09/07/2012 08:30 EDT | Updated 11/07/2012 05:12 EST

Nova Scotia premier willing to commit up to $21 million for Yarmouth-Maine ferry

HALIFAX - Nova Scotia Premier Darrell Dexter offered Friday to help revive a ferry link between Yarmouth and Maine, while reaffirming his commitment to a corner of the province critics say has been left to languish for three years.

Dexter said his government is willing to commit up to $21 million to relaunch the ferry service, which was discontinued in 2009 after the province stopped subsidizing the money-losing venture.

"There's no question in southwest Nova Scotia this became a political football," Dexter told a news conference. "It became a method of attack on the government that I frankly believe was totally unwarranted.

"This was not about whether or not we wanted to support Yarmouth. We have always wanted to support Yarmouth."

Dexter said the province would provide the money over a seven-year period if a private operator can be found to run it.

But he said other governments would also have to dig into their pockets.

"The simple fact of the matter is that the province, for many years, had no partner in Yarmouth," he said.

"They had not the federal government, they didn't have the municipalities, they didn't have anybody on the American side. It was just the Nova Scotia taxpayers paying."

Dexter said about $13 million from Ottawa to upgrade the federally owned ferry terminal in Yarmouth would be crucial to the overall project.

But when asked if they would pay for the refurbishment, a spokeswoman for Transport Canada suggested in an email that the federal government was interested in giving up ownership of the facility.

"As owner of the ferry terminal, Transport Canada is committed to working with local organizations interested in acquiring the terminal to re-establish the ferry service," said Maryse Durette.

Dexter's announcement came after the release of an independent panel report earlier in the day that concluded it would require about $35 million in public funds and a significant boost in passenger traffic to ensure the Yarmouth-to-Portland service is viable.

But the panel also said there's no guarantee that resuming crossings would be enough to attract American tourists. Visitors from the U.S. have long been the linchpin of the ferry service, but their presence in Yarmouth had been in decline long before the vessel stopped running.

Bay Ferries Ltd. announced in December 2009 that it would end high-speed ferry service between Yarmouth and Maine after the provincial government said it would no longer provide an annual, $6-million subsidy.

Mark MacDonald, chairman and CEO of Bay Ferries, said in an email Friday that the company was still reviewing the panel's report.

Yarmouth Mayor Phil Mooney said he was looking forward to sitting down with the provincial government and discussing the future, including financial help.

He said the last three years have been tough on the region, with disappointment deepening every time another business that catered to tourists shut its doors.

"When they first cancelled the boat, I was probably one of the most vocal critics of the government," Mooney said from Yarmouth.

"I don't want to look backwards. ... I'm more than happy with this announcement today."

The opposition parties, however, said the report was three years too late and came at the expense of southwest Nova Scotia.

Zach Churchill, the Liberal member for Yarmouth, called the premier's financial commitment "encouraging," but said damage to the region's tourism sector has already been done.

He also questioned the report's timing.

"This report clearly articulates a lot of the points that proponents of the ferry have been making over the course of the last three years," he said. "So why do we wait going into an election year before this happens? That's an interesting question."

Conservative Leader Jamie Baillie said Dexter owes southwest Nova Scotians an apology for "putting their economy through the ringer."

"Nothing today is different than what could have been without losing the service in the first place," he said.

The four-member panel, appointed in April, was not required to make a recommendation on whether the provincial government should re-establish the service.

However, its report outlines a new business plan that could see the ferry's operator break even in the seventh year and make a "modest" $1.3-million profit in the 10th year.

In order to achieve that, the panel said the ferry should offer its passengers a cruise-like experience with overnight cabins, on-board entertainment and dining options, as well as competitive ticket prices.

The panel's report said the ferry carried 75,000 passengers in its last year of service, down from 165,000 in 2002. It said more than 135,000 passengers would be needed annually to make a new service commercially viable.

Panel chairman Peter Nicholson said a future ferry service must tap into the northeastern U.S. market down to Washington, D.C., and its 70 million potential visitors to be successful.

"It's more than twice the size of Canada and it's a very affluent market, and it's a highly accessible market," he said.

"The potential certainly exists to mobilize the kind of traffic we're talking about, but by the same token, the competition for the tourist dollar has increased very substantially and continues to."

The $35 million in government funding would, in part, share or cover operating losses of about $20 million in the first six years. It would also fund an advertising blitz before a projected launch in the spring of 2014.

Panel member Elizabeth Beale cautioned that the region's economic woes won't be fixed by the ferry service alone.

"This is no panacea to all the changes we've seen in southwestern Nova Scotia and indeed in many rural parts of the province," said Beale, president and CEO of the Atlantic Provinces Economic Council.

"We have to be very careful with not ascribing all the challenges in southwest Nova Scotia to the problems in the tourism industry, or alternately thinking that tourism indeed will be the saviour for all communities."