In March of 1977, the federal government under Prime Minister Pierre Trudeau and Transport Minister, Otto Lang established a Commission of Inquiry to examine “existing transportation services in Newfoundland and Labrador to determine whether they meet generally acceptable Canadian norms, and where appropriate, recommend changes to meet current and future needs.”
Chapter II, The Constitutional Question examined the “constitutional obligations of the Government of Canada to Newfoundland related to transportation.”
The Commission made some 139 recommendations including “80. That, in principle, the Gulf crossing should be treated as the equivalent of a road crossing, with rates for basic travel charged accordingly, and extra services provided on a user-pay basis where possible, and that this principle be applied to the Argentina service when feasible.” and “94. That the Province have input into setting and monitoring contract requirements for the Gulf service operated by CN Marine Corporation.”
The strongest statement the Commission offered is on page 35 of the report, that “the Commission reiterates its own view that, under Terms of Union, the Federal Government is responsible for the maintenance of coastal, Gulf and rail systems, and for assuming all public costs pertaining to these services, so long as there is reasonable traffic offering. We are further of the opinion that this interpretation would be the one most likely to be accepted in any reference to the Supreme Court of Canada.”
If Newfoundland and Labrador were to mount a Supreme Court challenge that the federal government has not met its obligations under the Terms of Union with respect to Gulf ferry fees, there is a potential $1.6-Billion settlement on the table.
Mainland Canada views the subsidy afforded Marine Atlantic negatively, the way we here in the province, at times, view subsidized provincial ferries.
A judgement that increases this subsidy annually by over 25 per cent opens the door to a provincial negotiation to take over Marine Atlantic the way the Chrètien Liberals divested ports and airports that would be supported by Canadians. The ballpark number of such a negotiated settlement is roughly equal to the $7.9-Billion federally guaranteed portion of Muskrat Falls’ debt.
Let’s assume a Liberal government that would pay $4.5 Billion for an unfinished pipeline would be interested in talking about assuming the $7.9-Billion debt it had already cosigned in exchange for Newfoundland and Labrador taking over Marine Atlantic.
For Canadian taxpayers that’s a savings of over $1 Billion in the next five decades alone. For Newfoundland and Labrador, the interest savings on the $7.9 Billion would be three times the Marine Atlantic subsidy, with net savings to provincial rate payers of $300 million annually.
In addition, Nalcor’s mandated return on investment of $6 Billion over the next 20 years would no longer be required as this money was earmarked to service debt principal that now no longer exists.
That’s another $300 million a year in savings.
Unlike a rate-mitigation plan that simply takes money from other areas of the province’s treasury in a shell game, this plan eliminates $600 million annually from the Muskrat Falls equation altogether, allowing power rates to remain very close to current rates.
Marine Atlantic’s publicly available financial statements show a corporation that could find efficiencies. The new Marine Atlantic board is doing a good job of that, but the federal government is reaping those benefits. The corporation’s travel budget alone last year came in $800,000 below budget but was still higher than the entire budget for the Premier of Newfoundland and Labrador’s office including travel and salaries.
Think about that for a moment. Think about the logistics of using six smaller vessels that run hybrid electric technology and could run fewer or more frequent trips to better meet demand while providing security against vessel downtime.
Current vessels sail half full in winter but run full fuel and crew costs, similar to a Metrobus with two passengers.
This is a three-phase plan. Have the Supreme Court affirm our constitutional ferry rates and award retroactive settlement almost as big as Danny’s “We got it!” cheque; negotiate a win-win deal with Ottawa that returns this province to solid financial footing and gives us control over our own provincial access; and revamp Marine Atlantic to better service the population, reducing overall expenditures and subsidies, and moving the service to hybrid electric green technology.