Internal reallocation of resources from Capital to Contributions to undertake vessel repair and maintenance work to be carried out by the ferry operators
Requesting vote transfer of $9.2 million (M) through the 2020-2021 Supplementary Estimates B
Transport Canada (TC) is seeking to transfer $9.2M in capital funding (Vote 5) allocated for the Eastern Canada Ferry Services to the Grants and Contributions Vote (G&C) (Vote 10).
Key Messages:
- Budget 2017 provided approximately $278 million over two years to support three ferry services in Atlantic Canada and Eastern Quebec through to March 31, 2022.
- A vote transfer of $9.2M is being sought through the 2020-21 Supplementary Estimates B from funding allocated for the Eastern Canada Ferries Services from Capital (Vote 5) to Grants & Contributions (Vote 10).
- Through the Ferry Services Contribution Program, TC supports three inter-provincial ferry services in Eastern Canada, including service between: Îles-de-la-Madeleine, Quebec and Souris, Prince Edward Island; Saint John, New Brunswick and Digby, Nova Scotia; and Wood Islands, Prince Edward Island and Caribou, Nova Scotia.
- TC owns the six terminals and four ferry vessels used to provide the services. Funding is provided to private operators to cover operating deficits, including to maintain TC’s terminals and vessels.
- Safe and reliable ferry service provides essential services to residents, link communities and support the regional economies through the transportation of goods and other economic activities, such as tourism.
- TC is seeking to transfer $9.2M in capital funding allocated for the Eastern Canada Ferry Services (Vote 5) to the G&C (Vote 10), to be used in 2020-21:
- The funds will be used to offset the cost of COVID-19 related operating deficits for the three ferry services stemming from travel restrictions, the continued requirement for social distancing and the reluctance of the general public to travel for leisure purposes; and,
- the additional funding is also required to undertake additional major repair work required to keep the existing vessels safe and operational, as the nature of these projects has shifted from capital to maintenance, given the age of the vessels.
- The funding will help to ensure safe and reliable ferry service for users and support the local economy.
If pressed:
- The funding will be used to invest in essential repairs on the MV Madeleine to ensure safe operations and service continuity on the Iles-de-le-Madeleine – Souris route until the new interim replacement vessel, the MV Villa de Teror, enters into service in summer 2021.
- Ferry revenues for 2020-21 are expected to decline by approximately 55% given travel restrictions, lower ridership and the continued requirement for social distancing as a result of the COVID-19 pandemic.
Background
- Through the Ferry Services Contribution Program, contribution funding is provided to ferry operators to cover: 1) operating deficits (revenues minus operating costs); and 2) expenditures made to maintain and repair Transport Canada’s assets (vessels and terminals) for the safe operation of the ferry services.
- Budget 2019 announced that the Ferry Services Contribution Program would be extended until 2022 with existing service levels and fleet size. It was also announced in the budget that the Government would procure two new vessels from a Canadian shipyard to replace the MV Madeleine and the MV Holiday Island as both ferries are at the end of their useful lives. The new vessels are expected to be in service by 2026-27.
- Due to the age and condition of the vessels, maintenance costs have significantly increased in recent years. In accordance with Classification Society requirements, passenger vessels must be drydocked twice within every five year period.
- On July 2, 2020, the Government announced that it is purchasing a temporary replacement for the MV Madeleine providing ferry services between Iles-de-la-Madeleine and Souris, Prince Edward Island. Officials from Transport Canada and Public Services and Procurement Canada are currently negotiating the final contract with the existing owner of the vessel. The vessel is expected to enter into service by summer 2021.