk goods handled by Port Metro Vancouver have declined in recent years, with more and more of these commodity types being containerised. The volume of breakbulk cargo decreased 17% in 2007 over 2006, as shown in Figure 2-3. The breakbulk component represents 25% of total cargo traffic handled by Port Metro Vancouver in 2007.

Figure 2-3: Volume of Port Metro Vancouver Breakbulk Cargo (2003 – 2007)

45 41 38 39 38 40

35 32 30

Tonnes (millions) Tonnes 15

0 2003 2004 2005 2006 2007

Source: Vancouver Fraser Port Authority 2007 Annual Report

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With the emerging trend of containerisation, container traffic volumes at Port Metro Vancouver have been on the rise in recent years. As shown in Figure 2-4, Port Metro Vancouver container traffic has increased steadily over the past five years, averaging 9% per year since 2003.

Figure 2-4: Port Metro Vancouver Container TEUs (2003-2007)

3,000

2,499 2,500 2,302 2,140 1,982 2,000 1,800

1,500

1,000 TEUs (thousands) TEUs

500

0 2003 2004 2005 2006 2007

Source: Vancouver Fraser Port Authority 2007 Annual Report

Port Metro Vancouver handled 25% of all new vehicles imported to Canada in 2007 and received 100% of all Asian imports destined for Canada. With the recent trend of consumer shifts toward hybrids and other fuel-efficient vehicles in response to high fuel prices, the demand for automobile shipments have increased. In 2007, automobile shipments through Port Metro Vancouver terminals have increased by 8% over 2006.

Figure 2-5: Port Metro Vancouver Automobile Shipments (2003-2007)

470

460 458 453

450 446

440 437

430 424

420

Automobile Units (thousands) Units Automobile 410

400 2003 2004 2005 2006 2007

Source: Vancouver Fraser Port Authority 2007 Annual Report

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2.2 Combined Port Trade Value

The estimated value of cargo throughput at Port Metro Vancouver in 2007 was approximately $75 billion. This estimate was developed using a bottom up approach in which approximate values per tonne of bulk and breakbulk commodities are applied to Port tonnage by commodity type. This is done by calculating a per tonne value for each individual commodity in the bulk and breakbulk categories and multiplying this by the total tonnes of that commodity handled in 2007.

An advantage of this “bottom up” approach is that it reveals trade values in dollars for specific commodities. The estimated per tonne values of commodities traded at Port Metro Vancouver are presented in Appendix 2.

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3. The Methodology for Economic Impact Analysis

3.1 Introduction

This chapter describes the methodology and sources that were used to measure direct employment related to on-going operations at Port Metro Vancouver. Results of the employment survey are provided in Chapter 4.

3.2 Surveying Direct Employment

The primary tool for estimating the economic impact of Port Metro Vancouver was an employment survey. This was augmented by data from government and Port sources. Employment attributable to Port operations was measured by surveying over 500 businesses located at Port Metro Vancouver or off-site businesses economically linked to the Port along with ground transportation firms. Specifics of the survey methodology are contained in Appendix 4 and a sample copy of the survey is provided in Appendix 5. Telephone follow-up was conducted to increase the response rate. In total, 68% of the firms contacted returned the questionnaire (see Figure 3-1) representing an estimated 83% of total jobs represented in the survey.

Figure 3-1: Response Rate (Employers and Jobs)

Employment Covered by Surveyed Employers Survey Respondents 17% 32%

68% 83%

Responding Non-responding

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3.3 Inferring Employment

Employment was “inferred” for firms that did not respond to the survey by using a proven and accepted methodology.5 This includes using other sources of employment information such as past employment surveys or using survey results for firms of similar types. A conservative approach was taken when using other survey or employment information to infer for non-responding firms. Appendix 8 provides additional detail on inferred employment.

There may be firms which were not surveyed simply because it was not known that they existed. We do not include any estimate of employment for such non-surveyed firms because there is no basis for an assessment. In any event, we expect most of these to be very small in terms of missed employment.

3.4 Formulaic Approach in Estimating Service Provider Direct Employment

As not all of a business’s activity and employment may be Port related (e.g., they may also be involved with local transportation movements or air transportation as well), the questionnaire included questions to determine the proportion that is Port related. In some cases, it was very difficult for businesses to determine the proportion of their employment related to Port Metro Vancouver, as it may only represent a small number of their total customers. In such cases, an alternative approach was used.

In particular, trucking related employment was calculated using the B.C. Ministry of Transportation Container Trucking Forum Container Simulation Project (prepared by IBI Group, 2007), in conjunction with Port Metro Vancouver Estimated Container Traffic Flow statistics and the Container Trucker and/or Tractor Surplus Study Synopsis (prepared by the Vancouver Port Authority, 2007). In addition, cruise services related employment was estimated based on the Economic Contribution of the International Cruise Industry in Canada (prepared by Business Research & Economic Advisors, 2007). This study was prepared for the NorthWest CruiseShip Association.

Detailed methodology and calculations used to estimate Port Metro Vancouver direct employment from the rail, trucking and cruise sectors are presented in Appendix 9, Appendix 10 and Chapter 8 respectively.

5 The methodology employed in this study to infer for non-respondents is similar to that used by the federal government for estimating the national income and product accounts.

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3.5 Study Time Frame

The employment survey was conducted between April-July 2008, and results reflect employment as of March 2008.6

3.6 Jobs versus Person Years

Traditionally, employment is measured in terms of number of jobs. However, when part-time and/or seasonal workers are used, this can be a misleading measure resulting in an overstatement of economic impact. For example, one firm with 100 part-time employees may have a similar overall economic impact to another firm with 50 full-time employees. Whenever possible, employment impacts are measured both in terms of the number of jobs and the number of person years or full- time equivalents.7

6 While the survey results reflect employment as of March 2008, surveyed firms were asked about their seasonal employment for the past year. Thus, the survey results include the seasonal workers in the cruise industry who are generally employed between April and October. 7 One person year is equivalent to 1,832 hours of work. Please see Appendix 6 for a detailed calculation of the number of hours per person year. Person years are the same as full-time equivalents (FTEs).

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4. Direct Employment Impacts

4.1 Introduction

This chapter describes the direct employment at Port Metro Vancouver. Jobs and person years (or full-time equivalents) figures are presented and wages associated with this direct employment are estimated.

The following sections break down the direct employment in the Port Metro Vancouver business community in more detail. Jobs are broken down by: Full-time versus part-time employment; Seasonal versus non-seasonal; and Onsite versus offsite.

Direct employment is also broken down by business type and by job trade.

4.2 Direct Employment and Wages

Direct employment related to on-going operations at Port Metro Vancouver totalled 53,100 jobs across Canada as of March 2008. After adjusting for part-time, seasonal and contract employment, these 53,100 jobs amounted to approximately 45,900 person years of employment.

Employees at Port Metro Vancouver firms earned nearly $2.6 billion in wages in 2007, yielding an average of approximately $56,000 per person year of employment. Employment figures are summarised in Table 4-1 for wages as well as jobs and person years.

Table 4-1: Direct Employment for Port Metro Vancouver (All locations in Canada)

Jobs Person Years Wages

Direct Employment for Port 53,100 45,900 $2.6 Billion Metro Vancouver

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4.3 Full-time versus Part-time and Seasonal Employment

Of the surveyed direct permanent jobs attributable to Port Metro Vancouver operations in 2008, 96% were full-time jobs. The breakdown of Port Metro Vancouver jobs and person years by part- time and full-time positions is presented in Figure 4-1.

Figure 4-1: Part-Time versus Full-Time Employment

Jobs Person Years

2% 4%

96% 98%

Full- time Part- time

Figure 4-2 shows that in March 2008, the seasonal component of Port Metro Vancouver direct employment base accounted for 6% of total surveyed jobs and for 3% of total surveyed person years.

Figure 4-2: Permanent versus Seasonal Employment

Jobs Person Years

3% 6%

94% 97%

Permanent Seasonal

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4.4 Onsite versus Offsite Employment

The majority of direct employment generated by Port operations is located within the Port Metro Vancouver’s jurisdiction. However, there are also over 10,000 offsite jobs supported by Port Metro Vancouver economic activity. 4.4.1 Onsite Employment

Onsite employment represents 73% of total direct jobs. A total of 27,100 direct jobs (amounting to 24,500 person years of direct employment) related to the Port Metro Vancouver are located within Port Metro Vancouver’s jurisdiction. These positions are held by individuals working at businesses that are tenants of the Port and the Port Authority itself. Figure 4-3 shows the breakdown of onsite and offsite employers, as well as the number of direct jobs located onsite versus offsite.

Figure 4-3: Onsite versus Offsite Employment

Surveyed Employers Direct Jobs

27%

42%

58% 73% Onsite Offsite

The largest onsite contributors to employment at the Port are stevedores, which account for approximately 3,800 jobs or approximately 14% of total onsite jobs. The next largest group of onsite businesses are manufacturing and processing firms located on Port Metro Vancouver land that, as of March 2008, employed nearly 3,300 individuals, representing 12% of all onsite jobs. The complete breakdown of jobs onsite at the ports is presented in Figure 4-4.

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Figure 4-4: Port Metro Vancouver Onsite Jobs by Business Type

Stevedoring 3,838 (14%)

Manufacturing/Processing 3,267 (12%)

Tug/Tow/Barge 2,707 (10%)

Sawmill 2,576 (10%)

Shipping 2,013 (7%)

Accommodations 1,864 (7%)

Commercial Fishing 1,815 (7%)

Insurance/Underwriting 1,773 (7%)

Bulk Terminal Operator 1,110 (4%)

Real Estate/Property Management 1,093 (4%)

Container Terminal Operator 1,047 (4%)

Government Agency 494 (2%) Total Onsite = 27,100 Jobs

Association 455 (2%)

Casino 350 (1%)

Other 2,691 (10%)

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4.4.2 Offsite Employment

Offsite employment represents 27% of total direct Port Metro Vancouver business employment in terms of jobs. While this sector of employment is not located on Port land, it is still considered to be part of the direct employment impact of Port Metro Vancouver related businesses. Offsite employment included in this study exists at firms whose business is dependent in whole or in part on the cargo traffic at Port Metro Vancouver. Examples of such businesses are freight forwarders and customs brokers.

Accounting only for the proportion of employment related to Port Metro Vancouver, there are nearly 10,200 jobs (nearly 7,700 person years) dependent on Port Metro Vancouver in the surrounding communities. This does not include employment in the rail, trucking and cruise industries, as these sectors are further discussed in later sections. As shown in Figure 4-5, shipping agents make up the largest component of the off-site employment, at 21% of all offsite jobs. Offsite jobs with service providers such as freight forwarders, manufacturers/processors and commercial fishing in the surrounding community depend on Port Metro Vancouver shipments.

Figure 4-5: Port Metro Vancouver Offsite Jobs by Business Type

Shipping 2,083 (21%)

Freight Forwarder 1,515 (15%)

Manufacturer/Processor 1,453 (14%)

Commercial Fishing 810 (8%)

Sawmill & Wood Preserve 794 (8%) Insurance/Underwriting 687 (7%)

Tug/Tow/Barge 282 (3%)

Customs Broker 264 (3%)

Bulk Terminal Operator 238 (2%)

Ship Building/Repair 198 (2%)

Government Agency 185 (2%) Total Offsite Employment Freight Transportation 183 (2%) = 10,200 Jobs Real Estate/Property Management 161 (2%) Cargo Inspection 149 (1%) Other 1,154 (11%)

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4.5 Economic Impacts by Location

Direct employment related to Port Metro Vancouver in British Columbia is concentrated in Metro Vancouver (92% of direct person years in British Columbia), but is not limited to this geographic region. Port Metro Vancouver is a significant job generator elsewhere in B.C., and indeed throughout Canada. A total of 5,400 jobs outside of British Columbia are dependent on the trade activity at Port Metro Vancouver (See Table 4-2). Transportation carriers and direct transportation employment at shipper firms are supported in the Prairies and beyond as they serve their export and import markets through Port Metro Vancouver.

Of total Port-related employment in Metro Vancouver, approximately 91% of jobs are concentrated in seven municipalities: Vancouver, Richmond, Surrey, Delta, the District of North Vancouver, New Westminster, and the City of North Vancouver, in descending job order. Figure 4-6 illustrates the distribution of employment at Port Metro Vancouver across Canada.

Figure 4-6: Distribution of Port Metro Vancouver Employment across Canada

Other British Columbia 3,388 PYs 3,794 Jobs PYs Jobs Alberta 1,750 1,824 Manitoba 1,121 1,121 District of Ontario 1,060 1,103 West North Vancouver Saskatchewan 904 904 Vancouver 3,109 PYs Quebec 469 490 90 PYs 3,529 Jobs 137 Jobs City of North Vancouver 1,892 PYs Coquitlam 1,996 Jobs 700 PYs Pitt 718 Jobs Meadows 280 PYs Maple Ridge Port Moody 286 Jobs 238 PYs Port Coquitlam 395 PYs 427 Jobs Vancouver 285 Jobs 740 PYs 14,311 PYs 800 Jobs 18,334 Jobs Burnaby 599 PYs 699 Jobs New Westminster 2,956 PYs 3,048 Jobs Richmond 4,978 PYs 5,710 Jobs Surrey Corporation 3,656 PYs of Delta 4,002 Jobs City of Langley 2,893 PYs 176 PYs 3,522 Jobs 180 Jobs Township of Langley 214 PYs 237 Jobs

Total Direct PYs = 45.919

Total Direct Jobs = 53,146

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The employment survey requested information from employers as to where jobs are located, both in terms of Metro Vancouver municipalities, and elsewhere in B.C. or Canada. This section describes how the employment impact of Port Metro Vancouver is distributed across Canada. Table 4-2 provides a breakdown of the direct economic impacts for all locations in Canada.

Table 4-2: Direct Economic Impacts by Location (All Locations in Canada)

Person Wages Jobs Years ($Millions)

Vancouver 18,300 14,300 870

Richmond 5,700 5,000 190

Surrey 4,000 3,700 220

Delta 3,500 2,900 140

North Vancouver 3,500 3,100 180 (District)

New Westminster 3,000 3,000 190

North Vancouver (City) 2,000 1,900 100

Port Coquitlam 800 700 30

Coquitlam 700 700 50

Burnaby 700 600 30

Maple Ridge 400 400 20

Port Moody 300 200 10

Pitt Meadows 300 300 10

Langley (Township) 200 200 10

Langley (City) 200 200 10

West Vancouver 100 100 0

Total Metro Vancouver 43,900 37,200 1,980

Other B.C. 3,800 3,400 220

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Person Wages Jobs Years ($Millions)

Total B.C. 47,700 40,600 2,210

Alberta 1,800 1,700 130

Manitoba 1,100 1,100 80

Ontario 1,100 1,100 70

Saskatchewan 900 900 70

Quebec 500 500 30

Total 53,100 45,900 2,600

Note: Totals may not add up due to rounding

Direct employment in British Columbia is estimated at 47,700 jobs, earning wages in the order of $2.2 billion. This includes individuals employed in all Metro Vancouver municipalities (43,900 jobs) and outside of Metro Vancouver (3,800 jobs). The municipalities with the largest employment impacts are those in which the Port owns assets, including: the City of Vancouver (represents 38% of total BC direct jobs), Richmond (12%), Surrey (8%), Delta (7%), the City of North Vancouver and the District of North Vancouver (12% combined), New Westminster (6%), Port Coquitlam (2%), Coquitlam (2%), and Burnaby (1%).

Direct employment in other Canadian provinces is equivalent to 5,400 jobs or 5,300 person years. The majority of these direct jobs are with rail carriers, by and large, with the rest of services incidental to agriculture and other manufacturing/processing industries. The provinces with employment impacts attributable to Port operations include: Alberta (represents 3% of all direct jobs), Manitoba (2%), Ontario (2%), Saskatchewan (2%), and Quebec (1%).

4.6 Employment by Industry Sector

The 53,100 jobs (equivalent to 45,900 person years) directly attributed to Port Metro Vancouver can be categorised by industry sector. Figure 4-7 shows relative employment at each of the five industry sectors that have been identified:

Maritime Cargo Activity

Cruise Services

Construction, Vehicle Building & Repair Services

Other Marine Related Services

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Non-marine Related Services

The largest category is maritime cargo activity, which includes services from shipping to stevedoring operations. The next largest category is cruise services, which attributes over 4,400 person years of employment. Chapter 8 discusses the economic impacts associated with Vancouver’s cruise sector in further detail. Non-marine related employment jobs are located onsite at the Port, but do not require access to the Port to operate. Non-marine related activity makes up 9% of total direct employment.

