Cutting Marine Atlantic’s cost recovery requirements is not the right course

Recently, Mayor John Spencer of Port aux Basques has renewed his call for the elimination of all cost recovery by Marine Atlantic. While Spencer and others may think this is good politics, it would be a horrible policy choice.

I reiterate my call for frank conversations about the future of freight transportation services in the province and how the continued influence of political posturing affects everyday service delivery.

No government should address rate setting at a Crown corporation operating in a competitive market as a pure policy or political decision, subject only to the whims and fancies of the political climate.

We should all be concerned that the operation of our critical freight transportation service market is afforded no more certainty than that.

Canada’s National Transportation Policy, as enacted in Section 5 of the Canada Transportation Act, is expressly designed to ensure evidence-based decision making without unbridled political interference. A structured and evidence-based rate setting process at Marine Atlantic, considering all relevant factors, is precisely what Oceanex set out to achieve in its recent court challenge of Gulf ferry rate setting by looking to the court to affirm that the National Transportation Policy applies to the service.

While politically expedient, we believe the elimination of cost recovery as proposed by Spencer is an ill-conceived notion without merit.

With his call for the elimination of cost recovery on the transportation of freight traffic, Spencer is really arguing for an enhanced subsidy to Marine Atlantic that he suggests would indirectly benefit Newfoundland consumers at the retail checkout. This thinking is flawed.

You need only look at Northern subsidies to realize these types of instruments don’t work. Nutrition North Canada is a program that provides subsidies to registered retailers and suppliers, requires regular compliance reporting and makes participants subject to independent audits to ensure compliance with the terms and conditions of their agreements, including the requirement that the subsidy is passed on to consumers.

Sounds good, right? Yes, it does, but the Nutrition North Canada program, with all its considerable checks and balances, has been regularly panned by Canada’s auditor general with concerns that the subsidies have tended to benefit retailers as opposed to consumers.

In the North, no consumer wins when you effectively need the equivalent of a monthly car payment to buy food for a few days.

Spencer would have you believe a subsidy to Marine Atlantic will be passed unimpeded through trucking companies to wholesalers to retailers and finally to consumers.

Forgive me for being a skeptic.

I wonder, too, where the money to end cost recovery and increase the subsidy will come from? Which much needed services won’t happen if this were ever allowed to come to fruition?

If Spencer is serious about helping Newfoundlanders, then why not argue for something that would directly benefit people, like a direct subsidy to certain income earners or a tax credit for others. These tools could potentially make a real difference to people. Let’s have that conversation.

Look, I get Spencer’s job is to advocate for his community. I also recognize the integral role Marine Atlantic plays in Port aux Basques. My previous work experience with CN Marine and Marine Atlantic have afforded me the opportunity to work closely with and to enjoy continued friendship with many past and current residents of the town and surrounding area. I have a great deal of respect for them and wish them nothing less than great success and prosperity long into the future.

I firmly believe that in a properly functioning market, Marine Atlantic will continue to operate a valuable service for the benefit of the communities in which it operates and for the province. It does not need shoring up by government.

I think we have been shown time and again in Newfoundland and Labrador that when politicians go off on political whims, we will likely pay for that folly for years.

Evidence must guide us to a place where we have reliable, sustainable and cost-effective freight transportation services for the people of this province.

Eliminating Marine Atlantic’s cost recovery requirements is not the way forward.