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The long battle against cost recovery

Years of lobbying Ottawa has failed to achieve removal or reduction

Transport trailers wait to board the MV Highlanders in Port aux Basques on Thursday morning, Jan. 26. – © René J. Roy / Wreckhouse Press Incorporated

By Jaymie White Local Journalism Initiative Reporter

PORT AUX BASQUES — For years, Marine Atlantic federally mandated cost recovery has been a hot-button issue. The cost recovery, designed to recoup operational costs by the ferry service, means an increase in prices for residents, tourists, and businesses living, visiting and working in this province. Because most goods come into the province via the ferry service, and with the cost of living already so high, there is real concern that some imported items, including basic necessities such as food and medication, will rise to the point they become out of reach, particularly for residents on a fixed income. Mayor Brian Button said the town has been lobbying the federal government regularly to make a change to the cost recovery system, but without much success. “Both past and present councils, trying to take it to another level, to all municipalities in Newfoundland and Labrador, to advocate that the cost recovery that the federal government tried to get back from Marine Atlantic, it drives up the cost. For us alone there are two factors. One is from a tourism perspective where there are people trying to come into the province, and the high cost of traveling on the ferry to get over here,” explained Button.

“Then there’s the high cost of all our goods and services that are coming into the province that, every time all the trucks and everything are traveling through the service, there’s an added cost to the consumers.”

Button is frustrated at the lack of movement regarding the issue coming from the federal government.

“I don’t understand. You build bridges in Montreal. You build the Confederation Bridge and it’s not even comparable on what the cost recovery is expected for Marine Atlantic from the federal government,” said Button. “The only way that the cost of traveling here is going to come down is if that changes.”

Cost recovery has also been a source of contention in other provinces like Prince Edward Island. On January 16, Premier Dennis King told CTV News that he wanted the Confederation Bridge tolls reduced by a little over $30, calling the current rate of $50.25 a competitive disadvantage. The federal government did freeze a planned increase of 4.75 this coming November.

Button is sympathetic, but won’t exactly equate the two.

“It’s not even comparable. It’s been ridiculous. I know back in the day, before the Liberal government took office and the Conservatives were in, they had said at that point that they felt this was unfair and it would be looked at, but there’s been nothing done with it. For Newfoundland and Labrador, we need those ferry costs and what’s expected to come back in a cost recovery to be changed,” said Button.

Button did appreciate Marine Atlantic’s travel incentives this year for people who booked their travel within a certain time frame, but doesn’t believe it goes far enough.

“It was great to see them last year offering a reduced rate for that particular time, but then we got back into the tourism season and the rates remained the same,” said Button. “I’m not placing the blame on Marine Atlantic, but the amount that’s expected to come back on the cost recovery piece, that’s done with the federal government and they need to make the change. And this change needs to happen so it makes it affordable and comparable to what the rest would pay across this country. Whether it’s tolls for bridges built or whatever the case may be, it needs to be on the same comparison. It seems like it’s totally different from what is expected from this province.”

With some people being unable to afford to leave the province and others being unable to afford to visit, Button said this issue is not just a Port aux Basques problem, it is a provincial problem.

“What it means to the province as a whole, for anything, for our goods and services, for our tourism, we do a bang up job in this province of promoting the province and inviting people to come and spend time with us, but when you are trying to figure out your costs, you’re with a family of four, you’re towing a trailer, there’s a lot to consider. Do you spend the money and take the time to explore the province of Newfoundland and Labrador or do you take your trip where your money will go further, to other provinces like Nova Scotia or Prince Edward Island where you don’t have to take the ferry and come over?”

Currently, for a family of four, a standard vehicle and 4-berth regular cabin to NS and back costs $805.74. That does not include food or pets, or take into account larger vehicles such as travel trailers. It does include a $13.95 passenger fuel surcharge, a $13.14 vehicle fuel surcharge, and a security fee per crossing.

Commercial drivers pay based on vehicle length. A standard trailer runs between 48 to 53 feet, and those 50 feet or less can expect to pay $357.45, plus a vehicle fuel surcharge of $48.47. For those 50 to 60 feet, that increases to $429.35 plus a $55.82 surcharge. Drivers pay $43.78 passage, including the $3.78 fuel surcharge, and if they want a trucker’s berth, that’s an additional $42.00. Dangerous good rates, handling fees, and lot storage are extra.

