mariomike's post should serve both as an example of what already exists on a volunteer basis on the one hand and the actual responsibility at law for rescue and coordination of rescue efforts for what I would term, for lack of better term the "commercial" side of things. Let me explain.
Mariomike talks of "responsibility" for 460 square miles of water and "operational jurisdiction" over it. This is incorrect. The City of Toronto has elected unilaterally to provide its citizens with a more advanced form of "lifeguard" service in view of the fact that pleasure boating on the lake is an important leisure activity of this citizenry. No higher government charged Toronto with this task and Toronto has no legal obligation to provide it. Similarly, the policing on the water is the responsibility of the RCMP, but by agreement, they can delegate such authority to Toronto for those waters outside the city's local waters. In Quebec and Ontario, for instance, the QPP and OPP have marine divisions authorized to patrol the waters otherwise the responsibility of the RCMP.
We can be thankful that TO has elected to provide such service which is of good quality and of a higher level than would likely be provided by the Military/Coast Guard on the smaller scale (pleasure crafts) it is provided at.
Such local services, whether they call themselves "SAR" or not (SAR is not protected trademark), are important resources for smaller scale emergency needs of a local nature and are very useful secondary resources to the JRCC's, but the JRCC's retain responsibility for actual distress. For instance, if JRCC Trenton received a call from a boater on the lake say five miles off Toronto Island saying they have lost someone overboard and can't find him, you can be absolutely sure that, while they may call on the TO police marine division to help, one or two big yellow birds or whirlybird from Trenton would quickly show up, followed by any red and white hull in the area and grey ones if any are available (the Navy has heavy Rhib's at Hamilton, Toronto and Kingston reserve units). In reverse, I don't think that the TO maritime unit would be the one going to do SAR if, in the middle of a bad storm, they happen to pick up a distress call from a cargo ship floundering mid-lake: they would pass it on to Trenton.
These local initiatives would not be affected by any "privatization" of SAR. it is the large scale/commercial SAR that we are talking about here.
Here is what I mean by commercial. By analogy, let's think of the aids to navigation maintained by the Coast Guard. If there were no commercial traffic on the water - no cargo, no fishermen, only pleasure crafts for people's leisure - does anybody believe that the federal government would bother having a Coast Guard or with maintaining all these light house, transits and buoys? I don't think so. They would let any such matters in the hand of locals, should they wish to have some in their corner of the world.
I surmise it's the same for the SAR that the federal government is responsible for: The maritime side grew out of the lifeboat services - these services were meant to go after professional seamen that got in trouble: fishermen, cargos ships, people that had no choice but to go to sea in all weather to earn a living - not to go after pleasure boaters too stupid to wait the storm out before setting out. Again today, I suggest that such service only exists for such mariners, not to go after boater Joe who didn't put enough gas in his tank or Sam, who just got his head knocked out by the boom of his sailboat. That, when human life is a t stake, SAR assets go after boaters is just a bonus from the fact that the organization exists.
On the air side, let me ask this: would we have such an organization as we have now if there were no commercial air traffic? Imagine that the only planes are small one or two passenger private planes for leisure that don't require much more than a green field to take off and land. I don't think that the government would bother with providing airports, air navigation, air traffic services, and I suggest, bother to maintain a system of air search and paramedic services for all these individuals. The air SAR side of things exists to deal with the Boeing 737 that crashes way north of TO, for instance. That they can go after joe public and his piper airplane is just a bonus again.
So it's this large scale/commercial side of SAR that is at issue here, and that would not affect any local initiatives in any way, save coordination as secondary resources if need be, which would remain with whoever does the "large scale" SAR task. (For instance, someone mm talked of TO's HUSAR and someone else mentioned its usefulness for the big one on the West Coast. Well, TO's HUSAR would not just show up there on its own, without telling/asking anyone and just start to do its thing all by itself wherever they felt like it. This would be coordinated at a higher level, and that higher level is the JRCC's.)