Construction, vehicle building and repair services includes activities related to the construction of docks, floating homes, and other properties located onsite at Port Metro Vancouver. Employment from this industry sector also comprises of jobs related to the building and repair of marine vessels, trucks and containers. More than 500 person years of employment are associated with this sector. Employment associated with other marine related services includes jobs that depend on its location but is not involved in marine transportation, including employment. This includes marinas and waterlots located onsite at Port Metro Vancouver and is estimated to be just over 200 person years of employment.

Figures 4-8 provides a further breakdown of the activities included in the maritime cargo industry sector and the employment associated with these subsectors, while Figure 4-9 provides breakdown on the employment within non-marine related services.

Figure 4-7: Direct Employment by Major Industry Sectors (Person Years)

Maritime Cargo Activity 37,50936,825 80%

Cruise Services 4,441 10%

Non-marine Related Services 3,937 9%

Construction, Vehicle Building & Repair 515 1% Total Direct Employment Other Marine Related Services 200 0% = 45,900 PYs

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Figure 4-8: Breakdown of Maritime Cargo Direct Employment (Person Years)

Rail 8,204 22%

Manufacturing/Processing 4,244 12% Stevedoring 3,836 10%

Shipping 3,543 10%

Sawmill & Wood Preserve 3,262 9% Tug/Tow/Barge 2,541 7%

Commercial Fishing 1,914 5%

Insurance/Underwriting 1,720 5%

Bulk Terminal Operator 1,315 4%

Container Terminal Operator 1,123 3%

Trucking 1,085 3%

Freight Forwarder 967 3%

Government Agency 648 2% Total Maritime Cargo Direct Storage/Warehousing 241 1% Employment Dredging 240 1% = 36,800 PYs Consulting 203 1%

Breakbulk Terminal Operator 199 1%

Other 1,541 4%

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Figure 4-9: Breakdown of Non-Marine Related Direct Employment (Person Years)

Accommodations 1,816 (46%)

Real Estate/Property Management 540 (14%)

Holding Company 392 (10%)

Casino 350 (9%)

Association 342 (9%)

Retailer 225 (6%)

Restaurant 145 (4%) Total Non-Marine Related Air Service 68 (2%) Direct Employment Teaching Institute 40 (1%) = 3,900 PYs Other 19 (0%)

4.7 Employment by Job Trade

Firms that responded to the employment survey were asked to provide a breakdown of their total Port-related jobs by job category. Although this is not a complete picture of the total employment related to the Port, it provides an indication of the trades that are most frequently employed in the Port business community.

According to Figure 4-10, ILWU Stevedores is the most common job categories with more than 5,000 jobs. These are followed by Managers/Supervisors with approximately 3,100, then by Sales/Customer Service with close to 2,300 jobs. Of the survey respondents that indicated a type of employment other than the categories listed in the survey, some provided a specific title or job description in the “other” category. These included: General Labour Engineering Manufacturing/Production/Processing Shipper/Receiver Operations Skilled Tradesmen

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Figure 4-10: Employment (Jobs) by Job Trade

ILWU Stevedores 5,004 (18%) Managerial / Supervisory 3,083 (11%) Sales/ Customer Service 2,317 (8%) Clerical/Analyst 2,226 (8%) Construction / Maintenace Trades 1,915 (7%) Logistics Planner 1,483 (5%) Warehouse Labour 1,139 (4%) Seamen & Officers 1,063 (4%) Call Centre 453 (2%) Drivers / Delivery 395 (1%) Total Surveyed Employment Pilots 293 (1%) (excluding rail) = 27,400 jobs Inspectors 218 (1%) Dispatchers 100 (<1%) Non-ILWU Stevedores 94 (<1%) Security Agents 18 (<1%) Other Surveyed 7,643 (28%)

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5. Multiplier Employment Impacts

5.1 Introduction

The previous chapters discussed how direct employment related to on-going operations at Port Metro Vancouver was measured and presented the results in some detail. However, the employment impact does not end there; other sectors of the economy are dependent on these employers’ businesses. Indirect employment is generated by suppliers to Port Metro Vancouver. Additionally, there may be a general stimulus to the overall economy when direct (and indirect) employees spend their wages. These employment effects are referred to as induced employment. Total employment impacts are the sum of direct, indirect and induced impacts.

5.2 Methodology: Economic Multipliers

While it might be possible to conduct a survey of such employers, the survey would need to cover thousands of firms for indirect employment. For induced employment, the entire economy would need to be scrutinised. In addition to the time and financial resources needed to conduct such surveys, the quality of responses would be suspect. It would be difficult, for example, for a regional hard hat manufacturer to know how much (if any) of his or her business depends on supplying terminal stevedores.

As an alternative to costly and inaccurate surveys, indirect and induced effects are typically measured by the use of economic multipliers. Multipliers are derived from economic/statistical/accounting models of the general economy. They come in a variety of forms and differ greatly in definition and application. Thus great care must be exercised in choosing the appropriate set of multipliers to use.

The use of multiplier analysis is limited by a number of factors, these are: the accuracy of the structure and parameters of the underlying model; the level of unemployment in the economy; the assumption of constant returns to scale in production; the assumption that the economy's structure is static over time; and the assumption that there are no displacement effects.

Multiplier impacts must be interpreted with caution since they can vary with the state of the economy and employment levels. In general, the use and reporting of multiplier impacts is discouraged. When they are reported, it is recommended that the reader be reminded of the limitations on the use of multipliers. Mindful of these limitations, this study has undertaken multiplier analysis to estimate indirect and induced employment.

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The indirect and induced employment impacts have been estimated using economic multipliers produced by Statistics Canada.8 Broadly speaking, these multipliers estimate the amount of indirect and induced employment, across individual provinces and the country as a whole by each direct job in a given industry. Different multipliers are available for different industries. In this case, multipliers relating to maritime cargo, cruise industry, shipbuilding and repair, capital investment, and non-maritime activities were used.

5.3 Indirect Employment

Indirect employment is employment in non-Port industries that supply or provide services to these industries. Using employment impact multipliers for various Canadian provinces, the indirect employment generated by Port related firms include approximately 54,900 jobs or 47,800 person years of employment. Labour income associated with indirect employment is estimated at about $2.4 billion across Canada. The indirect employment and wage impact of Port Metro Vancouver is summarised in Table 5-1.

Table 5-1: Indirect Employment for Port Metro Vancouver (All Locations in Canada)

Jobs Person Years Wages

Indirect Employment for Port 54,900 47,800 $2,400 Million Metro Vancouver

5.4 Induced Employment

Induced employment is employment created because of expenditures by individuals employed both directly and indirectly by Port businesses. It is the general demand for goods and services generated by wage earnings from economic activity in the Port sector. Induced employment in Canada attributable to Port Metro Vancouver is estimated at about 21,500 jobs or more than 18,100 person years. The induced employment and wage impact of Port Metro Vancouver’s employment is summarised in Table 5-2.

8 The source of the multipliers is the Statistics Canada Interprovincial Input-Output Model.

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Table 5-2: Induced Employment for Port Metro Vancouver (All Locations in Canada)

Jobs Person Years Wages

Induced Employment for Port 21,500 18,100 $1,100 Million Metro Vancouver

5.5 Total Employment

Table 5-3 summarises the direct, indirect, induced and total employment attributable to the on- going operations of Port Metro Vancouver.

Table 5-3: Port Metro Vancouver Related Total Employment (All Locations in Canada)

Type of Impact Jobs Person Years Wages ($Millions)

Direct 53,100 45,900 2,600

Indirect 54,900 47,800 2,400

Induced 21,500 18,100 1,100

Total 129,500 111,800 6,100

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6. Other Economic Impacts

6.1 Introduction: What are Economic Output and GDP?

Previous chapters focused on the employment impacts of operations at businesses related to Port Metro Vancouver. This chapter turns to the Port’s broader economic impacts that are measured in dollars.

The two most common measures of economic contribution (in addition to employment) are economic output and gross domestic product (GDP). Economic output roughly corresponds to the gross revenues of goods or services produced by an economic sector, while GDP measures only value-added revenues. As such, GDP removes the revenues to suppliers of intermediate goods and services and only includes the revenues from value-added activities (labour and capital). Alternatively, economic output adds all revenues at each stage of production together as a measure of total production in the economy. Economic output will always be greater than GDP (also termed as value-added).

To estimate economic output for a sector, one might add up the gross revenues of the various firms in that sector. However, to find GDP for a sector, care must be taken to avoid double counting. The revenues of one firm providing service to another are not incremental GDP. For example, in the automobile sector, one cannot add the value (gross revenue) of a finished auto to the value of the tires. The tires are already included in the value of the automobile.

One approach to measuring economic output and value-added is to ask firms in a survey to provide information on their gross revenues, payments to suppliers, etc. However, there are several problems with the approach. First, it is much too expensive. Second, the double counting problem makes this approach impractical.

An alternative is to infer economic output and GDP for an economic sector from employment data using economic multipliers. Statistics Canada produces economic multipliers both for Canada and all of the provinces and territories, and these are both more cost effective and more accurate than obtaining the data from surveys. This method, using Statistics Canada economic multipliers for British Columbia, is the approach adopted here.

6.2 Other Economic Impacts

Table 6-1 provides economic output and GDP impacts related to on-going operations at Port Metro Vancouver across Canada.

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Table 6-1: Port Metro Vancouver GDP and Economic Output (All Locations in Canada)

GDP Economic Output ($Millions) ($Millions)

Direct $4,800 $11,000

Indirect $4,300 $8,600

Induced $1,400 $2,400

Total $10,500 $22,000

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7. Maritime Cargo: Economic Impacts by Cargo Sector

7.1 Introduction

Port Metro Vancouver handles a wide range of commodities. This chapter examines the economic impact of the Port’s four major maritime cargo sectors.

The four broadest categorisations of cargo are based on how the cargo is handled. Automobiles, from compact cars to heavy earthmoving equipment, represented nearly half a million tonnes of total cargo in 2007 and accounted for 2% of direct maritime cargo employment.

Bulk commodities such as coal, grain, sulphur and potash tend to be shipped from the Port in specialised and dedicated ships, and frequently arrive for the loading onto those ships at the Port via unit train. Table 7-1 shows that bulk cargo accounts for 58% of the total tonnes of cargo handled by Port Metro Vancouver. The table also shows that roughly 25% of direct maritime cargo employment can be attributed to the handling of bulk cargoes.

Table 7-1: Employment by Cargo Type

Percent of Port Metro Percent of Direct Total Direct Vancouver Direct Cargo Type Total Person Maritime Tonnes Jobs Tonnes Years Cargo (Millions) Employment

Bulk cargo 74.6 58% 10,200 9,100 25%

Breakbulk cargo 31.8 25% 17,600 15,900 43%

Container 21.0 16% 12,300 11,100 30%

Automobiles* 0.5 <1% 800 700 2%

Total 127.8 100% 40,900 36,800 100%

Note: Totals may not add up due to rounding * Assumes that the average weight of an automobile is one tonne. This estimation is based on a conversation with WWL Vehicle Services.

Breakbulk cargoes include packaged and/or unitized items handled, such as forest products and steel, that are not containerised. These types of cargoes typically require a higher degree of

12 January 2009 2008 Port Metro Vancouver Economic Impact Study – Final Report 32

handling than bulk cargoes. At Port Metro Vancouver, breakbulk cargoes account for 25% of tonnes handled but 43% of direct maritime cargo employment.

Containerised cargoes consist of a large variety of goods, both import and export, that are handled in large metal reusable shipping boxes of standardized size. Port Metro Vancouver handled nearly 21 million tonnes of containerised goods (representing approximately 2.5 million TEUs). Containerised cargoes represent 30% of the direct maritime cargo employment at Port Metro Vancouver.

7.2 Automobiles

Automobile imports have increased in recent years due to consumer demand for hybrid and more fuel-efficient vehicles. The impact of automobiles moving through Port Metro Vancouver resulted in over 1,700 total person years in 2007, of which roughly 700 were direct person years. As presented in Table 7-2, wages attributed to total person years amounted to more than $90 million, of which direct person years accounted for $40 million.

Table 7-2: Multiplier Economic Impacts of Automobile Traffic at Port Metro Vancouver

Economic Wages GDP Person Years Output ($Millions) ($Millions) ($Millions)

Direct 700 $40 $70 $170

Indirect 700 $40 $70 $140

Induced 300 $20 $20 $30

Total 1,700 $90 $160 $340

Note: Totals may not add up due to rounding.

The direct, indirect, and induced effects of automobiles handled at the Port contributed more than $160 million to GDP and $340 million to economic output in 2007.

7.3 Bulk Cargoes

Bulk cargo, which is traditionally less labour intensive than breakbulk, accounted for approximately 9,100 direct person years of employment and nearly 22,400 person years of total employment when indirect and induced impacts are taken into consideration.

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Table 7-3: Multiplier Economic Impacts of Bulk Cargo Traffic at Port Metro Vancouver

Economic Wages GDP Person Years Output ($Millions) ($Millions) ($Millions)

Direct 9,100 $520 $990 $2,260

Indirect 9,900 $490 $900 $1,790

Induced 3,400 $210 $260 $450

Total 22,400 $1,220 $2,140 $4,500

Note: Totals may not add up due to rounding

As shown in Table 7-3, commodities transported by bulk cargo in Port Metro Vancouver contributed over $2.1 billion in GDP to the economy, of which nearly $1.0 billion was from direct impacts. Furthermore, bulk cargoes produced $4.5 billion in economic output and more than $1.2 billion in wages in 2007.

7.4 Breakbulk Cargoes

Breakbulk handling is quite labour intensive and therefore generates a significant share of employment despite its relatively small tonnage compared to bulk cargoes. Port Metro Vancouver’s three major breakbulk components are: woodpulp, lumber, and metals. These are all commodities that are not suited to the automated handling systems of bulk cargoes.

Table 7-4: Multiplier Economic Impacts of Breakbulk Cargo Traffic at Port Metro Vancouver

Economic Wages GDP Person Years Output ($Millions) ($Millions) ($Millions)

Direct 15,900 $910 $1,710 $3,930

Indirect 17,100 $850 $1,560 $3,100

Induced 5,800 $370 $450 $780

Total 38,800 $2,120 $3,720 $7,810

Note: Totals may not add up due to rounding

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Table 7-4 indicated that, including multiplier effects, breakbulk cargoes supported over 38,800 person years of employment in 2007. Total GDP from breakbulk cargo contributed over $3.7 billion to the economy, roughly $1.7 billion of which was a direct impact.

7.5 Containerised Cargoes

The handling of containers generates more than 11,100 person years of direct employment at Port Metro Vancouver, 30% of the total employment generated by maritime cargo. The employment and other economic impacts for container traffic at Port Metro Vancouver are presented in Table 7-5.

Table 7-5: Multiplier Economic Impacts of Container Traffic at Port Metro Vancouver

Economic Wages GDP Person Years Output ($Millions) ($Millions) ($Millions)

Direct 11,100 $630 $1,200 $2,750

Indirect 12,000 $590 $1,090 $2,170

Induced 4,100 $260 $320 $550

Total 27,200 $1,480 $2,600 $5,470

Note: Totals may not add up due to rounding

Containers are major contributors to the Port economy, supporting nearly 27,200 person years of total employment when multiplier effects are taken into account. The direct GDP associated with the container traffic logistics system contributes close to $1.2 billion to the economy. If multiplier effects are considered, the GDP impact rises to as high as $2.6 billion.

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8. Cruise Economic Impacts

8.1 Introduction

British Columbia is home to five principal cruise ports, Vancouver, Victoria, Prince Rupert, Nanaimo, and Campbell River. Combined, the five ports welcomed 1.4 million passengers during the 2007 cruise season and represented 73% of cruise passenger traffic in Canada. The largest of the five ports, Vancouver is the home port for most of the cruise lines operating in this region and is the only Lower Mainland Port that accommodates large commercial cruise vessels. Berths are provided at Port Metro Vancouver at two terminals, Canada Place and Ballantyne Pier. Due to the success of this cruise itinerary, Vancouver has become one of the most popular North American ports with respect to cruise passenger traffic.