For the past five years, rates for passenger and commercial traffic have fluctuated slightly based on both rate and fuel surcharge fees.

From Apr. 1, 2017, to Apr. 1, 2022, passenger vehicles including pickups up to 20’ had a rate of $101.05 per crossing, but the fluctuations for passenger vehicles lie in the fuel surcharge which went from $15.16 in 2017, to $18.19 in 2018 and 2019, then down to $13.14 in 2020, 2021, and 2022.

For commercial vehicles, specifically over 70’ to 80’, fluctuations were present in both the rate and fuel surcharge.

As of Apr. 1, 2017, the rate for these commercial vehicles was $547.45 with a fuel surcharge of $82.12.

Effective Apr 1. 2018, the rate stayed the same; however, the fuel surcharge jumped to $98.54.

For Apr. 1, 2019, both the rate and fuel surcharge increased. A commercial vehicle had a rate of $558.40 with a fuel surcharge of $100.51.

Effective Apr. 1, 2020, to Apr. 1, 2022, both the rate and fuel surcharge stayed the same; however, the numbers fluctuated in different directions. The rate sat at $569.55, an increase from 2019, and the fuel surcharge was $74.04, a decrease from 2019.

MP Gudie Hutchings (Long Range Mountains), Minister of Rural and Economic Development also spoke about the cost recovery mandate.

“Marine Atlantic is a crown corporation. I have a relationship with the board and with the CEO. We talk fairly regularly and, where they are a Crown corporation working with taxpayer dollars, it’s their obligation, as it is with any business, to be as efficient and cost-controlling as they can. That being said, we as Newfoundlanders and Labradorians have the constitutional right to the ferry service from Port aux Basques to Mainland Canada,” said Hutchings.

“So I’m always challenging them. How can we make it cheaper for Newfoundlanders and Labradorians to travel on the ferry and get our goods and services back here? I’m constantly, ‘how can we think outside the box? How can we address this?’, because the bottom line is, whatever you call it, let’s make it more affordable for Newfoundlanders and Labradorians.”

Hutchings believes the war in Ukraine also plays a role.

“That being said, I know there wasn’t an increase in the fare base the past few years, but the other thing we forget, and I know it’s a hard time for all Canadians, especially Newfoundlanders and Labradorians and folks in rural areas, but this war in Ukraine is having such an impact on so many things: on fuel, on flour, on goods and services, getting things, and I think people don’t think of it top of mind and don’t realize the impact that it’s having on the world and therefore having on us,” said Hutchings. “It’s not a Canadian problem, it’s a world problem. How can Marine Atlantic, and anybody for that matter, think outside the box to deal with these issues at hand until this terrible, tragic, sad war gets behind us.”

It’s not just consumers who are affected, but businesses as well. Some try to absorb as much of the cost as they can rather than simply pass it directly onto their customers.

Victoria Collier, who recently opened an independent grocery store, said that the cost of transportation hasn’t directly affected her ability to bring in any goods, but rising costs do affect her bottom line.

“A couple of things have gone up in price since I’ve been here and it’s only been two weeks,” said Collier. “If the costs continue to rise, it would basically affect the profit at the store because I don’t want to have my prices extremely high. Certain areas have a lot of the older crowds where they are not necessarily able to bring in much money, so I want to keep appealing to them and keep prices down a little bit.”

Darrell Mercer, Corporate Communications Officer for Marine Atlantic stated that, “The Government of Canada’s established annual cost recovery target is 65 per cent. During the period of COVID-19, the Government of Canada has worked with us recognizing the unique challenges presented as a result of the pandemic.”

Over the past five years, Marine Atlantic has met or exceeded its cost recovery mandate only twice.

In 2017, Marine Atlantic reported a cost recovery rate of 67 per cent. The next year that fell slightly to 65.5 per cent, but still met its target.

In 2019-2020, it decreased to 63.7 per cent, and in 2020-2021, during the height of the global pandemic, it dropped to 55.2 per cent. Last year, once things began to open up again and combined with some tourism rate initiatives, it recovered slightly to 60 per cent.

An initial rate increase for commercial traffic in April 1, 2021 was later rolled back in response to the “significant burden” on the Canadian economy, and customers were refunded the difference.

The Crown corporation’s cost recovery rate remains at 65 per cent.

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