MNL membership supports Town of Port aux Basques proposal regarding federal cost recovery
A proposal by the Town of Port aux Basques calling on the federal government to reduce the cost recovery for operations of Marine Atlantic was among the resolutions passed at the Municipalities Newfoundland and Labrador (MNL) conference this October.
An overwhelming 99 per cent of attendees voted to support the motion tabled by Mayor John Spencer.
Darrell Mercer, corporate communications officer for Marine Atlantic, clarified the cost recovery via email.
“Marine Atlantic currently has a 65 per cent cost recovery as established by our Shareholder, the Government of Canada, and to date we have been successful in achieving our cost recovery target. The Government of Canada is responsible for any updates to this policy.”
Spencer believes the cost recovery impacts every taxpayer in the province. One example the mayor used noted that 98 per cent of fruits and vegetables are transported to the island via Marine Atlantic.
The Retail Council of Canada stated in 2015 that transportation challenges forces Newfoundland and Labrador consumers to pay an extra five to 25 per cent for perishables.
“Such a draconian measure has forced personal and commercial costs on users of the ferry system to reach unbearable levels,” said Spencer in a copy of his MNL proposal, which he shared with The Gulf News.
Spencer also questioned longterm tourism growth, a market the southwest coast is working to grow.
“Cost recovery on operations at 65 per cent kills opportunities for a sustainable tourist industry. There are no accidental tourists coming to Newfoundland and Labrador,” wrote Spencer in his motion.
The negative impact on the province extends beyond the obvious tourism market, says Larry Laite, chair of Hospitality Newfoundland and Labrador (HNL). The organization has been lobbying for a reduction to Marine Atlantic’s cost recovery for years.
“HNL has had this as an issue probably as long as it’s been in operation, like 35 years. There’s always been a component and an advocacy to try to keep any type of access affordable, not only for the traveller but also for products and services to get to the province,” said Laite via telephone interview.
Laite says there have been some wins in the past, such as successful lobbying to keep fare increases smaller than initially projected. Lobbying is always a priority for HNL, regardless of whether or not the Crown Corporation is looking at further increases.
“If they increase the cost of the service as far as Marine Atlantic is concerned, then the rest of their pricing strategy filters in through.”
A report by Transport Action Atlantic, based in Moncton, New Brunswick noted that Marine Atlantic’s cost recovery in 2017 hit a record 70 per cent.
“The cost recovery ratio has risen steadily over the past two decades, climbing from approximately 45 per cent in the late 1990s. During that period, user rates have soared at triple the national inflation rate – in sharp contrast to tolls on P.E.I.’s Confederation Bridge, which are tied to the cost-of-living index.”
Spencer made a similar point, but on a provincial scale.
“To put cost recovery on operations into context, if Newfoundland imposed cost recovery on the same scale as the federally operated system, the service connecting Newfoundland to Labrador in the Strait of Belle Isle would see fares rise 40 times the current rate,” noted Spencer in his report.
By 2015, Marine Atlantic fares had increased by 11 per cent. After 2015, Marine Atlantic’s fares rose another three per cent, meaning an overall increase of 14 per cent from 2012 to 2016.
Calling it a “near hypocrisy”, Spencer noted that in 2018, although there was no fare increase, the fuel surcharge remained in place.
The fuel surcharge was first introduced in 2007, and this past summer the rate was 18 per cent, but it has been as high as 21 per cent at times.
The surcharge hike also prompted HNL to express frustration. In a press release dated from January 2018, HNL wrote that Marine Atlantic plays a key role in driving the provincial economy and impacts job growth, but that increasing the surcharge means yet another year where consumers are expected to absorb an increase.
“Funding for Marine Atlantic must be set over an extended period so that it enables long-term planning, allows for pricing that does not erode the level of service or deter travellers, and is sufficient to drive continuous improvement and cost efficiency in the service,” it was stated.
Spencer spoke on cost recovery again during the Oct. 9 meeting of the Port aux Basques town council. He noted that as Marine Atlantic increased fares and cut costs, the federal subsidy to the Crown corporation was significantly reduced.
“In 2012 they were at $130 million dollars subsidy. In 2016, when fares are gone up by 14 per cent, their (federal) contribution towards operations had lowered to $63 million,” Spencer informed council.
