I read Russell Wangersky’s column entitled “The cost of keeping boats afloat” (Dec. 30/17) with interest. Thanks for doing that, Mr. Wangersky.
It is a subject that needs tons of analysis and discussion because it has become a financial monster. The column states that operating costs for the provincial ferry fleet are almost $91 million a year. I don’t think that includes the millions for amortization and depreciation, which is an exercise in writing off the capital cost of vessels and infrastructure over their useful life. The $91 million is cash flow only for operations and ignores the cost of ships and infrastructure.
We have not had a refit yet for the MV Veteran or MV Flanders; that will be a major bump in the years those expenses are incurred. These two ships were built in Romania at a cost of $50 million each. Thrusters on the Veteran have been nothing but trouble and are supposedly costing us dearly.
The point of all this is that in the next eight to 10 years we are going to spend a billion dollars to provide marine services to fewer than 11,000 people in 42 communities; that is over $90,000 per person ($9,000, per person, per year). Subtract Fogo’s and Bell Island’s combined populations of 4,350, and that leaves 6,650 in 40 communities. That is an average population of 166 persons per community.
With a shrinking provincial workforce comes shrinking revenues; with an aging population comes increased expenses. These trends will not magically reverse. Marine services as they exist today cannot be sustained over the long haul and structural changes are necessary. In the meantime, while the province sits on its thumbs, it needs to manage the marine services for minimum cost. A cook on one of the ships made the sunshine list last year and I believe I am correct in saying that that was on one of the ships that does not have a live-aboard crew. That crew should be packing a lunch like thousands of other Newfoundlanders and Labradorians. If a live-aboard crew is required in emergencies, a catering contractor should be employed to take care of the need.
The Bell Island ferry service should be called Metro Boat — two ships and infrastructure worth $80 million to $90 million make 19 one-way trips per day; this would suggest that fuel is free. This is to serve approximately 2,000 people. In the real world, not Fantasy Land — Newfoundland — that should probably be one ship making four or five round trips per day, since there is enough capacity in one of the $50-million ships to give every man, woman and child a round trip every day.
The provincial government’s The Way Forward five-year plan (what a very deceptive title) states responsibility for the annual movement of 900,000 passengers, 400,000 vehicles and 12,000 tonnes of freight, for which they receive $7.7 million in revenue. That represents less than eight per cent recovery of cost, a gift to the users. No matter how you crunch the volumes versus revenue, the rates are practically free. The last study of rates I could find online was in 2005 using costs from 2003, in which the province’s lowest desired rate of return was 22 per cent.
Over the years, the ferry service has been classic “management by reaction,” with politics dictating service levels and outcomes. At times the service has been pathetically poor. With new ships and equipment, it is time now to review, professionalize and take a realistic view of the whole marine services division. The provincial politicians love to moan about the unfairness of the equalization formula and the fact that we are different; all true — however, we will get zero sympathy from Ottawa, Quebec, etc., so long as our spending and financial position remains out of whack by every yardstick.