News: Opposition MHAs press Tories on $25M ferry tariff

Questions about cost to taxpayers come in wake of CBC Investigates story on federal levy

CBC - November 28, 2014 

The Liberals and New Democrats grilled the Tory government in the House of Assembly Thursday about a federal tariff that could result in a $25-million hit to the provincial treasury.

CBC Investigates revealed that the province is on the hook for the levy, unless it can convince Ottawa to waive it — something that has only ever happened once for the same class of vessels.

The government won’t say whether other unsuccessful bids from countries that aren’t subject to the 25-per-cent tariff would have cost taxpayers less.

Liberal MHA Tom Osborne led off question period.

“Last November, the minister of transportation confirmed at the announcement of a new ferry vessel that tariffs were included in the $51-million cost,” Osborne said.

“He reconfirmed that in this house on Dec. 2, less than a month later. Today it is a different story. I ask the minister: Will you now confirm that if the federal government does not waive the $25 million in tariffs that the contract bid for the two new ferries was not in fact the lowest bid?”

Transportation Minister David Brazil replied.

“We have a responsibility, this administration does, to provide vessels that provide the service to the people in this province — safe, reliable vessels that are state-of-the art,” Brazil said. “Mr. Speaker, it is this administration that put in the first ferry replacement strategy in this province's history. We’ve done that.”

Osborne tried again.

“Mr. Speaker, that did not in any way answer the question that I asked so I will ask it again,” Osborne said.

“If the federal government does not waive the $25 million in tariffs on these two new vessels will he confirm that the awarded contract is not in fact the lowest bids on these two vessels?”

Brazil acknowledged that his first response did not answer Osborne’s question, but instead outlined the Tory government’s commitment to provide services.

“We announced that we would pay $100 million to Damen Shipyards because they have an expertise second-to-none in this world, to be able to provide services and that is what we have contracted,” Brazil said.

“We are confident that that tariff will be waived. There is precedent already set. My officials and the officials in other departments are working with the federal officials. If I feel that’s not moving fast enough I will intercede with the federal minister. If then it is still felt that it is not moving fast enough the premier will intercede.”

NDP questions deal

Later in question period, NDP MHA George Murphy took up the attack.

“A media report today tells us that taxpayers in this province may be dinged by a $25-million federal tariff for ferries that are being built outside the country, specifically in Romania,” Murphy said.

“This government claims openness and transparency. Why won't the minister release the unsuccessful bids to prove that government made a good deal for the taxpayers of this province?”

Brazil defended the process that led to the selection of the winning bidder.

“The tariffs that are being levied on this will be removed,” Brazil said. “There will be no tariffs coming here, we are confident in that.”

Nearly a third of the time alloted for Thursday’s question period was dedicated to questions about the ferry tariff.

The province announced the award of the two ferry contracts to Damen Shipyards of the Netherlands a year ago. The vessels are being built at a yard in Galati, Romania.

The new Fogo Island/Change Islands ferry is scheduled for delivery in September 2015, while the Bell Island sister ship will follow in February 2016.

The tariff is payable when the ships are delivered, unless Ottawa grants the province’s waiver request.

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