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Talking cost recovery with Ottawa

MHA Andrew Parsons says province has possible legal recourse

The MV Highlanders sits dockside in Port aux Basques in Feb. 2023 – © René Roy / Wreckhouse Press Inc.

By Rosalyn Roy Senior Staff Reporter

PORT AUX BASQUES — MHA Andrew Parsons (Burgeo – La Poile) visited Ottawa earlier this month, and during his work there had the opportunity to meet with Federal Transport Minister Omar Alghabrato discuss Marine Atlantic cost recovery. Parsons said the meeting was productive and encouraging. “The Minister of Transport is, certainly, he gets it I think, and he understands. But like every Minister, in order to do something, there’s a cost to that,” said Parsons via telephone interview on Tuesday, Feb. 14. “This is something where I don’t think it’s purely a Transport Canada decision. They have a budget envelope that they have to live within as well. So that’s why I don’t think the meeting with him is the only one. There’s going to be multiple other meetings that have to be had when we present this, because the reality is, to lower cost recovery return, it costs the Feds money. So we need to make that argument. I think we have a very strong case, on multiple fronts, but we’re just not stopping there. We have more to do.” Parsons has long maintained that the 65 per cent federally mandated recovery rate, which has been in place for well over a decade, impacts all NL residents on a daily basis, and hinders the provincial economy.

“It’s actually getting closer to twenty years now that we’ve been dealing with cost recovery. I mean, it was sixty percent, then it went up to sixty five. The last few years with COVID, it’s been down in the sixty-two to sixty-three range. But again, I still think there’s a strong financial argument to be made that for each percentage that it’s down, there will be an economic return. Whether it’s job creation, GDP (gross domestic product) growth, you name it. And all of this is being done aside from the biggest argument, which is the terms of the Union. So, like I say, I think there’s an economic case to be made, but we always know that this is a constitutionally mandated service, and there is an obligation to ensure that we have a strong reliable service that is not reprehensibly costly.” Marine Atlantic is not alone in its cost recovery mandate, but Parsons believes it is nonetheless unique. “So VIA Rail, number one, does have cost recovery. They do, but it is not as high. Nor do I think VIA Rail is a constitutionally mandated service,” said Parsons. “If this was going on in other places, there would be bloody murder being screamed. Screeched. The fact that even within Newfoundland itself, many people don’t realize the importance of this service to the food that’s on our table every single day and how it’s costed. So, if this was happening in any other province, I think people would just absolutely go nuts. Because it’s not as close to the capital city, people just have less of an idea. It doesn’t mean as much as it does to us who have grown up with this and seen it every single day of our lives. And we know the importance of the industry to, not just Port aux Basques, not just the Southwest Coast, but to the entirety of the province, as well as the Atlantic Provinces.” While Parsons is committed to trying to working with Federal and Provincial colleagues to find a solution, he has previously served as the provincial Justice Minister and is aware there are legal avenues should it prove necessary. “I’m a person that would prefer to work with others to achieve the goal. But that being said, there is absolutely, in my mind, a viable legal case that the terms are not being lived up to. To go that route would certainly be taking it a step further than has been taken, but we’re getting to the point where we have to. And again, it’s not just about a tourist going somewhere. This is a service that’s affecting a very sizable majority of the freight that comes here, every car coming in here. It’s the main point of our car traffic. So at some point we have to decide how important an issue it is.” Maintaining a ferry service connection between the island and the rest of the country was deemed important enough to be included in the British North America Act in 1949, usually referred to as the Terms of Confederation. Parsons wants the province to consider all options to deal with cost recovery, including legal ones. “I’m absolutely suggesting that we look at what it entails. Because I think people need to know that it’s not just a case of us going up and begging for a handout. When they joined Newfoundland and Labrador – I don’t say we joined Canada, I say Canada joined us – this was one of the terms. This is strictly written in there in black and white. Yes, the wording is a bit vague, but there is a service here, and in fact the Prime Minister has said in his own words, that this is basically our highway. They get it. So I know there’s a cost, but that’s one you need to be prepared to undertake.” So would that necessitate a Supreme Court challenge? “There’s different legal routes you can take, different levels of court, different legal points to be made, some a little more specific than others. But at the end of the day I think it’s all about achieving the same goal – a more affordable service.” Parsons is still working on building support to deal with cost recovery. He admits it’s a process. “Put it this way. Our team certainly knows how I feel, so I’ll continue to press the case, but more importantly, it’s a federal decision. So I would rather continue to work with the Finance Minister, the Prime Minister, our local MPs and cabinet ministers as well as Atlantic MPs to say, look this is a real issue, this is about a sense of fairness, and again, this is an investment you’ll see a return on. It’s not just about putting money in something where you never see it again. You will see results in a lowering of cost recovery in my opinion. I think the data shows that. Not only that, but every time it goes up it has a disproportionate effect of certain portions of our population.” The role the ferry service plays as a linchpin in the NL economy is difficult to ignore. In 2020 alone, the ferry service directly contributed ~0.24 per cent to provincial GDP. It supports a trade corridor valued at between $16 – 18 billion annually. Each $1 directly attributed to MAI’s GDP generates an additional $1.5 in GDP nationwide. Industries across the economy rely on affordable and reliable MAI service. In addition, passenger movements in 2022 reached 354,461, a 14 per cent increase since 2019 (309,909), and 60 per cent higher than in 2021 (221,596). Even though the province has lived with almost two decades of cost recovery, Parsons says it’s still early days in the process. “In the sense of where it goes, I would say it’s early on, but I think you need to raise the issue. The other side of this too, let’s be honest, when COVID was happening, just trying to figure out what the effects were. But I can tell you that 2022 numbers were up to pre-2019 levels, so now is the time where the service is back at its regular capacity. We had times last summer where you almost couldn’t get to this island. You could not get a spot. And again, if that happened somewhere else, you were prevented from getting to any province, you would hear about it,” said Parsons. “I’ve brought this up at multiple points, and look, there have been victories along the way. I mean, we haven’t seen the surcharges go up, haven’t seen the rates themselves go up in a couple of years. There have been other victories. So it’s not been a constant thing, but my fear right now is with diesel pricing like it is, with the Clean Fuel Standard, which is a Federal measure, which is about to come in the summer, I don’t know how Marine Atlantic operates. When you look at how that’s going to impact their fuel, it’s going to be extremely hard for them to do this without taking some kind of measures, and that’s what I’m trying to avoid. And that’s not on them. I think that it’s on the Federal Government. I think this Executive and this board (Marine Atlantic) have done great work holding the line in trying times, but sometimes this can go beyond what you can do. When you see the price of fuel go up like it has, and like it’s going to, then I think it calls for a different measure.”

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