Commercializing Canadian Airport, Port and Rail Governance - 1975 to 2000
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Changing Course: Commercializing Canadian Airport, Port and Rail Governance - 1975 to 2000 By Mark Douglas Davis, B.Sc. (Hons.), M.A. A thesis submitted to the Faculty of Graduate and Postdoctoral Affairs in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Public Policy Carleton University Ottawa, Ontario © 2016 Mark Douglas Davis Abstract This thesis examines the historical public policy circumstances surrounding the Government of Canada’s decision to commercialize Canadian National (CN) Railways, as well as federal airports and ports over the period 1975 to 2000. Its focus is on testing one specific empirical hypothesis: That the commercialization of federal airport and port assets between 1975 and 2000 occurred primarily due to: (i) federal government concerns over the growing size of the national debt and deficit; and (ii) the emergence of the neoliberal ideology in Canada and its growing influence throughout federal policy making, as witnessed by the swift 1995 privatization of CN Railways. In particular, this thesis considers the role and influence of various policy factors, such as efficiencies, governance challenges, organizational cultures, stakeholder behaviours, ideological pressures, and political realities encountered by senior federal transportation bureaucrats and the political leadership during this period. The selection of CN Railways, airports, and ports also provides a window into Transport Canada’s repeated attempts at developing an integrated and multi-modal national transportation policy. This thesis conducts a rigorous, forward-looking deductive analysis using a meso institutional framework to examine the interactions of the major micro and macro circumstances surrounding federal transportation commercialization. The three modal case studies apply the meso framework to each unique case with special consideration of the context and causality of each major reform. The principal findings suggest that the federal government’s desire for debt and deficit reduction was a major impetus for reform across all three modal cases and across all three decades. From a public relations perspective, governments of both Liberal and Progressive Conservative stripes strove to portray debt and deficit control as evidence of sound economic and fiscal management. Contrary to the national debt and deficit, however, neoliberalism did not, in the author’s opinion, exert as substantial an impact upon commercialization reforms as originally hypothesized. This result occurred due to the paltry neoliberal theoretical framework from which to analyse complex governance reforms such as transportation commercialization, as well as the mere passive acceptance of neoliberal tenets by both Liberal and Progressive Conservative governments. Rather, strong leadership and the determination of senior political and bureaucratic managers at Transport Canada, combined with the need for fiscal restraint, created the ideal policy conditions for swift and comprehensive reforms to federal transportation governance. 2 Table of Contents Abstract ............................................................................................................................................ 2 Acknowledgements .......................................................................................................................... 5 Chapter One: Introduction ............................................................................................................... 6 Chapter Two: Theoretical and Empirical Foundations .................................................................. 20 Chapter Three: The Privatization of Canadian National Railways ................................................ 95 Chapter Four: Federal Airport Reforms in Canada ...................................................................... 139 Chapter Five: Federal Port Reforms in Canada ........................................................................... 197 Chapter Six: Conclusion .............................................................................................................. 240 Bibliography ................................................................................................................................ 263 3 List of Figures Figure 1: Analytical Road Map......................................................................................... 19 Figure 2: I-M-O Model in Different Contexts .................................................................. 25 Figure 3: Hierarchy of Cultures Influencing Public Policy in Canada ............................ 33 List of Tables Table 1: Summary Table of Theoretical Framework ........................................................ 22 Table 2: Relevant Causal Mechanisms in the Literature .................................................. 24 4 Acknowledgements I wish to gratefully acknowledge the efforts of my thesis supervisor, Dr. Christopher Stoney, and my advisory committee members, Dr. Robert Shepherd and Dr. Michael Ircha, for their continued patience, advice and support throughout the development of my thesis. They challenged me to delve deeper and question the status quo, which has helped me to become a stronger policy analyst and researcher. I would also like to thank Dr. Barry Prentice and Dr. Paul Wilson for agreeing to serve on my thesis examining board and providing constructive feedback that has contributed to a well rounded analysis. I completed the PhD in Public Policy program in its entirety on a part-time basis while working full-time, and I therefore wish to thank my government colleagues for their words of encouragement throughout my journey. In particular, special thanks to Mr. Iain Tyrrell for referring me to two interview contacts and to Mr. John Linn for proof reading an earlier draft of this thesis. I would also like to thank the many individuals who took time out of their busy schedules and graciously agreed to sit for an interview of an hour (or sometimes longer) to recount their professional experiences during this policy rich period. In particular, I wish to acknowledge the ongoing support and words of encouragement from the Honourable Doug Young and Mr. Nick Mulder during the writing of this thesis. Most importantly, I wish to thank my family for their love and unwavering support during my educational journey. To my parents, Leonard and Wilma, for encouraging my sister and I to “rise above it all” through life’s challenges and to take the positive out of every situation. Also, special thanks to my sister, Dr. Karelyn, brother-in- law, Shawn, and little niece, Allivea, for their humour, encouragement and advice throughout the ups and downs of thesis writing. Lastly, the opinions and analyses expressed in this thesis are solely my own, and I accept full responsibility for any errors and/or omissions contained herein. 5 Chapter One: Introduction Transportation is still an instrument of national policy, but there has in recent years been more emphasis on using the instrument judiciously, and with due regard for economic forces. The prevailing attitude, on the whole well-justified, is that the country now has a relatively good transportation system, and there just isn’t the same need for huge Federal investments.1 This comment offered by Arthur Kroeger in 1980, in his role as Deputy Minister of Transport Canada, remains relevant to this day. For decades, bureaucrats, politicians and major stakeholders have sought to solve the key policy question: What is the role of the federal government in the national transportation system? Section 92(10) of the British North America Act (now the Constitution Act, 1867) assigned policy related jurisdiction over most intraprovincial transportation matters of roads, shipping and railways to the provinces, while interprovincial matters “for the general Advantage of Canada or for the Advantage of Two or more of the Provinces” resided with the federal government (CanLII, 2015). In 1936, the federal government further consolidated its role over national transportation policy with the merging of the Department of Marine and Fisheries, the Department of Railways and Canals, and the Civil Aviation Branch from the Department of National Defence to form the new Department of Transport (Library and Archives Canada, 2010). Known informally today as Transport Canada, the department extended its jurisdictional influence through the World War II and post-war periods, reaching its summit of influence in the 1960s with the advent of containerization 1 Arthur Kroeger, Deputy Minister of Transport, 1979-1983. Quoted in Kroeger, 1980, p. 13. 6 in the ports sector and the development of the jet engine in the commercial aviation industry (Ibid; McCoomb, 2014). Traditionally, policy reform has been an evolutionary process taking place over many years involving many stakeholders. Commercialization2 and other market-oriented approaches to transportation policy reform first arose as a policy alternative in Canada during the MacPherson Royal Commission of 1967 and slowly gained prominence throughout the 1970s. By the early 1980s, the rise of neoliberal thinking brought a new approach based on the supremacy of market-based principles and a minimal role for government. As budgetary deficits escalated, governments sought ways to devolve public services to the private sector and adopt marketplace principles into public sector decision making under the umbrella of the “new” public management (NPM) framework. Government-provided transportation