The boat that won’t float

The Yarmouth ferry to Maine will not operate this summer due to public safety concerns around COVID-19. 

The Department of Transportation Infrastructure and Renewal made the announcement today. It will be the third consecutive year the service has not run and the third consecutive year taxpayers will be billed an undisclosed amount to keep it docked — the pandemic cancelled the 2020 season and the re-location and building of a new terminal in Bar Harbour meant The Cat didn’t sail in 2019, either.

There are many unanswered questions about whether this service is worth keeping or a waste of public money. There is a clause in the 10-year contract between the province and Bay Ferries that would allow the government to bail right now. The penalty or the cost is unknown because the McNeil government refuses to disclose it.

 The language in the 2016-2025 contract states as follows:

Section 14.03 The Province may terminate this Agreement without cause:

 (b) at any time during the fourth to sixth Years of the term upon payment to Bay Ferries Ltd of an amount equal to two (2) times the Base Management Fee;

We are in the (b) period of the contract, where it would cost the government twice the annual fee it pays Bay Ferries to run the service, even when it doesn’t run. The fee is a secret — the company says it is commercially sensitive information — and so two years ago the Progressive Conservative party took the government to court in hopes a judge might order the fee be publicly disclosed. The Privacy Commissioner had ruled there was no valid reason to keep it under wraps. The court’s decision is expected any day. 

The minister says “no”

Today, upon learning there would be no season for a third straight year, the Halifax Examiner sent an email to Minister of Transportation Lloyd Hines asking why the government wasn’t exercising its option to exit the contract. We also asked what that would cost, although that answer is tied up in the court battle. 

Here’s the answer provided by Transportation Infrastructure and Renewal senior communications advisor Peter McLaughlin, on behalf of Hines:

The province is committed to both the ferry service and our operator.  The work Bay Ferries Limited has put into re-establishing this complex and challenging international service has been significant.  Placing the service on hold for this season is a decision based entirely on public safety.

The service is important to the economy of rural Nova Scotia, especially in the South West.

Financial information will be released through the 2021-22 budget process.

Transportation infrastructure projects of this nature can’t be stopped and started. The management fee represents only a small portion of costs incurred.

Reporters have been asking since last July what costs were incurred last year when the ship remained docked — $16.3 million had been budgeted but savings on fuel and crew should have made those operating costs much lower. Despite that, in December Hines indicated taxpayers should not expect much of a refund and we have seen no final tally.

In March, about $16 million was budgeted to operate the ferry in 2021; the province now says cancelling the season will “save” money. How much will be saved remains completely opaque.

“Making the decision now will help reduce costs in areas such as marketing, hiring additional ship and terminal crew, and moving The Cat ferry to Yarmouth. Normal vessel maintenance programs will continue,” says today’s news release from the province. 

(The boat, the Alakai, remains docked in Charleston, South Carolina.)

There’s no estimate as to how much those savings might be, even though this will be the third time it has happened.

“COVID-19 has caused the closure of many small- and medium-sized businesses in the tourism and hospitality sector who were actually operating for the past three years,” said Tim Houston, PC leader. “Instead of paying millions of dollars for a ferry that will spend its season anchored in the United States, they should be using that money to support the local businesses who will struggle for a second tourism season.”

In 2018-19, the province spent $24 million on ferry operations, including the construction of the new terminal in Maine. In the first two years of the ferry’s operation, after the Dexter government pulled the plug, the lease of the Alakai and its operating costs were in the vicinity of $30 million. Perhaps it is these “sunken costs” that make the current government loathe to jettison what appear to be mounting losses.

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