CFOA in the News: New Digby ferry worth the cost — experts

Chronicle Herald - December 11, 2014

DIGBY — The new ferry soon to be plying Bay of Fundy waters between Digby and Saint John came with a hefty albeit fair price tag, industry sources agree.

Government received value for its money, but the added cost of getting the ship into the country was a bit prohibitive, the head of one organization says.

A 25 per cent tariff applied to passenger ships shorter than 129 metres that are bought overseas by Canadians to service Canadian routes had to be paid on top of the purchase price, said Serge Buy, chief executive officer with the Canadian Ferry Association.

But since the Canadian government bought and owns the former Greek ferry Blue Star Ithaki, temporarily known as Canada 2014, did it pay the tariff?

Yes, the government paid itself.

“The import tariff was applied and was paid separately upon the vessel’s arrival to Canada,” said Ben Stanford, Transport Canada spokesman, in an email.

But the tariff added to the $44.6-million purchase price has rankled the association.

“We’re a little bit tired of this, to be frank, and we’re certainly hoping it’s going to stop,” said Buy.

The ship was still a fairly good deal for Canada, he said.

“I think it’s a good price. We don’t think the government has overpaid for that ship.”

The 124-metre ferry was built in Korea in 2000. The ship was found and procured in Greece by Public Works Canada.

Until 2010, all ships purchased internationally were subject to duties of 25 per cent if the ships were brought into Canada, said Buy. That year, government changed and the tariff on all ships except passenger vessels shorter than 129 metres was cancelled.

Government did this to protect shipbuilding, Buy said.

“But that industry is busy, working flat out from coast to coast. There is a huge demand to renew the Canadian (ferry) fleet.”

He said the average age of vessels is 42 years.

The tariffs are going to disappear, thanks to the European trade agreement that was signed recently. A Korean free trade agreement and others will also help remove the tariff in about eight years, said Buy.

“We expect that there’s about $750 million worth of ships that will have to be purchased by Canadian operators in the next five years,” he said.

Some may wait for the tariffs to disappear, he suggested.

Operators should not have to pay the tariff because that’s money that could be spent on servicing routes, job creation, ship maintenance and repairs, said Buy.

He said about 170 routes are served by 281 ferries in Canada.

West Nova MP Greg Kerr and Saint John MP Rodney Weston said in an earlier statement that they will provide an update in the new year on when the Bay of Fundy ferry will enter service and the naming process.

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