Councillor Jim Lane urged council to follow up with MHAs and MPs.
“I think that the seven federal MPs – it’s time for them to get off their rear ends and do something for the province as a whole,” Lane said. “I think it’s time for our premier and our MHAs also to put pressure.”
Spencer is encouraged by the show of support from the MNL vote, and also shared that some attendees lacked awareness about the issue.
“I was surprised at how many people did not know about the cost recovery,” said Spencer. “I talked to several MHAs and they thought I was talking double Dutch.”
While Long Range Mountains MP Gudie Hutchings did not respond to Gulf News inquiries prior to print deadline, Burgeo – LaPoile MHA Andrew Parsons says he is completely onboard with the Port aux Basques mayor’s position.
“I was definitely aware of the motion. The town gave me a heads up that they would be putting it in, plus I was at the MNL convention that week as the minister responsible,” said Parsons via telephone interview. “I am 100 per cent supportive. I don’t think cost recovery should be at 65 per cent.”
Parsons won’t speculate on what number cost recovery should actually be at, saying he’s unfamiliar with the data and economic studies behind it.
In addition to being MHA for the area, Parsons is also Justice Minister and Minister of Municipal Affairs and Environment. He says he’s also been lobbying for a reduction.
“I’ve advocated in Ottawa with the MPs. I’ve had public meetings. Where I am with this now, is I am constantly in contact (with MPs),” said Parsons, noting that the cost recovery is purely a federal decision. “I’m hoping in the near future to be able to schedule a meeting with (Federal Transport) Minister (Marc) Garneau to discuss this.”
Parsons doesn’t feel that Marine Atlantic is high on the list of priorities for the Federal Government, but he intends to keep working to change that.
“Marine Atlantic, up in Ottawa, is not what I would call a big issue,” says Parsons, who says he’s chatted to some MPs about this on several occasions. When it comes to lobbying on a provincial front, he’s doing what he can as well.
“It wasn’t that long ago that I intervened as Attorney General on behalf of the province when it came to a constitutional case regarding Marine Atlantic,” Parsons said. “We did that in the best interests of the province, and I think anything that we can do that will make Marine Atlantic more successful, more attractive and more competitive is in the best interest of this province.”
During its 2015 election campaign, the Liberal Party of Canada led by current Prime Minister Justin Trudeau took issue with Stephen Harper’s Tories over cost recovery. In a letter to then Premier Paul Davis, Trudeau promised change, writing, “an unreasonable percentage of cost recovery from Marine Atlantic has forced fare increases by a total of 11 per cent over the past three years.”
Since the election and under the federal Liberals, two more rate increases have occurred.
Meanwhile the Liberal Party has fulfilled a pre- election promise to Quebec to eliminate tolls on a $4 billion bridge project in Montreal, which means a projected annual loss of revenues in the hundreds of millions that Garneau later defended.
“With respect to the tolls, that was a decision based on the large number of people who chose to live there,” said Garneau from the Standing Committee on Transport, Infrastructure and Communities, May 30, 2018.
Mayor Spencer says it’s no different for island residents and that the federal government needs to make good on its promise to Newfoundland too.
“The election promise made in 2015 to the many thousands of Newfoundlanders and Labradorians, who voted overwhelmingly for the Liberal Party of Canada, whose only opportunity to take their vehicles and receive goods and services from the other side is on a Marine Atlantic ferry, need to be given the same consideration.”
Under Term 32 of the Newfoundland Act, the federal government is obligated to provide a ferry connection equivalent to the Trans-Canada Highway. “It did not specify federal cost recovery on operations by the Government of Canada, particularly cost recovery that has crept from 40 per cent two decades ago to reach nearly 70 per cent today,” writes Port aux Basques Mayor John Spencer.
Port aux Basques Mayor John Spencer wants the federal government to reduce the cost recovery rate imposed on Marine Atlantic. In his motion presented at Municipalities N.L. Spencer wrote, “Cost recovery tears at the socio, economic and political fabric of Newfoundland and Labrador.”
Burgeo – LaPoile MHA Andrew Parsons says, “Right now the major concern that you hear from citizens, whether it’s people that commute for pleasure or people that commute for work or the trucking industry, is that the fares are too high.”