As with maritime cargo traffic at Port Metro Vancouver, Vancouver cruise passenger traffic creates significant employment and stimulates economic output. In 2007, the North West CruiseShip Association commissioned a major study by Business Research & Economic Advisors (BREA) of the economic impact of Canada’s cruise ship industry which is the basis of the analysis in this chapter and will henceforth be referred to simply as the BREA study.

8.2 A Market in Recovery

Figure 8-1 shows cruise traffic levels from 1995 to 2007. Port Metro Vancouver handled 960,554, or 68%, of the 1.4 million passengers in British Columbia in 2007. Port Metro Vancouver competes with the Port of Seattle to be the largest homeport serving the Alaska market. As a result of this competition, Port Metro Vancouver experienced a decline in passenger volume from 2003 to 2006. However, traffic picked up in 2007, increasing nearly 15% over 2006 traffic.

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Figure 8-1: Port Metro Vancouver Revenue Cruise Passengers (1995 – 2007)

1,200 1,077 1,019 987 961 1,000 940 924 912 888 872 838 796 800 693 579 600

400 (thousands)

200 Revenue Passengers

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Port Vancouver statistics, The Economic Contribution of the International Cruise Industry in Canada 2007, VPA Statistics Backgrounder – Cruise Revenue Passenger Reporting

8.3 Cruise Ship Expenditures

The economic impact of cruise ship activity at Port Metro Vancouver has three basic sources: Spending by passengers while in Port. Items included in this category consist of lodging, tours and transportation, food and beverage, and retail purchases. Spending by the ship crews while in Port. The major difference between spending by passengers and spending by crew is the lodging component. Otherwise, crew expenditures consist of the same items as passengers; tours and transportation, food and beverage, and retail purchases. Spending by cruise lines while in Port. Cruise lines purchase food and beverage items to stock the ship, fuel, and machinery and equipment. Furthermore, cruise ships require services such as maintenance and repair, and transportation and storage while in Vancouver.

Table 8-1 provides an estimate of spending by passengers and crew in Vancouver for the 2007 cruise season, while Table 8-2 gives an estimate of expenditures by cruise lines.

Table 8-1: Estimated Expenditures by Passengers and Crew in Vancouver 2007

Expenditures Expenditure Item Passengers Crew

Lodging $58.5 Million -

Tours & Transportation $23.3 Million $0.7 Million

12 January 2009 2008 Port Metro Vancouver Economic Impact Study – Final Report 37

Expenditures Expenditure Item Passengers Crew

Food & Beverage $42.4 Million $6.1 Million

Other Retail $47.4 Million $6.5 Million

Total Spending $171.6 Million $13.2 Million

Average Spend $236.80 per passenger $54.70 per crew member

Source: The Economic Contribution of the International Cruise Industry in Canada 2007.

Table 8-2: Estimated Expenditures by Cruise Lines in Vancouver 2007

Expenditure Item Estimated Value ($Millions)

Food & Beverages $45.7

Bunker Fuels $34.6

Transportation and Warehousing $85.0

Professional Services $84.0

Other Operating Expenses $87.7

Total $337.0

Source: Revised cruise expenditures figures provided by Port Metro Vancouver via Cruise BC.9

Cruise industry presence in Vancouver generated almost $185 million10 in expenditures from passengers and crew and nearly $337 million in expenditures from cruise lines. Average passenger expenditure at Port Metro Vancouver is the highest of any port in British Columbia at $236.80 per unique passenger, based on the unique passenger count of 724,600 (see Appendix 12). This high level of expenditure is due to the fact that passengers traveling through the four intransit ports in B.C. (Victoria, Prince Rupert, Nanaimo and Campbell River) did not purchase lodging.

9 Port Metro Vancouver recommended the usage of revised cruise expenditures that were provided by Cruise BC. The BREA study did not provide expenditures for Vancouver alone, only the whole of BC. This figure better reflects the fact that most of the cruise line spending like fuel and professional services take place here, just like passenger and crew spending was higher in proportion because lodging was not purchased in the other BC ports. 10 This figure is understated due to the exclusion of cruise passenger expenditures on items such as airfare.

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8.4 Direct, Indirect and Induced Economic Impacts

Just as the impact of maritime cargo extends beyond direct employment to indirect and induced activity, the cruise ship industry at Port Metro Vancouver also has wider impacts on the provincial and Canadian economies. Table 8-3 shows the direct, indirect and induced activity of the cruise industry across Canada.

Methodology: The estimates of direct employment, person years and wages associated with the cruise industry were derived from a cruise sector model developed by Business Research and Economic Advisors (BREA). BREA recently conducted an economic impact study for the North West Cruiseship Association.11 The results from the BREA study were then adjusted upwards based on revised cruise expenditure data that Port Metro Vancouver attained from Cruise BC, as recommended by Port Metro Vancouver.

Table 8-3: Multiplier Economic Impacts of Vancouver Cruise Industry (Across Canada)

Wages GDP Economic Person Jobs ($Millions) ($Millions) Output Years ($Millions)

Direct 6,400 4,400 $220 $290 $690

Indirect 4.500 3,000 $150 $200 $510

Induced 4,300 2,900 $130 $170 $320

Total 15,200 10,300 $510 $660 $1,520

Note: Totals may not add up due to rounding

Cruise ship activity at Port Metro Vancouver generated 10,300 person years across Canada, of which 4,400 were direct person years and 3,000 were indirect person years. Induced employment that occurred as a result of the cruise industry at Port Metro Vancouver represented 2,900 person years in 2007. Total person year estimates for this sector in 2007 are higher than the 9,000 person years estimated in 2005 for the Cruise Economic Impact Study. In part, this can be attributed to the increase in cruise passengers at the Port Metro Vancouver, which increased by 5% over the three year period from 2004 to 2007.

Total wages from the cruise industry in Vancouver amounted to $510 million in 2007, the majority of which was generated from both direct and indirect sources ($220 million and $150 million, respectively). In terms of economic contributions, Port Metro Vancouver cruise ship activity contributed a total of $660 million to GDP and $1,520 million to economic output across Canada.

11 The Economic Contribution of the International Cruise Industry in Canada 2007, prepared for the North West Cruiseship Association, Vancouver Port Authority and St. Lawrence Cruise Association by BREA, March 2008.

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Cruise activity at Port Metro Vancouver is highly seasonal, with most of its employment occurring during the peak period between April and October. This explains the greater number of direct jobs to person years. With approximately 6,400 jobs equivalent to 4,400 person years of employment directly related to cruise activity, this represents a relatively high jobs to person year ratio of 1.45.

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9. Tax Revenue Impacts of Port Metro Vancouver

9.1 Introduction

This chapter of the report documents the current contribution to government revenues resulting from operations at Port Metro Vancouver and the associated economic activity. This includes revenues received by federal, provincial and municipal governments.

Revenue contributions are divided into three groups, based on who is making the payment: Taxes paid by employers and employees. These include income and payroll taxes, social insurance contributions (such as the employment insurance premiums) for all direct employment associated with Port Metro Vancouver and the federal and provincial fuel and corporate income taxes paid by employers. Taxes paid by the Port Authority. These include payments in lieu of property taxes and gross revenue charges. Taxes paid by cruise passengers, crew, and cruise lines. Both cruise ship passengers and cruise ship employees (crew) pay various taxes and fees. These include taxes on personal expenditures while in Canada, taxes on food and beverages, taxes on transportation and property taxes paid by hotels used by cruise ship passengers. Cruise lines contribute to provincial tax revenue by the refuelling that is carried out by bunkers located in the City of Vancouver.

For each category, taxes paid to the federal, provincial, and municipal government are separately identified.

The purpose of this section is to present the tax contributions directly related to the economic activity attributed to Port Metro Vancouver. As with all such studies, a conceptual decision has to be made as to how broad a definition should be used in measuring the economic impact of the Port. For this study, a relatively narrow definition has been taken. For example, the following are not included: Customs and excise duties and taxes levied on cargo arriving in the country through the Port; Taxes associated with indirect or induced employment (i.e. multiplier effects); Consumption taxes (GST and PST) paid by Port employees when they spend their income; and Property taxes paid by business and employees indirectly linked to the Port.

It would be very difficult to broaden the scope of the tax base in this analysis to include taxes generated by indirect and induced employment. The level of detail collected on direct employment by the survey is critical to the analysis, but such information is not available for the indirect and induced employment. This being the case, impacts and speculation about the general economy

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would be complex and averages would not necessarily be precise or accurate. Therefore, the tax analysis in this report is limited to revenues attributable to direct employment only.

9.2 Taxes by Level of Government

The total tax impact of on-going economic activity at Port Metro Vancouver was approximately $1,221 million in 2007. As displayed in Figure 9-1, the federal government was the largest recipient of tax revenue, receiving $648 million or 53% of the total. Figure 9-1: Breakdown of Tax Revenues by Government

Municipal 157.0 Millions Provincial 416.6 Millions

Federal 647.7 Millions TOTAL = $1,221.3 million

The B.C., Alberta, and Manitoba provincial governments received nearly $417 million in tax revenue related to Port Metro Vancouver (34% of the total), most of which consisted of income and payroll taxes and property taxes. Provincial property taxes consist primarily of the school taxes paid to their respective municipality, with the exception of those tenants that are tax exempt. The majority of school tax rates fall within a range of $7 to $9 per $1,000 of assessed land value and, once collected by the municipality, taxes are redirected toward the provincial government.

Key stakeholders such as the Port Authority, employees, employers, and both cruise passengers and crew contributed more than $1,221 million across all levels of government in 2007. Employers and employees paid $1,186 million (97% of the total), largely through a combination of income taxes, fuel taxes, social insurance contributions and property taxes.

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The Port Authority paid over $8 million in special payments (<1% of total), including gross revenue charge to the federal government and payments-in-lieu of property taxes to municipal governments. Cruise passengers and crew paid nearly $27 million (2% of the total), mostly through the goods and services tax (GST) and the provincial hotel tax.

A complete summary of tax contributions by Port Metro Vancouver stakeholders is provided in Figure 9-2.

Figure 9-2: Current Tax Contributions of Port Metro Vancouver Businesses – 2007

SUMMARY OF TAX CONTRIBUTIONS BY PORT METRO VANCOUVER - 2007

Federal Provincial Municipal All Gov'ts Amount Amount Amount Amount Tax ($m) Tax ($m) Tax ($m) ($m)

GST on Lodging 2.9 Hotel Tax on Lodging 4.7 Property Taxes* 4.0 GST on Tours & PST on Food & Transportation 1.2 Beverage1.7

GST on Food & Beverage 2.1 PST on Liquor 1.6 GST on Retail 2.7 PST on Retail 2.8 Property Taxes* 3.7 Paid by Cruise Cruise Paid by

Passengers and Crew Passengers Total 8.8 Total 14.6 Total 3.98 27.4 2.2%

Personal Income Tax 336.4 Personal Income Tax 143.2 Property Taxes* 148.4 Corp. Income Tax 53.5 Corp. Income Tax 35.0 EI - Employer 43.6 WCB 65.8 EI - Employee 31.1 Medical Premiums 28.8 CPP - Employer 82.5 PST on Fuel 3.0 CPP- Employee 82.5 Property Taxes* 126.1 Marine Navigation Service Employees Fees 5.5

Paid by Employers Paid by Employers or Total 635.1 Total 402.1 Total 148.4 1185.6 97.1%

Gross Revenue Charge 3.7 PILT 4.7 Paid By Paid By Authority Vancouver Fraser Port Port Fraser Total 3.7 Total 0.0 Total 4.7 8.4 0.7%

Grand Total $647.7 Grand Total $416.6 Grand Total $157.0 $1,221.3 100.0% 53.0% 34.1% 12.9% 100.0%

*Note: Property tax data is based on 2008 assessment figures provided by Port Metro Vancouver; thus, represent 2008 tax contributions by Port Metro Vancouver. For further information on property tax contributions, refer to Appendix 11.

Municipal governments collected over $157 million (13% of the total) of tax contributions from economic activity at Port Metro Vancouver. The largest single category is property taxes that are paid by employees and employers, accounting for more than $148 million. This includes the municipal portion of tenant property taxes, property taxes by port-related businesses that are not located on port land, and the residential property tax paid by employees.

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10. Capital Investment at Port Metro Vancouver

This chapter discusses the additional economic activity generated by expenditures associated with the Port Metro Vancouver's current capital program and by the capital investments of Port Metro Vancouver tenants. This is job generation in addition to the previously described jobs attributed to Port operations.

The following sections will cover these key topics: Port Metro Vancouver total book and replacement value of historic capital investment to 2007. Total replacement value of previous capital investments of Port Metro Vancouver tenants. The economic impact of new investment in Port Metro Vancouver facilities by Port Metro Vancouver (and its predecessors) and by Port Metro Vancouver tenants.

10.1 Replacement Value of Port Metro Vancouver Capital

Port Metro Vancouver, as the administrator, manager and landlord of Port Metro Vancouver facilities, has the responsibility to maintain existing structures and provide capacity for anticipated future growth. As such, annual capital investments by Port Metro Vancouver on items such as land, berthing structures, buildings, utilities, roads and surfaces, machinery and equipment, office furniture and equipment and other leased assets are typical. In 2007, capital investments by Port Metro Vancouver comprised of $1.66 billion for existing programs and $950 million for new programs totalling $2.61 billion in expenditure.

10.2 Replacement Value of Tenant Capital

The tenants who lease property from Port Metro Vancouver maintain their own capital and plan for future investment. Tenants on Port Metro Vancouver land were asked to estimate the replacement cost of their existing fixed capital. A total of 188 tenants responded to this survey question, equal to 35% of all Port Metro Vancouver tenants.

Of those firms that responded to this survey question, the replacement value of Port Metro Vancouver tenant capital is estimated at $44.2 billion.12 The total replacement value of Port Metro Vancouver tenant capital investments is broken down in Table 10-1.

12 To be conservative, an estimate was not made of replacement values of non-respondents to our survey. We note that PMV provided an estimate of the Terminal 2 expansion, and all of the major employers in the Port did respond to the survey.

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Table 10-1: Estimated Replacement Cost of Port Metro Vancouver Tenant Capital

Estimated Value Tenant Type ($Millions)

Maritime Cargo $42,832

Non-marine Related Services $1,241

Construction, Building and Repairs $82

Other Marine Related Services $76

Total $44,231

Other marine related services have invested the greatest amount, $42.8 billion, among the surveyed firms. This stands to reason as this group includes the significant historical investment of rail carriers at the Port. The group of tenants with the second largest replacement value is non- marine related firms. While the Port Metro Vancouver also makes capital investments at the terminals, the replacement value of Port tenants’ terminal investments is estimated at $44.2 billion.

10.3 Port Metro Vancouver Planned Capital Expenditures Through 2018

Port Metro Vancouver has budgeted a total of roughly $950 million for its capital investment program (not including land acquisitions) between 2008 and 2018. On average, planned capital investment at Port Metro Vancouver will be about $95 million a year.

10.4 Port Metro Vancouver Tenant Planned Capital Expenditures Through 2018

Port Metro Vancouver tenants were surveyed with respect to their 10-year capital investment plans. Many firms viewed this information as highly confidential and would not comment, but others did supply estimates of capital expenditures that may take place in the coming years. A total of 159 tenants responded to this survey question, equal to 29% of all Port Metro Vancouver tenants.

Of the tenants that responded to the survey, future capital investments planned by Port Metro Vancouver tenants over the next 10 years are estimated at over $3.3 billion, yielding an average of $330 million a year. Tenants in the maritime cargo sector are anticipating spending the most – nearly $3.2 billion on new capital. The other group with major capital plans is the non-marine related sector, which expects to invest nearly $80 million. Total future capital investments are broken out by tenant type in Table 10-2.

