Why Bay Ferries wasn’t concerned, and why we should be

the-cat-ferry-2016It was early February. The first “new-ferry-system-has-not-been-confirmed… we-must-unfortunately-cancel-the-space” emails from skittish U.S. tour operators had begun landing on reservations desks at Nova Scotia hotels and resorts.

Local tourism operators desperately needed to know if there would —  as the government had promised — actually be a ferry service this summer between Yarmouth and Portland, Maine.

Though summer was mere months away and advance marketing would be crucial to the season’s success, Transportation Minister Geoff MacLellan pasted on his best what-me-worry smile. “We’re not getting an indication from Bay Ferries (CEO Mark MacDonald) that it’s time for concern,” MacLellan told the CBC. “When we have a vessel, he’ll let us know.”

We now know why the Bay Ferries CEO wasn’t concerned.

Bay Ferries has a deal. A sweet deal. A 10-year contract. The province has agreed to pony up $32.7 million over the next two years (and who knows how much for the following eight) for just two years’ guaranteed use of a failed high-speed Hawaiian ferry-turned-U.S.-navy-surplus.

Nova Scotia taxpayers are currently covering the $9-million it will cost to retrofit the all-American-crewed catamaran at a shipyard in South Carolina. We’re on the hook for $4.1-million in start-up costs, plus all operating cash losses, not to forget an undisclosed management fee Bay Ferries will pocket for spending our money.

No wonder Bay Ferries wasn’t concerned.

This was a deal done in desperation and announced on the eve of a four-day long weekend by a government hoping no one would ask too many questions.

There are still many questions.

The biggest, of course, is whether the benefits of having a ferry service outweigh the costs.

The key benefit: more American tourists. But their numbers have been in steady decline since 2002, long before the Dexter government cut off subsidies in 2009.  While Americans spend Yankee dollars in hotels and restaurants, the reality is most tourism jobs are low paid and seasonal. The 2016 ferry season: 107 days.

The costs: Besides the subsidies themselves, the government appears to be shipping significant tax dollars to the U.S. navy and a South Carolina shipyard.

How would a cost-benefit analysis for subsidizing the ferry service stack up against… well, for the sake of argument, let’s say the benefits of the Nova Scotia film industry?

Discuss.

 

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  1. You should check out the Public Accounts meeting from last week. TIR officials were being asked about this very topic, and their answers were not only not encouraging, but the deputy was downright arrogant about it.

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  2. The thing about cost-benefit analysis is that you have to do the math. You have to make some assumptions, think about the broad implications not just for one group at one moment, but for all groups over time. Then you have to actually do math math. Adding, subtracting, multiplying and dividing.

    That’s the basic work you have to do to make financial decisions. And, like we learned in school, it’s important to show your work. The process of how you arrive at the answer is at least as important as the answer itself.

    This work was not done. We don’t know the costs or the benefits. It was not done for the film industry decision and it was not done for the ferry decision. It was not done for Pharacare and it was not done for the Convention Centre (well, actually in that case it was done, but did not produce the answer Peter Kelly et all wanted so they paid consultants to input knowingly wrong numbers until they got the result they presupposed and wanted.

    It seems a high price to pay so that Nova Scotian ‘zoomers’ (highly mobile retiring babyboomers) can spend more money at the outlet malls in North Conway.

    But maybe I’m wrong. Let’s discuss the assumptions and see the math.

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  3. 32 million for a US company to take money .not invest it here .could of done refit of ferry here in Nova Scotia or at leat canada .could hire nova Scotia ns on feet .but no just take money back yo the US .32 million good buy from nova Scotia easily done but could not give 200 thousand for a local business start up .answer why is because “the Nova Scotia Government is not in the business of giving away money “

    Reply

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