POLITICS

Nova Scotia government gives $5 million more to ferry service to Maine

10/14/2014 10:10 EDT | Updated 12/14/2014 05:59 EST
HALIFAX - Another $5 million in public funds will be spent to help the troubled ferry service between Yarmouth, N.S., and Portland, Maine, and more money could be set aside in the future, the provincial government said Tuesday.

The new funding brings the total amount of taxpayers' money for the service to $26 million after Nova Star Cruises went through a $21 million seven-year loan in the first two months of the sailing season.

Economic Development Minister Michel Samson, who last year announced that the recently elected Liberal government amended the loan deal in an effort to better protect public funds, said the new money was needed to cover the operation's costs.

"Nova Scotians said yes to us and they said yes to getting that ferry," Samson said. "A tremendous amount of work had been done and we felt that we had to give this a go."

Samson said the money is intended to help cover outstanding costs from the inaugural sailing season, which ended Tuesday, three weeks earlier than planned due to a lack of passengers.

"The numbers are nowhere near what the company originally projected and revenues were not enough to cover its costs during this initial season," said Samson.

He said the new money will be used to cover fuel, insurance and crew costs. Some of it may likely also go towards future costs, he added.

Samson said he has directed the company to pursue all leads in a bid to find winter work for the vessel. There is no agreement for such work and Samson said the ship could face significant costs for expenses such as berthing.

He said discussions were ongoing about more potential help from the government.

"What I'm telling you today is we also have to be prepared in case there is no winter work," he said.

The previous NDP government promised last year to revive the service after killing it early in its mandate in 2009 by eliminating an annual subsidy. That subsidy totalled $15.7 million over the last four years that the ferry service was in operation, which began in 1997.

Last November, shortly after they were elected, the Liberals amended a deal signed by the NDP that Samson said at the time would give the province greater oversight of the ferry operator's finances.

Under the new interim agreement for the additional funding announced Tuesday, $90,000 will be spent on an adviser from KPMG with ferry experience to audit costs, look for savings and advise on a plan for future years.

Samson said the new agreement also calls for detailed financial reporting to the province, including weekly cash-flow projections and immediate reports on any cash-flow problems.

The government said the ferry picked up business towards the end of its season, meaning visitors spent an estimated $13 million.

Samson said the government is also trying to get the vessel's owner ST Marine to make a $3 million contribution that was stipulated in the original agreement, but the company was looking for evidence of a long-term commitment from the province.

Progressive Conservative Leader Jamie Baillie said there had to be an end at some point to the government writing cheques every time the company comes calling. But he said he agrees with the latest offer of financial help.

"We agree with giving the ferry a chance and today is giving it a chance, but the time has come to see a plan to see where this is going in the future," he said.

Yarmouth Mayor Pam Mood said she believes the government money is well spent, given that it has provided an economic boost to an area of the province that needed it.

She was asked whether there was a point where funding from the province just wouldn't be viable.

"I'm sure there's a point, but I can say we haven't reached that yet, not nearly," she said.