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Table 10-2: Estimated Future Capital Investment of Port Metro Vancouver Tenants (10 years)

Estimated Value Tenant Type ($Millions)

Maritime Cargo $3,164

Non-marine Related Services $77

Construction, Building and Repairs $42

Other Marine Related Services $20

Total $3,303

Some firms that reported planned capital expenditures did so with the caveat that business continued to be "good." That would mean that further investment depended on Port Metro Vancouver remaining competitive among the Ports of Seattle, Tacoma and Los Angeles. Factors that will reduce the competitiveness of Port Metro Vancouver, and hence the investment climate, are a stronger Canadian dollar and higher priced intermediate transport for goods to Port Metro Vancouver. Locally, the municipal tax burden is viewed as a disincentive to invest.

10.5 Total Port Metro Vancouver Capital

Combining the replacement cost values of existing capital by the Port Metro Vancouver and its surveyed tenants, total Port Metro Vancouver capital investment amounts to nearly $46 billion. As shown in Table 10-3, planned new investment from the surveyed firms total to just over $3 billion dollars, Port Metro Vancouver acts as a facilitator of investment in the Port Metro Vancouver logistics system and its own investments are levered into even greater investment by its tenants/logistics partners.

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Table 10-3: Total Port Metro Vancouver Investments

Existing Capital Total Average Investment at Planned New Annual New Tenant Type Replacement Cost Investment to Investment to ($Billions) 2018 ($Billions) 2018 ($Millions)

Port Metro Vancouver and $1.66 $0.95 $95 Predecessors

Port Metro Vancouver Tenants $44.2313 $3.3014 $330

Total $45.89 $4.25 $425

10.6 Economic Impact of Future Port Metro Vancouver Investments

The average annual expenditures associated with the Port Metro Vancouver's current capital program will generate additional economic activity in the region, province and across Canada. Similarly, the capital investments of Port Metro Vancouver tenants over the next 10 years will also stimulate economic activity. This is job generation in addition to the previously described jobs attributed to Port operations.

Port Metro Vancouver’s $950 million capital investment program works out to roughly $95 million per year in new investment. The additions to capital by Port Metro Vancouver tenants that responded to the survey are assumed to be spread evenly over the next 10 years at $330 million a year. Together, Port Metro Vancouver (and its predecessors) and Port Metro Vancouver tenants will inject as much as $425 million a year in capital investment over the next ten years.

Using Statistics Canada ratios and multipliers for the non-residential construction industry, the annual impacts on employment and value-added in the Canadian economy for 2008 are calculated and presented in Table 10-4. An estimated total of 2,900 direct person years will be created each year with a potential total impact of 5,900 person years of employment.

These are job impacts in addition to the economic impacts of passenger and cargo related Port operations.

13 A total of 188 tenants responded to this survey question, equal to 35% of all Port Metro Vancouver tenants. 14 A total of 159 tenants responded to this survey question, equal to 29% of all Port Metro Vancouver tenants.

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Table 10-4: Average Canadian Economic Impacts of Port Metro Vancouver's Capital Investment, 2008

Wages GDP Output Person Years ($Millions) ($Millions) ($Millions)

Direct 2,900 $100 $160 $420

Indirect 2,400 $110 $170 $350

Induced 600 $650 $40 $80

Total 5,900 $860 $380 $850

Notes: Assumes average annual spend of $425 million. Figures may not add due to rounding.

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11. Economic Impact Summary

On-going operations at Port Metro Vancouver make considerable contributions to local employment and the provincial economy.

This study found that the Port Metro Vancouver’s on-going operations support 47,700 direct jobs, representing 40,600 direct person years (PY)15 of employment in British Columbia (B.C.). In round numbers, the direct economic impact of this employment on the B.C. economy is estimated at: $4.1 billion in gross domestic product (GDP); $9.8 billion in economic output; and $2.2 billion in wages.

The British Columbia economic impacts of on-going operations at Port Metro Vancouver are summarised in Table 11-1.

Table 11-1: 2008 Economic Impact of Port Metro Vancouver (B.C. Impacts Only)

Economic Person Wages GDP Type of Impact Jobs Output Years ($Millions) ($Millions) ($Millions)

Direct 47,700 40,600 2,200 4,100 9,800

Indirect 40,300 34,500 1,700 2,800 5,500

Induced 18,100 15,000 900 1,000 1,800

Total 106,100 90,100 4,800 7,900 17,100

15 Person years are also referred to as FTEs (full-time equivalents).

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Port Metro Vancouver’s economic impacts extend deep into B.C., the Prairies and the rest of Canada

Table 11-2 shows the estimated direct employment impacts on a community-by-community basis in Metro Vancouver, and totals for B.C., Alberta, Saskatchewan, Manitoba, Ontario and Quebec.

Table 11-2: Direct Economic Impacts by Location (All Locations in Canada)

Person Wages GDP Output Jobs Years ($Millions) ($Millions) ($Millions)

Vancouver 18,300 14,300 870 1,290 3,380

Richmond 5,700 5,000 190 390 840

Surrey 4,000 3,700 220 440 1,010

Delta 3,500 2,900 140 430 1,030

North Vancouver 3,500 3,100 180 250 560 (District)

New Westminster 3,000 3,000 190 240 650

North Vancouver (City) 2,000 1,900 100 150 430

Port Coquitlam 800 700 30 60 180

Coquitlam 700 700 50 90 160

Burnaby 700 600 30 50 110

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Person Wages GDP Output Jobs Years ($Millions) ($Millions) ($Millions)

Maple Ridge 400 400 20 40 110

Port Moody 300 200 10 20 50

Pitt Meadows 300 300 10 30 60

Langley (Township) 200 200 10 20 40

Langley (City) 200 200 10 40 70

West Vancouver 100 100 0 10 10

Total Metro Vancouver 43,900 37,200 1,980 3,550 8,670

Other B.C. 3,800 3,400 220 550 1,100

Total B.C. 47,700 40,600 2,210 4,100 9,780

Alberta 1,800 1,700 130 220 380

Manitoba 1,100 1,100 80 140 230

Ontario 1,100 1,100 70 130 280

Saskatchewan 900 900 70 120 210

Quebec 500 500 30 60 90

Total 53,100 45,900 2,600 4,800 11,000

Note: Totals may not add up due to rounding

Although the figures in this report are not directly comparable to the combined results of the previous studies, it appears that the economic impact of Port Metro Vancouver has increased. Table 11-3 shows the total Canada impacts of all Port Metro Vancouver employment at all locations.

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Table 11-3: 2008 Economic Impact of Port Metro Vancouver (All Locations in Canada)

Economic Type of Wages GDP Jobs Person Years Output Impact ($Millions) ($Millions) ($Millions)

Direct 53,100 45,900 2,600 4,800 11,000

Indirect 54,900 47,800 2,400 4,300 8,600

Induced 21,500 18,100 1,100 1,400 2,400

Total 129,500 111,800 6,100 10,500 22,000

Including indirect and induced effects, in round numbers, the total impacts of on-going operations at businesses related to Port Metro Vancouver across Canada are:

129,500 jobs; representing 111,800 person years of employment, $10.5 billion in GDP; $22 billion in economic output; and $6.1 billion in wages.

The jobs supported by Port Metro Vancouver are high wage positions

Port Metro Vancouver supports direct employment in various sectors

Direct jobs associated with handling maritime cargo at Port Metro Vancouver amount to 40,900 (or 77% of all direct jobs in all locations across Canada) with wages totalling approximately $2.2 billion. Jobs sectors included in this category include stevedores, rail, trucking and tug.

16 Statistics Canada Average Hourly Wages of Employees (Canada) for July 2008 multiplied by 1,832 hours worked by the average full-time equivalent worker in a year.

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Table 11-4 shows the direct employment and total payroll related to Port Metro Vancouver’s five main industry sectors.

Table 11-4: Direct Economic Impacts by Industry Sectors (All Locations in Canada)

Payroll Rank Industry Sector Jobs Person Years ($Millions)

1 Maritime Cargo 40,900 36,800 $2,190

2 Cruise 6,400 4,400 $220

3 Non-Marine Related 5,000 3,900 $130 Services

4 Construction, Vehicle, 600 500 $20 Building & Repair

5 Other Marine Related 200 200 $8 Services

Total 53,100 45,900 $2,600

Note: Totals may not add up due to rounding

Port Metro Vancouver supports direct employment both onsite and offsite

As shown in Figure 11-1, the majority of direct employment generated by the operations of Port Metro Vancouver is located within its jurisdiction. Direct employment attributable to onsite firms make up 73% of total direct jobs (or 76% of total direct person years), not including employment in the rail, trucking and cruise sectors. Most of this onsite employment is concentrated in seven municipalities: Vancouver, the City of North Vancouver, the District of North Vancouver, Delta, New Westminster, Richmond and Surrey. However, there are also more than 10,000 jobs supported by the economic activity of Port Metro Vancouver off-site.

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Figure 11-1: Onsite Employment versus Offsite Employment

Jobs Person Years

24% 27%

73% 76% Onsite Offsite

On-going operations at Port Metro Vancouver generate more than $1,221 million per annum in government tax revenues.

This analysis also estimated the current contribution of Port Metro Vancouver business community to government revenues through various taxes to all levels of government, shown in Figure 11-2. On-going activity related to Port Metro Vancouver contributes approximately $1,221 million annually in tax revenue to all levels of government, including: Federal tax revenue of close to $648 million. Provincial tax revenue of approximately $391 million in British Columbia, over $14 million in Alberta and more than $11 million in Manitoba.17 Government revenue in Port municipalities of approximately $157 million in property taxes.18

17 Tax revenue accrued in provinces other than British Columbia, Alberta, and Manitoba was included in the provincial tax revenue calculation for B.C. due to its insignificant impact. 18 Municipal taxes include school taxes collected by local governments on behalf of the provincial government.

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Figure 11-2: Estimated Annual Tax Revenues to Government

Municipal 157.0 Millions Provincial 416.6 Millions

Federal 647.7 Millions TOTAL = $1,221.3 million

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APPENDICES

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Glossary of Terms

Breakbulk: Breakbulk cargo is commodity cargo that must be loaded individually in a ship’s cargo. The goods can be packaged in bags, cases, crates, drums, barrels, or kept together by baling and placed onto pallets. Typical breakbulk commodities include paper, lumber, steel, and machinery.

Bulk: Bulk cargo is commodity cargo that is transported in large quantities and unpackaged. Typical bulk commodities include coal, grain, and chemicals.

Container: A container is a standardized re-sealable box used to transport goods. Containers are designed in standard sizes so that it can be loaded and sealed intact onto container ships, railroad cars, planes and trucks. A common size for containers is 20 feet by 8 feet by 8 feet, also known as a Twenty-foot Equivalent Unit (TEU).

Contract Work: Any work which is done for a company by an individual who is not on the payroll or work done for a company by another company. Generally speaking, firms will contract out work in areas in which they do not have expertise or when there are cost advantages to doing so.

Direct Employment: Direct employment is employment that can be directly attributable to the operations in an industry, firm, etc. It is literally a head count of those people who work in a sector of the economy. In the case of the Port, all of the jobs involved in moving goods to or through the Port or located on Port land would be considered direct employment.

Economic Activity: (also Output, Production) The end product of transforming inputs into goods. The end product does not necessarily have to be a tangible good (for example, knowledge), nor does it have to create utility (for example, pollution). Or, more generally, the process of transforming the factors of production into goods and services desired for consumption.

Employment Impact: Employment impact analysis determines the economic impact of employment in terms of jobs created and salaries and wages paid out. In the case of the Port, the direct, indirect, induced and total number of jobs or person years created at the Port are examined to produce a snapshot of Port operations.

Full Time Equivalent (FTE): (also Person Year) One full time equivalent (FTE) year of employment is equivalent to the number of hours that an individual would work on a full time basis for one year. In this study we have calculated one full time equivalent year to be equivalent to 1,832 hours. Full time equivalent years are useful because part time and seasonal workers do not account for one full time job.

GDP: (also value-added) A measure of the money value of final goods and services produced as a result of economic activity in the nation. This measure is net of the value of intermediate goods and services used up to produce the final goods and services.

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Indirect Employment: Indirect employment is employment which results because of direct employment. For the Port, it would include that portion of employment in supplier industries which are dependent on sales to the Port business sector. In some cases, contract work would be considered indirect employment.

Induced Employment: Induced employment is employment created because of expenditures by direct and indirect employees.

Multiplier Analysis: Analysis using economic multipliers in which indirect and induced economic impacts are quantified. Essentially, a multiplier number is applied to the "directly traceable economic impact" to produce indirect and total effects. (See Multiplier.)

Multiplier: Economic multipliers are used to infer indirect and induced effects from a particular sector of the economy. They come in a variety of forms and differ in definition and application. A multiplier is a number which would be multiplied by direct effects in order to calculate indirect or induced effects. In the case of the Port, as in many other cases, multipliers can lead to illusory results, and thus must be used with great care.

Output: (also Economic Activity, Production) The end product of transforming inputs into goods. The end product does not necessarily have to be a tangible good (for example, knowledge), nor does it have to create utility (for example, pollution). Or, more generally, it is defined as the process of transforming the factors of production into goods and services desired for consumption.

Person Year: (also Full Time Equivalent (FTE)) One person year of employment is equivalent to the number of hours that an individual would work on a full time basis for one year. In this study we have calculated one person year to be equivalent to 1,832 hours. Person years are useful because part time and seasonal workers do not account for one full time job

Seasonality: Seasonality results when the supply and demand for a good is directly related to the season in which it is consumed. For example, ski resorts experience changes in net income as a result of seasonality. Fishing companies also experience seasonality as a result of harvesting times for certain species. As a result of seasonality in fishing, some fishing companies hire extra fishermen during the busy season and furlough them in the off-season.

Tenant: A firm which pays a lease to a leasing company or to the Port Authority directly.

Twenty-Foot Equivalent Unit (TEU): Twenty-Foot Equivalent Unit is a standard unit for measuring containers. It represents the volume of a container with dimensions 20 feet by 8 feet by 8 feet.

Value-Added: (also GDP) A measure of the money value of final goods and services produced as a result of economic activity in the nation. This measure is net of the value of intermediate goods and services used up to produce the final goods and services.

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Appendix 1: Traffic Through Individual Ports

This appendix discusses historical traffic trends for Port Vancouver, Fraser River Port and North Fraser Port prior to its amalgamation in January 2008. Trade volumes for each commodity group along with directional trade flows are assessed.

Port Vancouver

Port Vancouver is Canada's busiest port in terms of total cargo handled, with 95% of its tonnage involved in international trade.

Trade Volume. The total volume of cargo shipped through Port Vancouver reached 82.7 million tonnes in 2007, up 3.9% from the 79.6 million tonnes handled in 2006. As displayed in Figure A-1, there has been a 12.5% increase in volume over the period from 1997-2007. Furthermore, volume increased 31.7% from a low of 62.8 million tonnes in 2002 to its current high in 2007 and total Port Vancouver cargo increased nearly 8% since the economic impact study completed in 2000.

Figure A-1: Volume of Port Vancouver Cargo (1997 - 2007)

illions) 50

30 Tonnes (m Tonnes

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

container breakbulk bulk

Sources: Port Vancouver 1996, 1998, and 2007 statistics.

Cargo tonnage can be grouped into three major categories: bulk, breakbulk and container (Figure A-2). Since the last economic impact survey conducted in 2000, containerised cargo has been the largest source of growth, resulting in its total share of cargo tonnage increasing from 13% in 2000

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to 23% in 2007. Over the same period, bulk shipments have declined from 81% to 74% of total tonnage and breakbulk has declined from 6% to 3%. The decline in breakbulk is attributable in part to the increasing use of containers for goods that were previously shipped as breakbulk, such as lumber and pulp.

Figure A-2: Breakdown of Port Vancouver Cargo by Shipment Type (2007)

Container 23%

Break bulk 3%

Bulk 74%

Source: Port Vancouver statistics 2007

Bulk Cargoes

The vast majority of freight handled by Port Vancouver is bulk cargo, accounting for 74% of total tonnage in 2007. Though still very significant, bulk cargo’s share has declined somewhat from a high of 85% in 1996. The decline in the volume share of bulk cargo should not be viewed as a negative trend, but rather as the consequence of rapid growth in containerised volumes. As displayed in Figure A-3, nearly 61 million tonnes of bulk cargo were handled at the Port in 2007.

