The long battle against cost recovery | Spare News

The long battle against cost recovery | Spare News

PORT AUX BASQUES – Marine Atlantic’s federally mandated cost recovery has been a hot topic for years. Cost recovery, aimed at covering the operating costs of the ferry service, means an increase in prices for residents, tourists and businesses that live, visit and work in this province.

With most goods entering the province via ferry service and the cost of living already so high, there is real concern that some imported items, including basic necessities such as food and medicine, will rise to the point of becoming out of reach, particularly for residents with fixed income.

Mayor Brian Button said the city has regularly lobbied the federal government to change the cost-recovery system, but with little success.

“Both past and present councils trying to take it to another level, to all Newfoundland and Labrador communities to advocate that the cost recovery that the federal government was trying to get back from Marine Atlantic is skyrocketing the costs drives. For us alone, there are two factors. One is from a tourism perspective where there are people trying to get to the province and the high cost of taking the ferry to get here,” Button explained.

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

Button is frustrated by the lack of movement on the part of the federal government.

“I don’t get it. They’re building bridges in Montreal. They’re building the Confederation Bridge and it doesn’t even compare to the cost recovery that’s expected from the federal government for Marine Atlantic,” Button said become is when that changes.”

Cost recovery has also been a point of contention in other provinces such as Prince Edward Island. On Jan. 16, Premier Dennis King told CTV News he wants to reduce tolls on the Confederation Bridge by just over $30, citing the current rate of $50.25 as a competitive disadvantage. The federal government has frozen a planned hike of 4.75 next November.

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

“It’s not even comparable. It was ridiculous. I know back then, before the Liberal government came into office and the Conservatives were there, they had said at that point that they thought it was unfair and that it would be looked at, but nothing was done about it. For Newfoundland and Labrador, these ferry costs and reimbursements need to be changed,” Button said.

Button appreciated Marine Atlantic’s travel incentives this year for people who booked their voyage within a certain time frame, but doesn’t think that goes far enough.

“It was great to see that last year they offered a reduced price for that specific time, but then we went back into the tourist season and the prices stayed the same,” Button said. “I don’t blame Marine Atlantic, but the amount that is expected to come back towards cost recovery is settled with the federal government and they need to make the change. And that change has to happen so that it’s affordable and comparable to what the rest of this country would pay. Whether it’s tolls for building bridges or whatever, it has to be the same comparison. It seems like it’s totally different from what you would expect from this province.”

As some people cannot afford to leave the province and others cannot afford to visit, Button said this problem is not just a Port aux Basques problem, but a provincial problem.

“What it means for the province as a whole, for everything, for our goods and services, for our tourism, we are doing a great job in this province promoting the province and inviting people to come and spend time with us spend, but when you’re trying to figure out your expenses, you’re a family of four, you’re towing a trailer, there’s a lot to consider. Spend the money and take the time to explore the province of Newfoundland and Labrador, or take your trip where your money goes 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 regular 4-berth cabin to NS and return costs $805.74. This does not include food or pets and does not take into account larger vehicles such as caravans. It includes a fuel surcharge of $13.95 for passengers, a fuel surcharge of $13.14 for vehicles and a security fee per crossing.

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

Over the past five years, passenger and commercial fares have fluctuated slightly based on fare and fuel surcharges.

From April 1, 2017 to April 1, 2022, passenger vehicles, including pickup trucks up to 20 feet, had a fare of $101.05 per crossing, but the variations for passenger vehicles are in the fuel surcharge, which increased from $15.16 in 2017 $18.19 increased in 2018 and 2019, then to $13.14 in 2020, 2021 and 2022.

For commercial vehicles, particularly over 70′ to 80′, there have been fluctuations in both tariff and fuel surcharge.

On April 1, 2017, these commercial vehicles were priced at $547.45 with a fuel surcharge of $82.12.

Effective April 1, 2018, the rate remained the same; However, the fuel surcharge rose to $98.54.

As of April 1, 2019, both the fare and the fuel surcharge have been increased. A commercial vehicle was priced at $558.40 with a fuel surcharge of $100.51.

Effective April 1, 2020 through April 1, 2022, both the tariff and fuel surcharge remained the same; However, the numbers swayed in different directions. The price was $569.55, an increase from 2019, and the fuel surcharge was $74.04, a decrease from 2019.

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

“Marine Atlantic is a crown company. I have a relationship with the board and the CEO. We speak fairly regularly and when it comes to a Crown Corporation operating with taxpayers’ money, their duty, as with any company, is to be as efficient and cost-controlling as possible. That being said, as Newfoundlands and Labradors, we have the constitutional right to ferry service from Port aux Basques to mainland Canada,” Hutchings said.

“So I always challenge them. How can we make it cheaper for Newfoundlands and Labradors to travel by ferry and get our goods and services back here? I keep asking myself, “How can we think outside the box? How can we do that?’ because the bottom line is, whatever you call it, we’re making it more affordable for Newfoundlands and Labradors.”

Hutchings believes the war in Ukraine is also playing a role.

“Even so, I know the rate base hasn’t increased in recent years, but the other thing we forget, and I know it’s a tough time for all Canadians, especially Newfoundlands and Labradors and people in rural areas. but this war in Ukraine has so much impact on so many things: fuel, flour, goods and services, getting things and I think people don’t think about it and don’t see the impact it’s about the world and about it us,” said Hutchings. “It’s not a Canadian problem, it’s a global problem. Until this terrible, tragic, sad war is behind us, how can Marine Atlantic and everyone else think outside the box to deal with these issues at hand.”

Not only consumers are affected, but also companies. Some try to absorb as much of the cost as possible rather than simply passing it directly on to their customers.

Victoria Collier, who recently opened an independent grocery store, said transport costs have not directly affected her ability to import goods, but rising costs are affecting her bottom line.

“Some things have gone up in price since I’ve been here and it’s only been two weeks,” Collier said. “Basically, if the costs keep going up, it would hurt the store’s profits because I don’t want my prices to be extremely high. In certain areas there are a lot of older people who don’t necessarily have a lot of money to make, so I want to continue to reach out to them and keep the prices a little low.”

Darrell Mercer, Marine Atlantic’s Corporate Communications Officer, stated, “The Canadian government’s established annual cost recovery target is 65 percent. During the time of COVID-19, the Government of Canada has worked with us to recognize the unique challenges posed by the pandemic.”

In the past five years, Marine Atlantic has met or exceeded its breakeven mission only twice.

In 2017, Marine Atlantic reported a cost recovery ratio of 67 percent. In the following year, this fell slightly to 65.5 percent, but still reached its target.

In 2019-2020 it fell to 63.7 percent, and in 2020-2021, during the peak of the global pandemic, it fell to 55.2 percent. Last year, when things reopened and were combined with some tourism tariff initiatives, it recovered slightly to 60 percent.

An initial commercial fare increase on April 1, 2021 was later reversed in response to the “significant strain” on Canada’s economy, and customers were reimbursed the difference.

Crown Corporation’s cost recovery ratio remains at 65 percent.

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