Yarmouth-Portland ferry to cost N.S. $33M in first 2 years alone

[PHOTO: Bay Ferries Ltd.]

The province of Nova Scotia is expected to spend nearly $33 million over the next two years to fund a re-launched ferry service between Yarmouth, N.S., and Portland, Me. Last Thursday, taxpayers learned the province will also be liable for another $5 million US if Bay Ferries Ltd. — the company that will operate the route — defaults on its deal.

Charlottetown-based Bay Ferries is chartering a high-speed U.S. navy transport ship to run the route. In 2014 and 2015, Nova Star Cruises ran a ferry between Yarmouth and Portland called the Nova Star that cost the province $41.5 million and failed to meet passenger targets in the two seasons it sailed.

N.S. Transport Minister Geoff MacLellan has said the province will provide Bay Ferries with $19.6 CDN million in operating funds for the first two seasons, $9 million to remodel the ship and $4.1 million in start-up funds. In addition, on March 24 a $5 million letter of credit was issued through the Royal Bank of Canada that protected the U.S. navy against a possible default by Bay Ferries.

“There’s risk associated for the province obviously from a financial perspective and there’s risk on Bay Ferries as well, but they are a local company that believe in the province and they have experience with the service and have run it in the past,” MacLellan told Yahoo Canada News.

Bay Ferries operated the Yarmouth-Portland route between 1997-2009.

“The previous government decided to end the service, cutting it in 2009 so the southern region of Nova Scotia was without the Yarmouth ferry service for four years,” he said.

“In that time we saw nothing short of a decimation of the southern economy. Every tourism operator, hotel, motel, bed and breakfast, restaurant, clothing store — you name it — were impacted by this.”

MacLellan added that the call was loud and clear from the entire province that the ferry service between the U.S. and Canada brought in tens of thousands of American visitors, and dollars, every year.

While opposition PC Party Leader Jamie Baillie agrees that a cross-border ferry service is needed, in an interview with Yahoo Canada News he insisted the province signed a terrible deal.

“In addition to all the money we’re going to pile into that ferry subsidy, we’re actually guaranteeing the private company Bay Ferries’ lease payments to the United States navy,” Baillie said. He also highlighted the fact that the province had not released funding projections for the full 10 years of the contract.

“The government either knows the total cost over 10 years, which we estimate to be at least $100 million, or they wrote a blank cheque to Bay Ferries,” he explained.

“Our government got hosed. They don’t even know for sure how many of our tax dollars have been committed to this private company, and if they do know they’re keeping it a secret and that’s not fair to the people who actually pay those bills, the taxpayers.”

Baillie also took issue with the fact the new ferry would not be able to transport commercial vehicles.

“The ferry is not only about tourism, it’s also about trade. We have a billion dollar lobster fishery in southwestern Nova Scotia, we have great softwood lumber exports, we have one of the world’s great ground fisheries and all their markets are New England. They need to get their fish and their lobsters and their softwood to New England as quickly and as efficiently as possible. They need the ferry to do that. The fault of every ferry before this was that it did not take cargo trucks.”

That decision, according to Bay Ferries president Mark MacDonald, was out of the hands of the Canadian operators.

“Last fall, when the government indicated it wanted to enter into an agreement with our company, one of the first things we did was to visit the City of Portland with whom we’ve always had a good business relationship,” MacDonald told Yahoo Canada News.

“During the course of those discussions it was made very clear to us that Portland was not prepared to permit large commercial vehicles on the ferry service and the City of Portland can control the issue because they lease the Portland ferry terminal to us.”

MacDonald added that it was up to the politicians to make policy and decide what’s best for the province; his company’s responsibility was to provide as realistic as possible projections of costs in their official bid.

“When our company ran the service we moved 1.7 million people approximately over a period of 12 seasons,” MacDonald said. “That was a massive movement of people back and forth and it represented a key artery of western Nova Scotia. It’s up to governments to decide the importance of that versus the cost of maintaining the service, but we led that service for many years and we know how crucial western Nova Scotia and indeed all of Nova Scotia felt the service was.”

The transport minister was similarly emphatic about the ferry’s role in the lives of Nova Scotians.

“The impact [of the Yarmouth-Portland ferry service] is real, it affects small businesses, families, rural communities and really, it’s something that every political party in the province supports. The cynicism and criticism of us is going to be based on our negotiating abilities, not on the fact that we’re protecting this service.”