By volume, coal (42%) was the largest bulk commodity in 2007 (Figure A-4). Fertilizer and grain ranked second and third, each contributing 19% of total tonnage. Together, coal, grain, and fertilizer comprise 80% of the bulk cargo total tonnage at Port Vancouver in 2007. Petroleum (10%) and chemicals (8%) are the fourth and fifth ranked components in terms of share of 2007 total tonnage, respectively.

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Figure A-3: Volume of Port Vancouver Bulk Cargo (1997 – 2007)

70 62.0 62.3 61.0 60.0 57.9 59.2 58.7 58.8 60 56.2 51.0 50 47.6

30 Tonnes (millions) 20

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Sources: Port Vancouver 1997 - 2007 statistics.

Figure A-4: Bulk Tonnage Components (2007)

Forest Products Processed Food 1% 1% Chemicals 8%

Petroleum 10% Coal 42%

Grain 19%

Fertilizer 19%

Source: Port Vancouver statistics, 2007.

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Breakbulk Cargoes

Breakbulk, or general cargo, made up 3% of trade at Port Vancouver in 2007. Breakbulk cargo is very concentrated in forest products, with woodpulp, lumber and logs, bolts and rough wood accounting for the majority of total volume.

Following its peak of 7.5 million tonnes in 1995 (11% of total volume), breakbulk cargo has continued to decline, as clearly depicted in Figure A-5. In 2007, breakbulk tonnage came to 2.5 million, a decline of 22% compared with 2006 and a decline of 43% compared with 2000, when the previous economic impact study was undertaken.

A number of factors account for the decline in breakbulk volumes. Among these are the severe decline in forest product shipments from B.C., a strong Canadian dollar, and the containerization of breakbulk commodities.

Figure A-5: Volume of Port Vancouver Breakbulk Cargo (1997 – 2007)

6 5.3

5 4.3 4.3 4.4

4 3.6 3.4 3.2 3.2 3.3 3.2 illions) 3 2.5

Tonnes (m Tonnes 2

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Port Vancouver Statistics 1997-2007.

Containerised Cargoes

Containerised cargo has been the fastest growing segment at Port Vancouver for many years and, as Figure A-6 displays, accounted for 2.3 million twenty-foot equivalent units (TEUs) in 2007.

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Since the opening of the Deltaport terminal in 1997, container TEUs have more than tripled, increasing by 218% or an average of 20% per year.

The upward trend in container TEUs closely resembles the increase in container tonnage. In 1997, containerised cargo totalled nearly 6 million tonnes and represented only 8% of Port volume. In 2007, containerised shipments amounted to 19 million tonnes, or 23% of total Port volume, a three- fold increase.

Figure A-6: Port Vancouver Containerised Cargo TEUs (1997 – 2007)

20,000 19,239

17,652

14,400 15,000 14,060

12,615 12,031

9,978 10,072 10,000 9,004

7,014 5,937 Units (thousands) Units

5,000

2,208 2,307 1,458 1,547 1,665 1,767 1,070 1,163 1,146 724 840 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

TEUs Tonnage

Source: Port Vancouver Statistics 1997-2007

Figure A-7 displays the breakdown of containerised commodities in 2007. Household goods is currently the largest single commodity category that is containerised at Port Vancouver, with 3.2 million tonnes shipped in 2007. Woodpulp is the second largest containerised commodity shipped in 2007, accounting for 2.4 million tonnes. Woodpulp container tonnage doubled between 2000 and 2007, increasing from 1.2 million tonnes to its current tonnage of 2.4 million. The third and fourth largest containerised commodities in 2007, lumber and special crops, represented 1.7 million and 1.8 million tonnes, respectively. Containerised cargo at Port Vancouver is much less concentrated than bulk and breakbulk freight.

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The miscellaneous group of commodities greatly exceeds woodpulp's share of the containerised cargo, accounting for 37% of the tonnage. This aspect of the breakdown reflects the advantage of containerisation. Containerisation makes the consolidation of multiple shippers' goods into a single container possible and export or import by sea a very competitive option.

Figure A-7: 2007 Container Tonnage Components

Household Goods 17%

Others Parts and 37% Components 6%

Metals 5%

Woodpulp 13% Chemical Products 4% Lumber Special Crops 9% 9%

Source: Port Vancouver Statistics 2007.

Trade Balance

Trade at Port Vancouver is characterised by a directional imbalance with exports to international trading partners exceeding imports in terms of tonnage.

Inbound vs. outbound traffic. By weight, the majority of cargo traffic through Port Vancouver is exported. Until recently, export tonnage consistently accounted for approximately 90% of total Port traffic, with imports making up the remaining 10% (see Figure A-8). However, inbound traffic increased in 2006 and 2007, representing 15% and 16% of total Port tonnage, respectively.

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Figure A-8: Imported and Exported Port Vancouver Tonnes (1997 – 2007)

30 Tonnes (millions) Tonnes

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Imports Exports

Source: Port Vancouver Statistics 1997- 2007

Major imports. Displayed in Figure A-9 are the top inbound commodities at the Port of Vancouver over the past ten years. Currently, household goods are the largest inbound commodity by volume, with nearly 3.2 million tonnes arriving in 2007. Since 2003 household goods have increased by 58%, an increase of almost 12% per annum during the five year period. Minerals and parts and components are the next largest inbound commodities, with 2007 volumes of 1.4 million and 1.2 million tonnes, respectively. Note that there are two categories mentioned that were unavailable prior to 2003 (“Household Goods” and “Parts and Components”). Both commodities were likely included in the ‘other’ category throughout this period and were not extrapolated until 2003. Port of Vancouver also experienced growth in overall container traffic by 5% in 2007 over 2006. With a major component of imports being containerized, total inbound container traffic grew 6%, from 1.1 million tonnes in 2006 to 1.2 million tonnes in 2007.

Major exports. Foreign export tonnage increased by 25% from 55.1 million in 2002 to 69.1 million tonnes in 2007, a 25% increase throughout the six year period. Despite the upward trend in foreign export tonnage, the percentage of export tonnage to total Port Vancouver tonnage decreased from 87.7% in 2002 to 83.5% in 2007. The inverse relationship between export tonnage and export percentage infers that while cargo traffic at the Port is increasing, most of the increase is coming from imports rather than exports. As can be seen from Figure A-10, coal remains the most significant outbound export in terms of tonnage, accounting for 24.8 million in 2007. Potash and sulphur exports have demonstrated some stability with respect to market share and overall volumes since 2003. The bulk commodity sector contributed the most to export traffic at the Port of Vancouver.

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Figure A-9: Top 3 Inbound Commodities (2003 – 2007)

3 Tonnes (millions) 2

0 2003 2004 2005 2006 2007

Household Goods Minerals Parts and Components

Source: Port Vancouver Statistics 2003- 2007

Figure A-10: Top 3 Outbound Commodities (1998 – 2007)

40,000

35,000

30,000

25,000

20,000

15,000 Tonnes (thousands) Tonnes 10,000

5,000

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Coal Potash Sulphur

Source: Port Vancouver Statistics 1998- 2007

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Fraser River Port

Fraser River Port is Canada’s largest fresh water port, spanning 270 kilometres of shoreline beginning at the mouth of the Fraser River and extending east to the Fraser Valley at Kanaka Creek and north through the Pitt River to Pitt Lake. Domestic trade continues to be the largest component of total Fraser River Port trade, equivalent to 30.7 million tonnes of cargo in 2007. International cargo and containerised goods continue to contribute significantly to the overall Fraser River Port trade. These three trade segments are considered in turn.

Domestic Cargoes. Domestic cargo volumes decreased nearly 4% in 2007 over 2006. Despite this slight decline in recent years, domestic volumes are still high compared to ten years ago, due to the strong growth in domestic trade from 2001 through 2005, as shown in Figure A-11.

Figure A-11: Fraser River Port Domestic Cargo Volume (1997-2007)

35,000

30,000

25,000

20,000

15,000

10,000 Tonnes (thousands) Tonnes

5,000

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Outbound Inbound

Source: Fraser River Port Authority Cargo Statistics 2000-2007

The 30.7 million tonnes of domestic cargo volumes handled by Fraser River Port in 2007 is comprised of 63% outbound goods and 37% inbound goods. Prior to 2002, inbound cargoes exceeded outbound domestic cargoes at Fraser River Port. From 2002 onwards, this situation was reversed due to a 14% average annual growth in outbound cargoes.

In terms of tonnage, the top three inbound domestic goods handled by Fraser River Port in 2007 are aggregates, logs and general cargo, representing 41%, 24% and 21% of total inbound domestic volumes respectively. General cargo and logs are also the top commodities among the outbound domestic goods, representing 61% and 12% of total outbound domestic volumes

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respectively. Woodchips takes third place, making up 11% of total outbound domestic volumes handled by Fraser River Port.

International Cargoes. The trend in international cargoes is quite similar to that of the domestic sector. Overall international cargo volumes handled by Fraser River Port dropped in the past two years (by 25.8% in 2007 over 2005). However, international cargo volumes are still significantly higher than compared to ten years ago. This is shown in Figure A-12.

Figure A-12: Fraser River Port International Cargo Volume (1997-2007)

6000

5000

4000

3000

2000 Tonnes (thousands) Tonnes

1000

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Imports Exports

Source: Fraser River Port Authority Cargo Statistics 2000-2007

In terms of trade balance, there is a fairly equal balance between imports and exports in recent years. In 2007, exports made up a slightly larger share of Fraser River Port’s international cargo volumes (54%) as compared to imports (46%).

Cement, general cargo and logs continue to rank the highest in terms of tonnage of export goods handled for the Fraser River Port. Combined, these top three commodities make 72% of total exports handled at the Port. For the imports side, general cargo, steel and automobiles consistently make up the largest portion of import goods handled by the Port, at 38%, 32% and 26% respectively in 2007.

Containers. Fraser River Port’s container traffic saw a significant drop by approximately 75% in 2006 over 2005. This decline in container trade is said to be “pinpointed to consolidations and reallocation of container traffic in the Northwest.”19 Despite this decline, container traffic began to

19 According to news releases posted on the Fraser Port Authority website, 16 February 2007.

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increase again in 2007, doubling from 2006 levels. Figure A-13 illustrates the fluctuations in Fraser River Port’s container traffic.

Figure A-13: Fraser River Port Container TEUs (1999-2007)

400 373 350 318 300 253 250 191 200

150 101 Tonnes (thousands) 100 95 67 51 50 32

0 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Fraser River Port Authority Cargo Statistics 1999-2007

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North Fraser Port

The North Fraser River Port is a major transportation link in the Lower Mainland, extending from Pacific Spirit Park and the University Endowment Lands in the west to New Westminster in the east. A working river, the North Fraser is home to the forest and construction supply industry and serves as an essential transportation route that connects coastal and international markets. Domestic trade accounts for 100% of the Port’s cargo, which represented 10.3 million tonnes in 2007. Of the total North Fraser Port cargo throughput by volume in 2007, the majority (87%) was inbound (Figure A-14).

Figure A-14: North Fraser Port Cargo Volume (1997-2007)

25,000

20,000

15,000

10,000 Tonnes (thousands) Tonnes 5,000

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Inbound Outbound

Source: Port North Fraser Cargo Statistics 1997-2007

Cargo volumes in the North Fraser Port have shown a downward trend from 2004, a result of the decrease in log and lumber volumes. The decrease in inbound cargo volume outpaced the decrease in outbound cargo volume from 2006 to 2007, as inbound tonnage decreased by 24%, while outbound tonnage decreased by 16%.

As depicted in Figure A-15, the top three commodities handled by North Fraser River Port in 2007 are woodfibre, aggregates, and by-products representing 67%, 21% and 12% of total volumes, respectively. Although woodfibre and by-products have decreased steadily from 2004, aggregates increased 26% from 2005 levels.

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Figure A-15: North Fraser Port Top 3 Commodities (1997-2007)

20,000 18,000 16,000

14,000 12,000 10,000 8,000 6,000 Tonnes (thousands) Tonnes 4,000 2,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Woodfibre By Products Aggregates

Source: Port North Fraser Cargo Statistics 1997-2007

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Appendix 2: Estimating Port Metro Vancouver Trade Values for 2007

A bottom up approach was used to estimate the value of Port Metro Vancouver trade. This approach involved applying a per unit value for each commodity to the total volume of that commodity handled in 2007.

The commodity traffic volumes for Port Metro Vancouver were determined by consolidating 2007 commodity traffic volumes for Port Vancouver, Fraser River Port and North Fraser Port.

The per tonne value of bulk and breakbulk commodities were based on Statistics Canada international trade data for 2006 and adjusted for inflation using the Bank of Canada Inflation Calculator for 2007.

The total value of commodities and containers handled at the Port Metro Vancouver is estimated at $75.2 billion, as presented in Table A-1.

Table A-1: Estimated Value of Port Metro Vancouver Tonnes by Commodity, 2007

Average Value Total Value Commodity Tonnes (000’s) Per Tonne in 2007 ($ Millions)

Animal Products, 1,200 $770 $910 Dairy & Products

Grain, Specialty 14,300 $190 $2,730 Crops & Feed

Chemicals 3,600 $750 $2,710

Metals 2,500 $1,740 $4,350

Minerals 2,300 $110 $240

Ores/Concentrates 1,000 $540 $550

Coal 24,800 $200 $4,900

Fertilizers 90 $190 $16

Potash 6,400 $180 $1,180

Sulphur 5,300 $130 $710

Lumber 2,500 $510 $1,260

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Average Value Total Value Commodity Tonnes (000’s) Per Tonne in 2007 ($ Millions)

Woodpulp 4,000 $600 $2,390

Woodchips 3,300 $140 $470

Other Forest 15,900 $500 $7,860 Products

Consumer & 3,700 $6,040 $22,640 Related Goods

Processed Food 1,300 $790 $840 Products

Machinery & Parts 2,700 $1,090 $2,890

Automobiles & 560 $850 $480 Parts

Diesel & Fuel Oil 1,400 $1,010 $720

Gasoline 710 $680 $970

Other Petroleum 4,000 $790 $3,180 Products

Cement 870 $1,320 $1,150

Other 25,400 $470 $12,030

Total 127,900 $590 $75,200

Source: Tonnage data from Port Metro Vancouver. Average value per tonne from 2006 Statistics Canada International Trade data (NAICS) and adjusted for inflation using Bank of Canada Inflation Calculator for 2007.

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Appendix 3: Maritime Cargo Employment by Commodity

Allocation of employment by commodity type

This appendix provides details on how direct maritime cargo employment at Port Vancouver is distributed among commodity types. From this, employment can then be inferred into the broader categories of automobiles, bulk, breakbulk and containers.

The Vancouver Fraser Port Authority Employment Survey asked respondents for the percentage of total employment associated with their corresponding commodity throughput. The responses collected by firms offering the amount of employment attributable to each commodity was studied and consulted throughout the allocation process. Furthermore, established methodologies from previous economic impact studies conducted by InterVISTAS Consulting (IVC), such as the 2000 Port Vancouver Economic Impact Study and the 2005 Port Vancouver Update, as well as the 2006 Fraser River Port Economic Impact Study, were used as reference.

In consultation with the survey data, industry-specific labour productivity ratios obtained from Industry Canada and tonnage growth figures procured from Port Metro Vancouver were examined to accurately compare employment within each commodity sector to that of previous economic impact studies. Industries included in the calculations were consistent with business sectors that actually constitute direct maritime cargo employment at Port Metro Vancouver, and thus accounted for fluctuations in labour productivity throughout the person year allocation process. As such, determining the appropriate business sectors and number of person years associated with maritime cargo was a critical measure since their corresponding labour productivity ratios were incorporated into the calculations. Table A-2 presents the sequential calculation to determine the number of person years per commodity sectors.

Table A-2: Allocation of Person Years per 10,000 Tonnes of Commodity Sector 2007 Port Percent of Person Metro Direct Total Direct Years (per Cargo Type Vancouver Person Maritime 10,000 Tonnes Years Cargo tonnes) (Millions) Employment Automobiles 15.13 0.5 693 2% Bulk cargo 1.23 74.6 9,145 25% Breakbulk cargo 4.99 31.8 15,876 43% Container 5.30 21.0 11,111 30% Total 26.64 127.8 36,825 100%

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Appendix 4: Employment Survey

Identification of the survey population

The 537 firms that received employment surveys for the Port Metro Vancouver economic impact study included on-site and off-site firms, as depicted in Table A-3. Port Metro Vancouver provided a list of Port contacts and tenants. InterVISTAS Consulting referred to the Yellow Pages phone directory and previous studies at the Port to supplement the list provided by the authority.

