Ferry Tales

One of the earliest and bravest choices of the Dexter government was to cease support for the CAT ferry to Yarmouth from New England. Passenger numbers were down more than 75% from the 330,000 in 2002  and the annual subsidy had grown to $8.9 million in 2009.

The report released this week (arguably years later than necessary) discusses possibilities for restoring service. It does an admirable job of identifying and responding to the key questions.

In his release Premier Dexter claimed that, “Nova Scotia now has a plan for a successful, profitable and stable ferry service that can carry 130,000 people every year through southwest Nova Scotia. Now the work must begin to turn the vision in this report into reality.”

That is a very considerable distortion of the report. Here are some of its key findings:

  1. Why did traffic drop off so drastically while the service was still available? In part this was because the Cat was the wrong service at the wrong price, even with subsidies. But it was also a reflection of the overall trends — a 14% drop for Canada and 36% drop for Nova Scotia between 2002 and 2010. Causes cited include a higher Canadian dollar, high fuel prices, weak US economy, and increased international competition. If anything these are more true today than in 2009.
  2. What is needed to re-establish a viable service? The report argues that a cruise ferry is the best option. So a ship of  that type and the right size must be found as well as an operator who can commit to meeting the cost estimates made in the report. The Yarmouth terminal needs to be refurbished. But a robust and effective marketing campaign will be required, as well as an overall enhancement of the tourism experience in southwest Nova Scotia. The report stresses the need for a proper marketing study before a decision to proceed is made.
  3. What are the tourism related economic benefits? The report cites two earlier studies which, by their sharply differing conclusions, illustrate the uncertainty of any forecasts. The more optimistic of the two  forecasts 300 incremental jobs and $6.8 million of  employment income across the province, with 63 of the jobs and $1.4 million of the income being in the Yarmouth and Acadian Shores area. These seasonal jobs would produce $1.0 million of additional federal tax and $1.4 million for the province.
  4. What traffic is assumed? To meet the financial forecasts the report estimates 95,000 passengers in the first year (up from 75,000 in 2009) increasing to 135,000 over 10 years. Of these 22,000 will come  at the expense of the service from Digby to Saint John, increasing its deficit by $1.8-$1.9 million. Many of these passengers will take the return ferry without spending an overnight in Nova Scotia.
  5. What will this cost? The costs to the two levels of government over the first seven years will be $30-$35 million, of which $10-$15 are up front. This does not include the added losses in Digby nor the cost of improving the overall tourism product.

The report emphasizes that it makes no recommendation. It does provide answers to important questions and stresses the need for further research before a decision is made.

And if the further research confirms their estimates what are we to make of the Premier’s response? The province seems prepared to spend $21 million on seasonal jobs yielding only $1.4 million in annual tax revenue.

Economically this makes no sense. But the political pressure has been enormous, perhaps also accounting for the response from opposition politicians. The Liberals (“Stephen McNeil and the Liberal caucus have been clear – a Liberal government will restore the international ferry service between Yarmouth and the United States”) don’t seem to care about the economics or the report’s emphasis on the need for further study.   Progressive Conservative Leader Jamie Baillie (“The ferry should have been maintained while a new plan was developed for it. We could have transitioned to this point three years ago”) was more interested in the timing.

Thus continues a dreary pattern of propping up historical industries that have become unviable, at the expense of taxpayers who work in profitable ones.

People in the Yarmouth area feel understandably disadvantaged both economically and because they keep losing transportation infrastructure (trains, flights, ferries). If it is wise to spend $30-$35 million in support of the Yarmouth area surely we could do better than an uncertain prospect of 63 seasonal jobs. If improving Yarmouth’s sense of connectedness is the issue the right place to start is connections with the rest of Nova Scotia.

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