Ferry service awash in problems

It appears that all of the Canadian government operated vessels have reached their tolerance for chronic underfunding at once. The next 20 years should be a boom for the yards as vessels reach the end of their service life and need to be replaced.

Marine Atlantic needs $1.5b, the auditor general tells Ottawa
By STEPHEN MAHER Ottawa Bureau

OTTAWA — Auditor general Sheila Fraser has advised the federal government to pony up about $1.5 billion over 25 years to ensure that Marine Atlantic’s connection between Nova Scotia and Newfoundland is up to snuff.

In a special report issued Thursday, Ms. Fraser bluntly assessed the shortcomings of the constitutionally mandated service, saying it "is at risk of being unable to deliver its services" because of its aging fleet and onshore facilities.

The problems have accumulated over many years, the result of management issues and underfunding, and to fix them, Marine Atlantic must improve its management and must get more money from Ottawa, Ms. Fraser says.

"The fleet didn’t age overnight," she said in an interview Thursday.

"So it was obvious that these questions have been around for a long time. Deferred maintenance — these are problems that have just accumulated over the years and now it’s becoming more urgent that they be dealt with."

Service levels are not good enough now, she said.

"We looked at the 2008 season and found that Marine Atlantic only met its schedule 10 per cent of the time, and it notes in its own surveys a very high level of dissatisfaction with the service," she said.

"Clearly, it’s facing a major challenge with an aging fleet and shore installations that will require a significant upgrade. If there isn’t a plan going forward it’s going to have difficulties meeting its schedule."

Since then, Marine Atlantic has overhauled its management team and chartered a vessel — the Atlantic Vision — that improved the service in 2009.

But that charter will cost more than planned, partly because Marine Atlantic didn’t realize it would have to pay $17 million in taxes.

"The analysis was not as well done as it should have been," said Ms. Fraser.

"Those are the kinds of issues, quite frankly, that don’t give a lot of confidence to federal officials when they are analyzing the plans of the corporation. I should mention though that there has been quite a significant change in management over the last year or so, and a strengthening of the management capacity."

The government has confidence in the new management team, and it will make the necessary investments, said Rob Merrifield, the politician in charge of Marine Atlantic as minister of state for transport.

"I’m committed to addressing the two fundamental problems, which is on-time service and capacity," he said Thursday. "So we will do that. I’m not in a position to say exactly how but I’m seized with the issue. "

Mr. Merrifield said he can’t say how much money the government is prepared to spend, or when it might announce more funding.

"It’s something that as a government we’re going to have to take a look at," he said. "We’ll have a budget in the spring and we’ll see where we go."

Mr. Merrifield said he has been impressed by Rob Crosbie, Marine Atlantic’s chairman of the board of directors.

"He’s taking this as a personal thing," he said. "It’s almost a pride thing. He’s committed to making sure the auditor general’s deficiencies get addressed."

Mr. Crosbie, of the Tory-connected St. John’s family, was appointed in 2006 in place of Vince MacLean, the former Nova Scotia Liberal leader, after the federal Conservatives were elected.

Mr. MacLean’s stewardship of the agency came under question in 2006 when a Chronicle Herald investigation uncovered tens of thousands of dollars in questionable expense spending by senior managers and members of the board of directors. After the story, then-transport minister Lawrence Cannon ordered an audit, which found that some expenses violated rules, including Mr. MacLean’s voyage to an elite resort in Greece for a conference without the prior approval of the board.

But the auditor general’s report Thursday pointed out that an external review found the internal audits of Marine Atlantic did not meet industry standards.

Ms. Fraser couldn’t say whether the internal auditors who studied expense spending at the organization had the necessary independence from Marine Atlantic bosses to do their jobs.

"It’s not always necessarily a problem, but this is of course a very small organization and it would be up to the board of directors to give that kind of oversight to ensure that the internal auditor, especially in a case like that, had the necessary objectivity to be able to carry out the audit."

She couldn’t say whether the organization had been able to bury embarrassing details through insufficiently vigorous audits.

"I guess all we can hope is that action is taken to address the issues," she said. "And I think we can see here that there has been pretty significant change at the board level and at senior management and they have taken significant actions to address issues that have been raised."

Mr. Merrifield said he didn’t know about earlier audits, but he has written to all Crown corporations under his purview to warn against inappropriate spending.

"I don’t know and I haven’t seen any evidence of it but I can tell you what I’ve done, and that’s send a very stern letter to not only Marine Atlantic but every one of them."

Sydney-Victoria MP Mark Eyking says the government ought to commit to spending on Marine Atlantic now, while it is spending billions on infrastructure.

"What happens in a couple of years’ time if they don’t commit this money and if there’s cutbacks in infrastructure? This service will be dilapidated," he said.

Marine Atlantic and the federal government have not decided whether to purchase new vessels, refurbish the two they now own or charter more vessels.

Sackville-Eastern Shore MP Peter Stoffer said Thursday he hopes they will build ships in Canada.

"Anything possible that can be done should be done to ensure work is done here because it is public dollars at the end of the day being spent in Canada," he said Thursday.

With Tom Peters, business reporter, http://thechronicleherald.ca/Front/1153711.html, Pictures from various internet sources

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