Table A-3: Total Number of Firms Surveyed

Number of Firms Number of Firms’ Type of Business Response Rate Surveyed Responses

On-site firms 301 210 70%

Off-site firms 236 155 66%

Total 537 365 68%

Questionnaire design

The basic questionnaire was designed to be effective in obtaining information and, equally important, to be as clear and easy to understand as possible for respondent firms. The survey was provided to Port Metro Vancouver tenants and certain off-site users of the Port.

General Information Name of firm, address Contact person's name Phone and fax numbers Email and website address Type of business

Port-Related Business Proportion of revenues related to Port operations

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Proportion of revenues related to each of three ports, Vancouver Port, Fraser River Port and North Fraser Port Proportion of revenues related to domestic coastal trade versus international trade Proportion of marine operations related to imports versus exports

Total Employment Numbers Total employees as of March 2008 Total payroll excluding benefits, 2007

Part-time and Full-time Employment Full-time permanent employees Part-time permanent employees Full-time seasonal employees Part-time seasonal employees Average hours and weeks worked for part-time and seasonal employees

Employment Details A breakdown of employment by location A selection of job trades was provided to categorise employment

Throughput by Commodity Types Total throughput in tonnes Total container throughput in TEUs for both laden and empty containers A breakdown of throughput by commodity type in tonnes A breakdown of employment associated with each commodity type

Capital Investment Current value of facilities and capital investment in terms of replacement costs Expected future investments in facilities and capital investment over the next ten years

Copies of the surveys are provided in Appendix 2.

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Conducting the survey

The survey was mailed out from the InterVISTAS Consulting with a cover letter from Port Metro Vancouver Chief Sustainability Officer, Captain Allen O. Domaas. The letter explained the purpose of the study, the confidentiality of responses and encouraged members of the Port business and transportation community to participate. Postage paid envelopes were provided with all mail-out surveys.

Following the initial mail-outs, non-responding firms were contacted by telephone to follow up and to encourage them to complete the survey and/or provide employment figures.

Analysis of the results

The survey results were compiled into a custom MS Excel database.

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Appendix 5: Sample Survey

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Appendix 6: Calculation of Person Hours Per Year

The following are details of calculations for the average number of hours per person year (PY).

Calculation of person hours per year:

365 days per year

Less: (104) weekend days

(11) legal holidays

(15) average vacation days

(6) sick leave

229 days per person year

* 8 hours per work day

1,832 hours per person year

Workdays vary anywhere from 6.5 to 8 hours; however, in order to be conservative, an 8 hour workday was assumed.20 Similarly, numbers of vacation and sick leave days may also vary.

20 Essentially, we are using a measure of paid hours per year. Using a measure of productive hours per year with 6.5 hour workdays (8 hours less 1 hour for lunch less two 15 minute work breaks) would give 1,489 hours per person year. Using this lower figure would result in inferring a greater number of person years from seasonal and part-time jobs. Using the 1,832 figure, we infer a lower number of person years.

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Appendix 7: Employment Breakdown

The following section provides the breakdown of direct employment by business type and job type.

Direct Full- Part- Person Business Type Time Time Seasonal Formulaic Inferred Years Rail 0 0 0 8,204 0 8,204

Cruise 0 0 0 4,441 0 4,441

Stevedoring 3,834 1 0 0 0 3,835

Shipping 2,818 19 7 0 699 3,543

Sawmill & Wood 1,766 0 14 0 1,483 3,263 Preserve

Trucking 0 0 0 1,085 0 1,085

Tug/Tow/Barge 2,292 12 21 0 216 2,541

Commercial Fishing 904 0 406 0 605 1,915

Accommodations 1,753 63 0 0 0 1,816

Insurance/Underwriting 1,633 4 0 0 82 1,719

Bulk Terminal Operator 1,173 18 67 0 57 1,315

Manufacturing – 554 13 184 0 450 1,201 Seafood

Container Terminal 989 4 5 0 125 1,123 Operator

Freight Forwarder 913 1 1 0 52 967

Manufacturing – Forest 494 0 0 0 266 760 Products

Government Agency 569 5 9 0 66 649

Manufacturing – 353 1 37 0 156 547

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Direct Full- Part- Person Business Type Time Time Seasonal Formulaic Inferred Years Concrete & Cement

Real Estate/Property 414 12 6 0 108 540 Management

Manufacturing – 444 0 0 0 35 479 Chemicals

Manufacturing – Metals 338 1 0 0 85 424

Manufacturing – Other 197 0 0 0 197 394 Food Products

Holding Company 108 4 0 0 280 392

Casino 350 0 0 0 0 350

Association 239 45 14 0 44 342

Ship Building/Repair 261 7 4 0 32 304

Storage/Warehousing 187 5 8 0 42 242

Dredging 240 0 0 0 0 240

Retailer 223 2 0 0 0 225

Consulting 157 3 0 0 43 203

Breakbulk Terminal 130 69 0 0 0 199 Operator

Marina 151 19 15 0 14 199

Distributor 106 4 0 0 82 192

Construction 164 5 0 0 22 191

Customs Broker 151 0 0 0 35 186

Freight Transportation 103 11 9 0 61 184

Pilotage 140 17 0 0 0 157

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Direct Full- Part- Person Business Type Time Time Seasonal Formulaic Inferred Years Manufacturing – 155 1 1 0 0 157 Marine-Related Goods

Restaurant 55 90 0 0 0 145

Container Transloading 138 8 0 0 0 146

Cargo Inspection 72 25 0 0 32 129

Manufacturing – 114 0 0 0 0 114 Agricultural Products

Automobile Terminal 104 1 0 0 0 105 Operator

Automobile Parts 93 0 0 0 11 104 Manufacturing/Supplier

Wholesaler 64 0 0 0 37 101

Law Firm 20 0 0 0 60 80

Marine Technology 25 3 0 0 41 69

Air Service 32 6 3 0 27 68

Manufacturing – 60 0 3 0 0 63 Minerals

Ship Chandler 42 1 0 0 14 57

Security 51 3 0 0 0 54

Marine Surveyor 35 1 0 0 8 44

Teaching Institute 34 6 0 0 0 40

Ship Broker 20 1 0 0 0 21

Truck/Container Repair 20 0 0 0 0 20

Waste Treatment 12 4 0 0 0 16

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Direct Full- Part- Person Business Type Time Time Seasonal Formulaic Inferred Years Financial Services 4 1 0 0 3 8

Automobile Rentals 1 3 0 0 0 4

Film Industry 1 0 0 0 3 4

Manufacturing - 0 1 0 0 1 2 Rubber

Tour Business 2 0 0 0 0 2

Water Lot 1 0 0 0 0 1

Parking 0 <1 0 0 0 <1 Total Person Years 25,302 497 814 13,730 5,574 45,919

Note: Rows and columns may not add to totals due to rounding.

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Appendix 8: Inferred Employment

This appendix describes how employment was inferred for non-responding Port employers and ship service employers.

Our approach was to utilise information from responding firms for each type of business and use it, along with publicly available information on individual non-responding firms, to make inferences. This approach is generally deemed to be the best approach, and is often used for developing the national income and products account (i.e., partial survey with inference for non-surveyed or non- responding firms based on responses of surveys received). Our approach was conservative in that, unlike the national income and products account inference, we assumed that the non-responding firms were smaller than respondents.

The employment data in this report was constructed from a combination of two sources: Employment reported by employers on surveys. Employment inferred for employers who did not provide a survey response. Where possible, survey results from the 2001 Port Vancouver employment survey and 2005 Fraser River Port employment survey were consulted to provide an estimate of employment. Where previous survey results were not available, inferred employment was based on employment information from firms in each business type that responded to the survey. The mean employment of respondents in each business type was calculated and adjusted to exclude outliers. For example, especially large firms were excluded from the "mean without outliers” and this "adjusted mean" employment for each business type was then applied to the non-respondent firms. Trucking employment that is required by Port Metro Vancouver businesses, trade, and shipping was estimated by using studies recently conducted on these industries in the Lower Mainland. Trucking related employment was calculated using the B.C. Ministry of Transportation Container Trucking Forum Container Simulation Project (prepared by IBI Group), the Port Metro Vancouver Container Trucker and/or Tractor Surplus Study Synopsis and the Port Metro Vancouver 2007 Estimated Container Traffic Flow by Inland Origin/Destination and Transport Mode statistics. An average number of daily truck trips per driver and average trucking hours were used to determine total trucker hours associated with Port activity. Appendix 9 describes the methodology used to estimate total Port-related trucking employment. Rail service was estimated based on surveyed employment by the rail carriers that serve Port Metro Vancouver and traffic served by those carriers at the Port. Cruise service employment was estimated using results from a North West CruiseShip Association study (prepared by Business Research & Economic Advisors - BREA). Upon Port Metro Vancouver’s request, the cruise impacts were adjusted upwards based on revised data on cruise expenditures that Port Metro Vancouver attained from Cruise BC.

Appendix 7 provided the breakdown of surveyed and inferred employment for each business type.

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Appendix 9: Estimating Port-Related Rail Employment in 2007

Direct employment associated with the rail sector was determined by interviewing the following major rail companies that service Port Metro Vancouver: Canadian Pacific Railway Company Canadian National Rail Burlington Northern Inc. Southern Railway of British Columbia Ltd.

As part of the interview, rail companies were asked to estimate the portion of its employment that depends on the existence of Port Metro Vancouver. In most cases, rail companies provided their best guess of the percentage of system-wide employment involved in handling goods that have ultimately originated from or are destined to the Port. Rail companies were also asked to provide an approximate allocation of total Port-related jobs by employment type and by location. Total payroll calculations were based on an average wage calculated from payroll and employment figures provided by the rail company for its system-wide operations.

Table A-4 summarises the total economic impacts pertaining to Port-related rail activity in Canada.

Table A-4: Total Impacts Attributable to Port-related Rail Activities (Total Canada Impacts)

Person Wages GDP Output Years ($Millions) ($Millions) ($Millions)

Direct 8,200 $550 $1,100 $1,800

Indirect 5,700 $270 $500 $1,100

Induced 4,000 $240 $400 $600

Total 17,900 $1,100 $2,000 $3,400

Note: Figures may not add due to rounding.

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Appendix 10: Estimating Port-Related Trucking Employment in 2007

Trucking employment was estimated from a number of data sources related to the movement of container to and from Port Metro Vancouver: Port Metro Vancouver data on container traffic flows for 2007, which included the movement of containers by inland origin and destination, by transport mode (rail or truck), and breakdowns into loaded versus empty containers. The data also includes container movement destined for off-dock transload facilities, which also contributes to the overall Port-related trucking employment. Port Metro Vancouver also provided a synopsis for its 2007 Container Trucker and/or Tractor Surplus Study, which provided information on the average number of working days for truckers in 2007. The B.C. Ministry of Transportation report, Container Trucking Forum Container Simulation Project, prepared by IBI Group in 2007, which provided information on the number of container trips carried out by local truckers in a working day. This report estimated that Lower Mainland container truck drivers each handled an average of 7.2 daily one-way truck trips to/from Lower Mainland terminals, of which 5.3 of these trips were loaded with a container and 1.9 truck trips were empty. The study also indicated that the average truck driver is on duty for 9.7 hours per day.

It should be noted that the container statistics used in this analysis are based on the number of container boxes handled rather than the TEU measure provided in Chapter 2. While the TEU is a standardised measure of container traffic (twenty-feet equivalent unit), actual containers vary in size from 20 feet up to 53 feet. At Port Metro Vancouver, the average container box is equal to approximately 1.7 TEUs. Since it is the container boxes that drive trucking demand, the analysis is based on container boxes rather than TEUs. Therefore the container traffic figures presented in this appendix are lower than those presented in Chapter 2, due to the use of a different metric.21 The trucking employment was calculated on the basis that: The average trucker worked 294 days in 2007 (taken from the Container Trucker and/or Tractor Study Synopsis); A person year of employment or a full-time equivalent works 1,832 hours per year (refer to Appendix 6 for details on calculation).

21 Published traffic figures are based on the movement of containers in and out of the terminal gate only. In addition, the container traffic figures in this appendix also include the movement of some empty containers not captured in the published traffic figures as they do not cross the dock face (e.g., from destuffing activity). These movements do generate truck hours so are included in this analysis. Port Metro Vancouver provided InterVISTAS Consulting Inc. with this supplemental data (2007 Estimated Container Traffic Flow by Inland Origin/Destination and Transport Mode) for the purposes of conducting this trucking employment analysis.

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1.5% of trucking trips were non-local (based on Port Metro Vancouver data, 98.5% of all non- local containers were transported by rail), and were assumed to generate an average of 3 working days of employment per round-trip.

Using these assumptions in conjunction with the above information provided, it was estimated that 1,100 person years of trucking employment related to Port Metro Vancouver were generated in the Lower Mainland. The results are presented in Table A-5.

Table A-5: Estimated Port-Related Trucking Person Years in 2007

Total Containers Total Container (Boxes) by Truck Total Trucking (Boxes) Person Years

Loaded and Empty 1,637,400 732,400 1,100 Note: Container TEUs data from PMV Estimated Container Flow Statistics.

Service Canada’s Labour Market Information website indicates that the average hourly wage for truck drivers is $20.35, which is equivalent to $37,300 annual payroll per person year. As a result, Port-related trucking employment generated roughly $40 million in wages in 2007.

Including indirect and induced impacts, the trucking sector of Port Metro Vancouver generates a total of 1,900 person years, which creates $80 million in wages and $150 million in GDP across Canada. Table A-6 shows the Canadian economic impacts of Port-related trucking activities in 2007.

Table A-6: Total Impacts Attributable to Port-related Trucking (Total Canada Impacts)

Person Wages GDP Output Years ($Millions) ($Millions) ($Millions)

Direct 1,100 40 70 150

Indirect 600 30 60 120

Induced 200 10 20 30

Total 1,900 80 150 290

Note: Figures may not add due to rounding.

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Appendix 11: Tax Revenues Attributable to Employers and Port Users

This appendix describes the employment and other assumptions on which tax revenues calculations are based. As well, the approaches used to estimate employer and employee contributions to local, provincial and federal governments are presented. All estimates are for the 2007 calendar year (most recent data available) unless otherwise stated.

Some of the taxes pose conceptual questions about how much, or if any tax revenue from a particular source should be attributed to firms serving Port Metro Vancouver. These questions are highlighted and simplifying assumptions are put forth.

The majority of tax calculations depend on direct employment and total wages. The total direct employment, in person years, used for these calculations is 45,919 person years. The total payroll is estimated at approximately $2.6 billion.

Personal Income Tax (federal and provincial)

Tax base and rates. Under the Income Tax Act federal income tax is paid on taxable income at a rate that increases with taxable income.

Provincial income tax was formerly calculated as a percentage of federal tax, but most provincial governments have begun collecting taxes on a sliding scale. British Columbia and Manitoba use the sliding scale method, while Alberta uses a fixed rate. Table A-7 shows the provincial and federal income tax rates for 2007.

Table A-7: Personal Income Tax Rates For 2007 Federal - Basic Tax Income Range: $0 to $37,178 Tax Rate: 15% $37,178 to $74,357 22% $74,357 to $120,887 26% Over $120,887 29% British Columbia - Basic Tax Income Range: $0 to $34,397 Tax Rate: 5.7% $34,397 to $68,794 8.65% $68,974 to $78,984 11.1% $78,984 to $95909 13.0% Over $95,909 14.7%

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Alberta - Basic Tax Income Range: All taxable income Tax Rate: 10.0% Manitoba - Basic Tax Income Range: $0 to $30,544 Tax Rate: 10.9% $30,544 to $65,000 13.0% Over $65,000 17.4% Estimation Method and Results

Because the tax rate is progressive, the tax paid by a group of employees depends on the distribution of income among those employees. Unfortunately, the distribution of income is not known and average incomes must be used. This leads to an underestimate of taxes paid.

Each employee is assumed to pay tax as a single tax filer. Table A-8 shows the estimated income tax paid by each employment group at Port Metro Vancouver. Estimated income tax payable is $336 million in federal tax and $143 million in provincial tax.

