The Governance of Port Devolution: a Tale of Two Countries

Over a little more than the past decade, governments internationally have devolved responsibility for ports from the public sector to the private sector. The outcome of port devolution depends on the governance systems put in place. This paper adds to the growing body of literature on what constitutes good governance in the transport sector. First, some background on devolution as an alternative service delivery mode is presented. Second, the authors propose, based on a survey of strategic management and organization theory literature, that good governance of devolution efforts requires matching the characteristics of three organizationor program-level variables: the external environment, organizational goals and strategies, and organizational structures and systems. They present this proposition as the Matching Framework. Next, they describe ports devolution in Canada and the Philippines. Finally, after observing current performance of the devolution efforts, they use the Matching Framework to explain the outcomes and draw general conclusions. DEVOLUTION AND ALTERNATIVE SERVICE DELIVERY Over a little more than the past decade, governments internationally have devolved responsibility from the public sector to the private sector for transport support industries. In Canada, this has happened to ports through the implementation of the 1995 National Marine Policy (NMP) via the Canada Marine Act, 1999. In the Philippines, the Philippine Port Authority has invoked Administrative Order 02-98 to devolve smaller ports to Local Government Units (LGUs). In Canada, the intention of such devolution was to secure the benefits of commercially driven business decision-making in organizations previously run by government while, at the same time, securing compensation for prior investments by taxpayers. In the Philippines, there was pressure from within to isolate marginal ports from their access to scarce government capital while, externally, the international community encouraged the Philippines government to separate the regulation of ports from the operation of ports. This devolution has been part of the broader trend, since the early 1980s, of government reform known as “new public management” (Charih and Rouillard, 1997: 27). This movement is a response to at least two drivers of change. First, rapid developments in information technology have increased the transparency of government operations, providing citizens with greater ability to monitor and participate in government activities (Ford and Zussman, 1997; Rodal and Mulder, 1993). Second, increasing deficit and accumulated debt burdens (Ford and Zussman, 1997) coupled with low levels of public confidence in government have put pressure on governments to find ways to do more with less (Osborne and Gaebler, 1992).