The Ferry Contract Should Be Disclosed, But We Already Know the Costs are Excessive
Posted February 22, 2019
Premier McNeil has asserted that the contract with the Yarmouth Ferry operator must be kept confidential or corporations will be reluctant to do business with the Government of Nova Scotia.
That is hard to believe, and not consistent with other dealings by the province. Hardly a week goes by without an announcement of government funding for a business:
- On Feb 4th, Nova Scotia Business Inc. (NSBI) announced approval of a business development incentive in the form of a payroll rebate for The Sydney Call Centre Inc.
It has the potential to create up to 750 jobs under the three-year payroll rebate agreement which could generate $49.5 million in payroll, and $5.1 million through their income and consumption taxes. The company could earn a rebate up to $2.5 million over three years.
- A similar five year agreement with Manulife announced last October could generate up to $140 million in salaries on 600 added jobs. If so, there would be $15.8 million of income and consumption taxes. As a result, the company could earn a rebate up to $9.9 million over five years.
- On the same day, it was announced that Michelin North America (Canada) Inc. will proceed with a $14.3 million capital investment to install an innovative semi-finished manufacturing process.The company is eligible to earn a maximum innovation rebate of $3.6 million upon completion of its project.
- Last July, S. W. Weeks Inc. of New Glasgow was awarded a $1.4 million contract for drainage and gravelling. Its bid was disclosed as well as those of four unsuccessful bidders.
These announcements and dozens like them every year disclose the essential elements of the contracts with local, national, and international firms without any apparent reluctance on their part.
Why then must the Yarmouth Ferry contract be kept under wraps? As far as we can tell, the effect of the contract is that the province pays all of the bills, net of whatever revenue arises.
It should be emphasized that many of those expenses are creating jobs in the United States, including the crew on the ferry, and now the cost of building a new terminal in Bar Harbor, in the $5 million range.
The 2012 report on the Yarmouth Ferry estimated that if passenger numbers averaged 115,000 per year there would be 63 seasonal jobs in Yarmouth and Acadian Shores, and 355 in the province as a whole. Based on the 50,000 passengers in 2018, the numbers would be about 30 and 150.
Transport and Infrastructure Renewal Minister Lloyd Hines says he has no idea what it will cost to build the new terminal in Bar Harbor, but assures us that it is a prudent expenditure. Really?
Bar Harbor and the rest of Maine also get a tourism benefit from Nova Scotians using the ferry to visit them, with all the costs being paid for by Nova Scotia.
When the Liberals made their original contract with Bay Ferries, they negotiated from a self-inflicted weak position. They announced that they were working with just one contender and that a contract would be completed in time for service to begin in 2016. Having done so, they had no bargaining power.
Something similar is happening now. The Liberals have said that they will pay for the refurbishment of the Bar Harbor terminal without knowing the cost. Having paid for the construction in Bar Harbor, the province will nevertheless have to pay an annual lease, and will also have to make a contribution to the cost of US customs.
It is uncharacteristic that McNeil, who has been so committed to making sensible arrangements on other matters, most recently the Teachers’ Pension Plan, has been so weak on this.
Bay Ferries, the operator, gets a management fee plus a breakup fee if the government cancels the ten-year contract before its conclusion.
Progressive Conservative leader Tim Houston has filed a court action seeking to pry loose the contract details. It argues that the government refused to release the information despite privacy commissioner Catherine Tully’s determination there was not sufficient reason to withhold it.
He says that he supports the concept of the ferry, but says you cannot judge the contract until you see the details, including the management fee. He is right to pursue the question. But it is secondary.
Whether that fee is large or small will not change the bigger picture of a program whose costs reflect a pattern of poor management by the Liberals, and are far out of proportion to the benefit realized.
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