Table A-8: Income Tax Revenues in 2007 Average Income Estimated Income Tax Rates (%) Tax ($M) Payroll Federal Provincial British Columbia Federal Provincial ($M) ($M) ($M) Accommodations $ 46 7.6% 3.2% $ 3.5 $ 1.5 Air Service $ 4 11.5% 4.8% $ 0.4 $ 0.2 Association $ 11 7.6% 3.2% $ 0.8 $ 0.4 Breakbulk Terminal Operator $ 11 11.5% 4.8% $ 1.3 $ 0.5 Bulk Terminal Operator $ 86 14.7% 6.0% $ 12.7 $ 5.2 Casino $ 8 7.6% 3.2% $ 0.6 $ 0.2 Commercial Fishing $ 91 11.5% 4.8% $ 10.5 $ 4.4 Construction $ 9 11.5% 4.8% $ 1.0 $ 0.4 Consulting $ 7 7.6% 3.2% $ 0.6 $ 0.2 Container Terminal Operator $ 47 11.5% 4.8% $ 5.4 $ 2.3 Container Transloading $ 10 14.7% 6.0% $ 1.5 $ 0.6 Dredging $ 21 16.8% 7.0% $ 3.6 $ 1.5 Film $ 0 11.5% 4.8% $ 0.0 $ 0.0 Financial $ 0 11.5% 4.8% $ 0.1 $ 0.0 Freight Transportation $ 9 11.5% 4.8% $ 1.0 $ 0.4 Government Agency $ 38 11.5% 4.8% $ 4.3 $ 1.8 Holding Company $ 22 11.5% 4.8% $ 2.6 $ 1.1 Marina $ 8 7.6% 3.2% $ 0.6 $ 0.2 Pilotage $ 13 14.7% 6.0% $ 1.9 $ 0.8 Restaurant $ 2 7.6% 3.2% $ 0.2 $ 0.1

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Average Income Estimated Income Tax Rates (%) Tax ($M) Payroll Federal Provincial British Columbia Federal Provincial ($M) ($M) ($M) Ship Building/Repair $ 12 7.6% 3.2% $ 0.9 $ 0.4 Teaching Institute $ 2 11.5% 4.8% $ 0.2 $ 0.1 Tour business $ 0 7.6% 3.2% $ 0.0 $ 0.0 Tug/Tow/Barge $ 138 11.5% 4.8% $ 15.8 $ 6.6 Water Lot $ 0 7.6% 3.2% $ 0.0 $ 0.0 Insurance/Underwriting $ 105 14.7% 6.0% $ 15.5 $ 6.3 Shipping $ 164 11.5% 4.8% $ 18.9 $ 7.9 Distributor $ 7 7.6% 3.2% $ 0.5 $ 0.2 Parking $ 0 7.6% 3.2% $ 0.0 $ 0.0 Waste Treatment $ 1 7.6% 3.2% $ 0.0 $ 0.0 Retailer $ 5 7.6% 3.2% $ 0.4 $ 0.2 Ship Chandler $ 3 11.5% 4.8% $ 0.4 $ 0.2 Freight Forwarder $ 37 7.6% 3.2% $ 2.8 $ 1.2 Cargo Inspection $ 6 11.5% 4.8% $ 0.7 $ 0.3 Truck/Container Repair $ 1 7.6% 3.2% $ 0.0 $ 0.0 Customs Broker $ 7 7.6% 3.2% $ 0.5 $ 0.2 Marine Surveyor $ 3 14.7% 6.0% $ 0.5 $ 0.2 Marine Technology $ 3 11.5% 4.8% $ 0.4 $ 0.2 Lawyer $ 5 11.5% 4.8% $ 0.5 $ 0.2 Security $ 1 7.6% 3.2% $ 0.1 $ 0.0 Ship Broker $ 1 7.6% 3.2% $ 0.1 $ 0.0 Stevedoring $ 329 16.8% 7.0% $ 55.1 $ 23.1 Wholesaler $ 3 7.6% 3.2% $ 0.2 $ 0.1 Storage/Warehousing $ 8 7.6% 3.2% $ 0.6 $ 0.3 Manufacturing - Metals $ 18 11.5% 4.8% $ 2.1 $ 0.9 Manufacturing - Forest Products $ 29 11.5% 4.8% $ 3.4 $ 1.4 Real Estate/Property Management $ 29 11.5% 4.8% $ 3.4 $ 1.4 Sawmill & Wood Preserve $ 218 14.7% 6.0% $ 32.1 $ 13.0 Manufacturing - Concrete & Cement $ 17 7.6% 3.2% $ 1.3 $ 0.5 Automobile Terminal Operator $ 5 11.5% 4.8% $ 0.6 $ 0.2 Manufacturing - Marine-Related Goods $ 2 7.6% 3.2% $ 0.2 $ 0.1 Manufacturing - Minerals $ 3 11.5% 4.8% $ 0.4 $ 0.2 Manufacturing - Seafood $ 36 7.6% 3.2% $ 2.7 $ 1.2 Manufacturing - Rubber $ 0 7.6% 3.2% $ 0.0 $ 0.0 Automobile Rentals $ 0 7.6% 3.2% $ 0.0 $ 0.0 Manufacturing - Chemicals $ 14 7.6% 3.2% $ 1.1 $ 0.5 Manufacturing - Agricultural $ 3 7.6% 3.2% $ 0.2 $ 0.1

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Average Income Estimated Income Tax Rates (%) Tax ($M) Payroll Federal Provincial British Columbia Federal Provincial ($M) ($M) ($M) Products Manufacturing - Other Food Products $ 18 11.5% 4.8% $ 2.1 $ 0.9 Automobile Parts Manufacturing/Supplier $ 3 7.6% 3.2% $ 0.2 $ 0.1 Trucking $ 40 7.6% 3.2% $ 3.1 $ 1.3 Cruise $ 222 11.5% 4.8% $ 25.5 $ 0.7 Rail $ 416 14.7% 6.0% $ 61.1 $ 24.8 Total BC $ 2,359 $ 305.7 $ 126.6 Alberta Bulk Terminal Operator $ 1 15.0% 6.9% $ 0.2 $ 0.1 Container Terminal Operator $ 0 7.5% 2.0% $ 0.0 $ 0.0 Shipping $ 1 11.9% 5.6% $ 0.1 $ 0.1 Freight Forwarder $ 0 7.5% 2.0% $ 0.0 $ 0.0 Manufacturing - Forest Products $ 2 7.5% 2.0% $ 0.2 $ 0.0 Real Estate/Property Management $ 0 11.9% 5.6% $ 0.0 $ 0.0 Manufacturing - Marine-Related Goods $ 2 7.5% 2.0% $ 0.1 $ 0.0 Manufacturing - Minerals $ 0 11.9% 5.6% $ 0.0 $ 0.0 Rail $ 118 15.0% 6.9% $ 17.7 $ 8.2 Total AB $ 125 $ 18.4 $ 8.4 Manitoba Bulk Terminal Operator $ 4 14.8% 9.8% $ 0.6 $ 0.4 Rail $ 79 14.8% 9.8% $ 11.7 $ 7.8 Total MB $ 84 $ 12.3 $ 8.2 Total Provinces $ 2,567 $ 336.4 $ 143.2

The average tax rates used in Table A-8 are derived from the more detailed calculations of taxes payable shown in Table A-9, A-10, and A-11. In those calculations, assumptions have been made about income from non-employment sources, tax deductions from income (i.e., RPP and RRSP contributions), and tax credits applied against tax otherwise payable (i.e., CPP, EI and charitable contributions). Average deductions are those used by the Ministry of Finance in estimating tax payable by “representative” families for provincial budget papers. Average credits are calculated from Revenue Canada, General Income Tax Forms.

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Table A-9: British Columbia Single Tax Filer Income Tax Calculation - 2007

British Columbia Single Tax Filer Income Tax Calculation

Income Employment 20,000 40,000 60,000 80,000 100,000 Other 2,000 4,000 6,000 8,000 10,000 TOTAL 22,000 44,000 66,000 88,000 110,000

Deductions RPP 56 531 1,543 1,627 1,349 RRSP 414 1,471 2,888 4,663 7,950 Carrying Charges 64 183 261 445 968 Union 47 204 486 416 259 TOTAL 580 2,389 5,177 7,150 10,527

Taxable Income 21,420 41,611 60,823 80,850 99,473

Credits Basic Federal 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 Basic Provincial 9,027 9,027 9,027 9,027 9,027 9,027 9,027 9,027 9,027 CPP 642 1,390 1,602 1,649 1,646 EI 221 491 580 562 486 Charity 157 324 553 856 1,363 Fed. Total 10,621 11,806 12,335 12,666 13,095 Prov. Total 10,048 11,233 11,762 12,093 12,522 Federal Credits 1,593 1,771 1,850 1,900 1,964 Provincial Credits 527 589 616 634 656

Tax Payable Federal - Bracket 1 (15%) 3,213 5,577 5,577 5,577 5,577 Federal - Bracket 2 (22%) 0 975 5,202 8,179 8,179 Federal - Bracket 3 (26%) 0 0 0 1,688 6,530 Federal Total 3,213 6,552 10,779 15,444 20,286 Basic Federal 1,620 4,781 8,928 13,544 18,322

BC - Bracket 1 (5.7%) 1,221 1,961 1,961 1,961 1,961 BC - Bracket 2 (8.65%) 0 624 2,286 2,975 2,975 BC - Bracket 3 (11.1%) 0 0 0 1,131 1,121 BC - Bracket 4 (13.0%) 0 0 0 243 2,200 BC - Bracket 5 (14.7%) 0 0 0 0 524 BC Total 1,221 2,585 4,246 6,310 8,781 Basic Provincial 694 1,996 3,630 5,676 8,125 TOTAL TAX PAYABLE 2,314 6,777 12,558 19,220 26,447

Average Rate of Tax 10.8% 16.3% 20.6% 23.8% 26.6% Federal 7.6% 11.5% 14.7% 16.8% 18.4% Provincial 3.2% 4.8% 6.0% 7.0% 8.2% Similar assumptions have been made about income from non-employment sources, tax deductions from income, and tax credits applied against tax otherwise payable for the provinces of Alberta and Manitoba. However, it is important to note that residents of Alberta pay a flat tax rate of 10% of their income, as shown in Table A-10.

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Table A-10: Alberta Single Tax Filer Income Tax Calculation - 2007

Alberta Single Tax Filer Income Tax Calculation

Income Employment 20,000 40,000 60,000 80,000 100,000 Other 2,000 4,000 6,000 8,000 10,000 TOTAL 22,000 44,000 66,000 88,000 110,000

Deductions RPP 65 394 1,145 1,784 1,428 RRSP 371 1,383 2,748 4,581 7,160 Carrying Charges 49 80 151 272 500 Union 34 122 254 318 228 TOTAL 518 1,979 4,297 6,955 9,316

Taxable Income 21,482 42,021 61,703 81,045 100,684

Credits Basic Federal 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 Basic Provincial 16,161 16,161 16,161 16,161 16,161 16,161 16,161 16,161 16,161 CPP 692 1,529 1,647 1,717 1,721 EI 259 542 593 620 580 Charity 141 337 581 807 1,150 Fed. Total 10,692 12,008 12,421 12,744 13,051 Prov. Total 17,253 18,569 18,982 19,305 19,612 Federal Credits 1,604 1,801 1,863 1,912 1,958 Provincial Credits 1,725 1,857 1,898 1,930 1,961

Tax Payable Federal - Bracket 1 (15%) 3,222 5,577 5,577 5,577 5,577 Federal - Bracket 2 (22%) 0 1,065 5,395 8,179 8,179 Federal - Bracket 3 (26%) 0 0 0 1,739 6,845 Federal Total 3,222 6,642 10,972 15,495 20,601 Basic Federal 1,619 4,841 9,109 13,583 18,644

AB - Bracket 1 (10%) 2,148 0 4,202 0 6,170 0 8,105 0 10,068 AB Total 2,148 4,202 6,170 8,105 10,068 Basic Provincial 423 2,345 4,272 6,174 8,107 TOTAL TAX PAYABLE 2,041 7,186 13,381 19,757 26,751

Average Rate of Tax 9.5% 17.1% 21.7% 24.4% 26.6% Federal 7.5% 11.5% 14.8% 16.8% 18.5% Provincial 2.0% 5.6% 6.9% 7.6% 8.1%

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Table A-11: Manitoba Single Tax Filer Income Tax Calculation - 2007

Manitoba Single Tax Filer Income Tax Calculation

Income Employment 20,000 40,000 60,000 80,000 100,000 Other 2,000 4,000 6,000 8,000 10,000 TOTAL 22,000 44,000 66,000 88,000 110,000

Deductions RPP 151 831 2,124 2,337 2,185 RRSP 338 1,228 2,693 4,692 7,379 Carrying Charges 30 103 151 322 753 Union 66 198 456 351 273 TOTAL 585 2,361 5,424 7,701 10,589

Taxable Income 21,415 41,639 60,576 80,299 99,411

Credits Basic Federal 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 9,600 Basic Provincial 7,834 7,834 7,834 7,834 7,834 7,834 7,834 7,834 7,834 CPP 654 1,457 1,629 1,708 1,714 EI 258 543 622 595 515 Charity 208 490 959 1,449 2,845 Fed. Total 10,719 12,090 12,809 13,352 14,674 Prov. Total 8,953 10,324 11,043 11,586 12,908 Federal Credits 1,608 1,814 1,921 2,003 2,201 Provincial Credits 976 1,125 1,204 1,263 1,407

Tax Payable Federal - Bracket 1 (15%) 3,212 5,577 5,577 5,577 5,577 Federal - Bracket 2 (22%) 0 981 5,148 8,179 8,179 Federal - Bracket 3 (26%) 0 0 0 1,545 6,514 Federal Total 3,212 6,558 10,724 15,301 20,270 Basic Federal 1,604 4,745 8,803 13,298 18,069

MB - Bracket 1 (10.9%) 2,334 3,329 3,329 3,329 3,329 MB - Bracket 2 (13.0%) 0 1,442 3,904 4,609 4,609 MB - Bracket 3 (17.4%) 0 0 0 2,488 5,814 MB Total 2,334 4,772 7,233 10,427 13,752 Basic Provincial 1,358 3,646 6,030 9,164 12,345 TOTAL TAX PAYABLE 2,963 8,391 14,833 22,462 30,414

Average Rate of Tax 13.8% 20.2% 24.5% 28.0% 30.6% Federal 7.5% 11.4% 14.5% 16.6% 18.2% Provincial 6.3% 8.8% 10.0% 11.4% 12.4% All corporations are liable to pay federal income tax under the Income Tax Act. The tax rate varies by type and size of company and by province. Provincial governments also levy a corporation income tax on any company having a permanent establishment in that province.

Estimation Method and Results 1. To calculate tax liability precisely is very difficult. It requires knowledge of the total tax base, and the proportion of the tax base attributable to the provinces. Therefore, an approximate method has been used. 2. Throughout all three provinces, the federal corporate income tax collected per employee was $1,182 in 2007. However, provincial corporate income tax collected in 2007 varied among provinces; British Columbia collected $738 per employee, whereas Alberta and Manitoba collected $1,835 and $468, respectively. 3. Assuming all companies pay tax at the average rate per employee indicated above, the 2007 corporation income tax liability of Port Metro Vancouver employment is estimated to be

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approximately $53.5 million toward federal revenues and about $35 million toward provincial revenues. The estimated total corporate income tax revenue is $88.5 million as shown in Table A-1222.

Table A-12: Estimated Corporate Income Tax Paid by the Port Metro Vancouver Community Government Revenue ($Millions) Total Federal $53.5 British Columbia $31.3 Alberta $3.2 Manitoba $0.5 Total Provincial $35.0 Total Federal and Provincial $88.5

Employment Insurance Premiums

Tax base and rates. In 2007, employees in Canada paid employment insurance (EI) premiums equal to 1.73% of earnings up to a maximum of $711 per year. (Maximum insurable earnings are $41,100) Employers paid EI premiums equal to 1.4 times employee premiums.

Estimation Method and Results

The employee premium rate is applied to total payroll costs for employees earning less than $41,100 per year. The maximum contribution was used for employment earning more than $41,100 per year. Estimated employee payments were $31.1 million in 2007.

The employer rate is applied to the employee payments. Estimated employer payments were $43.6 million in 2007.

Canada Pension Plan Contributions

Tax base and rates. In 2007, employee contributions for the Canada Pension Plan (CPP) were 4.95% of pensionable earnings. Pensionable earnings are actual earnings less $3,500, to a maximum of $41,100. The maximum annual employee contribution is $1,861.20. The employer contribution is the same as the employee contribution.

22 Port Authorities and government agencies are exempt from paying corporate income tax. However, since the estimation of corporate income tax paid per employee encompasses all employment in British Columbia, including employment at entities that are exempt from corporate income tax, these firms have not been excluded for the purposes of this study.

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Estimation Method and Results

The employee contribution rate is applied to average payroll for employees earning less than $41,100 a year. The maximum contribution was used for employees earning more than the maximum pensionable earnings.

Estimated employer and employee contributions were nearly $82.5 million each, for a total of $164.9 million.

Workers’ Compensation Board Contributions

Tax base and rates. Employers in each province are required to make contributions to the Workers’ Compensation Board to help offset the cost of on-the-job injuries. Employers are classified into industry groups. The contribution rate for each group is based on the injury costs associated with all companies in that group. The group contribution rate varies widely among industries and provinces. In British Columbia, 2007 industry rates ranged from $0.19 per $100 of insurable earnings to $6.98 per $100 of insurable earnings for the industries applicable to this study.

Some major companies are not included in the general “rateable” method of contribution but simply pay the actual cost of their claims plus an allowance for WCB administration costs. As it is not generally known which firms contribute in this manner, nor the value of their claims, an estimate based on reported payroll has been made for all firms.

Conceptual issues. It is possible that some companies are self-insured and their payments could be viewed as a business expense rather than a tax. However, we have chosen to include their contribution because they are required to be part of this mandatory government program.

Estimation Method and Results

The contribution rates for each employment classification at Port Metro Vancouver have been applied to the total payroll for that group, to the maximum assessable wage. Port Metro Vancouver employees in British Columbia paid an estimated $61.6 million to Worker’s Compensation in 2007, while employees in Alberta paid $1.6 million and employees in Manitoba paid $2.7 million.

Medical Services Plan Premiums

Tax base and rates. Medical Services Plan (MSP) premiums for single filers in British Columbia, Alberta, and Manitoba in 2007 were:

British Columbia - $54 per month

Alberta - $44 per month

Manitoba -$0 per month

Conceptual issues. Premiums must be paid by any person registered with the Plan, whether they are employed or not. Therefore, premiums are not directly related to employment. Nevertheless,

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many employers pay premiums on behalf of their employees. Therefore, premiums are included as a tax contribution.

Estimation Method and Results

Many employees may be covered by premiums paid by or on behalf of a spouse. Therefore, an employee may not need the coverage offered by an employer. For any group of employees it is difficult to know how many have coverage through a spouse. Therefore, we have assumed that all employees are covered as a result of employment, but that the premium required is only the rate for single persons.

Total employment of 43,048 person years in British Columbia at $648 per employed person ($54 x 12 months) equaled a total contribution of $27.9 million in 2007. As for Alberta, total employment of 1,750 person years at $528 per employee contributed nearly $1 million to medical service plans. Manitoba, which does not require its employees to pay a premium, had no contributions from its 1,121 person years.

Property Taxes Generated by Port Metro Vancouver

Total property taxes generated by Port Metro Vancouver were nearly $287 million in 2008, of which 45% are made up of the school tax paid to the provincial government and 55% are paid to the municipal government. Table A-13 below summarises total property taxes attributable to Port Metro Vancouver by source and by geographic region.

Table A-13: Total Property Tax Generated by Port Metro Vancouver, 2008 ($ Millions)

Region Property Tax Property Tax Hotel Residential Total Paid on Port Paid by Property Tax Property Tax Property Tax Land* Businesses Related to Paid by Not Located Cruise Employees on Port Land Passengers

Greater 69.4 55.4 6.2 102.6 233.6 Vancouver

Rest of B.C. 0 9.9 1.5 12.2 23.5

Total B.C. 69.4 65.3 7.7 114.8 257.1

Rest of 0 5.7 0 24.0 29.8 Canada

Total Canada 69.4 71.0 7.7 138.8 286.9

Note: Figures may not add due to rounding. * Property tax paid on port land consists of 2007 payment in lieu of taxes paid by Port Metro Vancouver and 2008 property taxes paid by Port Metro Vancouver tenants.

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The municipal share of total property taxes attributable to Port Metro Vancouver totalled $157 million. Table A-14 summarises the municipal share of property taxes.

Table A-14: Municipal Property Tax Generated by Port Metro Vancouver, 2008 ($ Millions)

Greater 41.3 27.8 3.2 54.1 126.5 Vancouver

Rest of B.C. 0 5.0 0.7 5.8 11.6

Total B.C. 41.3 32.8 4.0 60.0 138.1

Rest of 0 3.3 0 15.6 18.9 Canada

Total Canada 41.3 36.1 4.0 75.6 157.0

Property taxes paid on Port Metro Vancouver land

Payments in Lieu of Taxes (PILT) by Port Metro Vancouver Port Authority totalled approximately $4.7 million in 2007, paid to the municipalities making up Port Metro Vancouver land. In addition, tenants of Port Metro Vancouver paid nearly $64.7 million in property taxes in 2008, of which nearly $36.7 million went to the municipal government.

Property taxes paid by businesses not located on Port Metro Vancouver land

There are many businesses in Vancouver, British Columbia and elsewhere which depend on the Port. These include shipping agents, insurance brokers, warehouse operators, export/importers, etc. that are not located on Port Metro Vancouver lands. Without Port Metro Vancouver, these businesses would be smaller in number and size. As traffic at Port Metro Vancouver has increased, new businesses have opened and existing ones have expanded, resulting in an increased property tax base for the municipalities.

The Port of Vancouver also forms part of a logistics system which includes rail and trucking. As traffic at Port Metro Vancouver has increased, the amount of trucking and rail services moving goods to and from the Port has increased. Truck and rail companies require land to park and maintain vehicles, for offices and to process goods (in addition, rail companies pay property tax on their track bed).

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Property taxes paid by hotels benefiting from cruise passenger business

Port Metro Vancouver is a homeport to the Alaska cruise industry. In 2007, cruise traffic at Port Metro Vancouver was about 961,000 revenue passengers. Many of these passengers stayed overnight in Vancouver, or other parts of British Columbia, before or after their cruise. These overnighting cruise passengers play a part in supporting the current hotel inventory in Vancouver. Without these passengers, the hotel inventory in Vancouver would necessarily be smaller, and the amount of property tax paid by the hotel industry would be less.

Property taxes paid by employees of Port related businesses

Employees of Port related businesses pay residential property taxes either as homeowners or as renters. The residential property tax paid by people employed in Port related businesses can reasonably be considered part of the property tax generated by Port Metro Vancouver.

Estimation Method and Results

The property tax generated by Port Metro Vancouver was calculated based on a 2004 study by InterVISTAS Consulting Inc., which estimated property taxes generated by the Port of Vancouver in 2003.

The property tax estimates have been updated to reflect property values provided by Port Metro Vancouver and 2008 tax rates according to data from the B.C. Ministry of Community Development. The calculations have also been adjusted for the growth in total Port Metro Vancouver employment and cruise passenger volumes to accurately reflect the changes that took place since the previous study. The municipal portion of total property taxes are estimated by applying the municipal share of 2008 tax rates by municipality to the total property taxes calculated.

Marine Navigation Service Fees

The Marine Navigation Services Fee (MNSF) was officially introduced in 1996 as a user fee for navigational services provided by the Canadian Coast Guard. Subsequently revised on July 1, 1997, and again on October 1, 1998, the MNSF is assessed on all vessels operating in Canadian waters with the exception of fishing vessels, "government ships" and pleasure craft as defined by the MNSF Fee schedule. Barges operating in Canadian waters in the Western Region are exempt from payment of the MNSF.

As such, the MNSF applies to foreign flagged vessels, including cruise ships, and tugs serving Port waterways in 2007. There were 3,166 ship arrivals in 2007 at all three Port Metro Vancouver ports and the average size of these vessels was estimated at 30,400 gross tons. At least 191 tugs with an estimated average size of 43 gross tons were active in Port Metro Vancouver waters. Furthermore, there were 275 cruise ship arrivals at Port Metro Vancouver in 2007 with an average tonnage of over 66,000. The fee schedule for these types of vessels and estimated fees owing in 2007 are presented in Table A-15.

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Table A-15: MNSF Fee Structure and Estimated Port Metro Vancouver Revenues 2007 Estimated Fees Vessel Type Fee Structure 2007 $640 per entry plus Cruise $686,500 $0.028 per Gross Ton Foreign $640 per entry plus $4,721,139 Flagged Ship $0.028 per Gross Ton $300 per year plus Canadian Tug $135,451 $9.50 per Gross Ton Total $5.54 Million The average per entry fee for a foreign-flagged vessel is estimated at $1,491 and the average per entry fee for a cruise ship is nearly $2,500. The average annual fee for Canadian-flagged tugs operating in the Ports is estimated at $709. These calculated average fees, grossed up by the number of foreign vessel entries and number of tugs, resulted in a total of $5.54 million in federal MNSF attributable to Port Metro Vancouver in 2007.

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Appendix 12: Tax Revenues from Cruise Sector

This appendix estimates taxes paid by cruise passengers, crew, and cruise lines during the time they spent in Vancouver. All expenditure information was assumed to include taxes, and therefore all tax revenues are calculated on a pre-tax base such that the base amount plus all taxes equalled total expenditures.

The source of information on cruise passenger, crew, and cruise line spending is a study conducted by the Business Research & Economic Advisors (BREA) and commissioned by the North West CruiseShip Association of the economic impact of Canada’s cruise ship industry.

In 2007, a total of 960,554 embarked/disembarked cruise passengers visited Vancouver while at dock at Canada Place or Ballantyne Pier. It is important to make the distinction between embarked/disembarked (e/d) cruise passengers and actual individual cruise passengers. The e/d totals include a double counting of individual passengers who are counted once as they embark the ship and once as they disembark the ship. As such, 2007 individual cruise passenger and onshore crew visits in Vancouver totalled 724,598 and 241,533 respectively, as identified in the BREA study.

GST and Provincial Tax on Hotel Accommodation

Tax base and rates. The 5% GST rate applies to hotel accommodation. The province of B.C. also levies an 8% tax on the purchase price of short-term accommodation, mostly hotels. Municipal governments may also ask the province to levy an additional tax of up to 2% in specified areas on behalf of local tourism organisations. This municipal hotel tax revenue has not been included in the report.

Simplifying Assumptions 1. Spending on lodging was not estimated for onshore crew visits as cruise employees typically use lodging provided on the cruise ships.

Estimation Method and Results 1. The BREA study estimated total cruise passenger spending on lodging in 2007 of $58.5 million. Spending on lodging was not estimated for onshore crew visits as cruise employees typically use lodging provided by the cruise ships. 2. GST on hotel receipts totalled $2.9 million for individual cruise passengers that embarked/debarked at Port Metro Vancouver. 3. The B.C. hotel tax of 8% was applied to all passengers for Vancouver accommodations for a total of $4.7 million. 4. As a result, federal taxes revenues on cruise passenger lodging accounted for $2.9 million and provincial hotel tax revenues for cruise passenger lodging accounted for $4.7 million.

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GST and Provincial Tax on Retail Spending

Tax base and rates. The 5% Goods and Services Tax (GST) and the 7% Social Services Tax (Provincial Sales Tax or PST) apply to most retail purchases. Some products are exempt from the PST including food, candy, children’s clothing and books. Grocery purchases are also exempt from the GST.

Simplifying Assumptions 1. A proportion of retail goods are exempt from the PST. The tax calculation for retail purchases takes this exemption into consideration and estimates that only 75% of retail purchases would include the PST. Estimation Method and Results 1. The BREA study estimated total cruise passenger spending on retail at $47.4 million in 2007. Passenger retail expenditures contributed $2.4 million to federal tax revenues and, taking account the 25% of retail purchases that are PST-exempt, passenger retail expenditures generated $2.5 million in provincial taxes. 2. Similarly, crew retail expenditures generated $0.3 million in tax revenue at both the federal and provincial levels

GST and Provincial Tax on Food and Beverage Spending

Tax base and rates. The 5% (GST) and the 10% Provincial Liquor Tax apply to all food and beverage purchases made at restaurants and bars in B.C. The GST would not be charged on the majority of grocery items.

Conceptual issues. It was assumed that cruise passengers included all taxes and gratuities in their food and beverage expenditures. The survey did not ask passengers to estimate what percentage of their food and beverage expenditures were liquor purchases.

Simplifying Assumptions 1. In order to remove gratuities from the total, it was assumed that on average, gratuities were 15%. 2. It was assumed that 40% of total expenditures were for liquor. 3. It was also assumed that all food and beverage purchases were made in restaurants (i.e., non-grocery purchases, which are GST exempt).

Estimation Method and Results 1. Cruise passenger expenditure on food and beverage during the 2007 cruise season was estimated at $42.4 million in the BREA study. After removing 15% in gratuities, passenger expenditure on food and beverage amounted to $36 million. Assuming the bill is 40% liquor, total provincial revenue for passenger spending on food and beverage was $3.4 million and total federal revenue was $2.1 million.

12 January 2009 2008 Port Metro Vancouver Economic Impact Study – Final Report 102

2. Crew expenditure, after removing gratuities and accounting for liquor, contributed $0.4 million in provincial taxes and $0.3 million in federal taxes. According to the BREA study, total crew spending on food and beverage in 2007 totalled $6.1 million at Port Metro Vancouver.

GST on Tours and Transportation

Tax base and rates. The 5% GST tax applies to both packaged tours and taxi, limousine and bus transportation (ground transportation), as well as to car rentals.

Simplifying Assumptions 1. In order to keep taxes on private transportation conservative, GST on parking and taxes on gasoline purchases have been excluded. Estimation Method and Results 1. According to the BREA study, passengers embarking/debarking at Port Metro Vancouver spent $23.3 million on both tours and transportation in 2007. Comparatively, onshore crew visitors spent only $0.7 million on tours and transportation. 2. As a result, tax revenue from cruise passenger expenditures contributed $1.2 million to the federal government while crew visits generated less than half a million in federal taxes.

PST on Fuel

Simplifying Assumptions 1. Port Metro Vancouver recommended that this study uses revised cruise line expenditure data provided by Cruise BC. From this data, total cruise line expenditure on fuel in British Columbia was $34.6 million in 2007.23 Estimation Method and Results 1. Based on the recalculated fuel expenditure of $34.6 million, a Provincial Sales Tax of $3.0 million was assessed using similar methodology as the 2005 IVC Study.

23 The figure in the BREA study was $42.9 million, which was for all of BC and not specifically for Vancouver. The $34.6 million reflects that Vancouver sees more than its share of fuelling activity here mainly because it is a home port. Port Metro Vancouver provided statistics from Cruise BC that were an estimate for Vancouver alone.

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Summary of Tax Contributions by Cruise Passengers, Crew, and Cruise Lines

The areas in which cruise passengers, crew, and cruise lines contribute to, provincial and federal tax purses are itemised and summarised in Table A-16.

Table A-16: Summary of Tax Expenditures by Passengers, Crew, and Cruise Lines

Expenditures ($Millions) Tax Passengers Crew Cruise Lines

GST on Lodging $2.93 - -

Hotel Tax on Lodging $4.68 - -

GST on Retail $2.37 $0.33 -

PST on Retail $2.49 $0.34 -

GST on Food & Beverage $1.80 $0.26 -

PST on Food & Beverage $1.51 $0.22 -

PST on Liquor $1.44 $0.21 -

PST on Fuel - - $3.0

GST on Tours & Transportation $1.17 $0.04 -

Total Tax Contribution $18.4 $1.4 $3.0

12 January 2009

Prepared by InterVISTAS Consulting Inc.

Airport Square – Suite 550 1200 West 73rd Avenue Vancouver, B.C. Canada V6P 6G5

Telephone: 604-717-1800 Facsimile: 604-717-1818 www.intervistas.com