Fare Game

Gerry Byrne and the Ferry Dodge

Gerry Byrne is a queer hand.

According to Gerry, Marine Atlantic ferry rates are why the economy in Newfoundland is in the crapper.

That’s what he told VOCM’s fill-in host Anthony Germain on Open Line a couple of Mondays ago.

Seriously.

That was his argument to get rid of Marine Atlantic ferry charges. Not just freeze or lower ‘em. Get rid of ‘em.

Utter nonsense. Not a shred of evidence to back it up but there was Gerry telling us about the imaginary Prince Edward Island miracle that supposedly came with the new bridge in PEI and lower charges for driving than for riding the ferry as if that were even possible in Newfoundland. Therefore, said Gerry, leaping across the Gulf of St. Loonacy that we’d see the same benefit here with the announcement Gerry knew was coming later that day from Uncle Ottawa.

What can you tell me about this severance allowance, Anthony asked.

Don’t remember any talk of it, sez Gerry. You could hear his nose growing so large it was sweeping the coffee cups, papers, and Gerry’s feet off Gerry’s desk and pushing through the wall as it grew and grew.

Then he launched into another tirade that showed he knew all about the allowance. Gerry kept going. Turned it into a cheesy attack on the Pea Seas. This MHA pay commission stuff like the one Gerry and his buddies rejected out of hand doesn’t work because no report by a commissioner has ever been accepted, so put it in a campaign platform.

Just nonsense. None of the reports has ever come back with outrageous ideas. All Gerry’s crowd had to do is accept the report, as others have done. Oh yes, Gerry was wrong about that too. Anyway, Gerry went back to last year, desperately trying to climb out of the hole he and his buddies dug for themselves by doing something actually quite straightforward and then lying about it.

Liberals think this won’t matter come voting time. They are wrong. People are adding it to the tally against Gerry and his buddies, just like they tallied against the Pea Seas a decade ago on the stuff they did. Premier Davis never expected to hand over to Premier Ball just like now no one can imagine Hogan handing over to Wakeham. Make a bet with a Liberal and you will probably make a lot of money come election night.

The important thing for us, though, is that Gerry made some claim about the Terms of Union and ferries, which was just as far removed from reality as everything else he was talking about. The Terms of Union say very simply at Clause 32 that “Canada will maintain in accordance with the traffic offering a freight and passenger steamship service between North Sydney and Port aux Basques, which, on completion of a motor highway between Corner Brook and Port aux Basques, will include suitable provision for the carriage of motor vehicles.”

That’s it. Nothing about cost or the type of service. Note those words “in accordance with the traffic offering….” We’ll come back to them.

Gerry’s politics are so common in Newfoundland and Labrador there’s even a name for it: Pinocchiosis. The Gerry variant we could call Pinocchiosis Boyle because it is more like something from a Codco sketch or 22 Minutes - remember Gerry Boyle? - than what you should get from such an experienced politician as Gerry Byrne.

Of course, we know just how windily out to lunch Gerry was in his claims about the ferry fares and economic magic because the announcement later on Monday told us the detail. The official announcement from Ottawa on Monday is that the frozen commercial fares and the passenger rates chopped in half will add $28 million to the economy. That’s what VOCM reported. The result is a drop of about $100 for a couple of people, their car, and a cabin on a typical crossing, not half because the cost of cabins is staying the same. So yeah, this is way less than Gerry cracked it up to be.

Boost to the economy of $28 million.

Let’s no argue. Let’s take it as is.

The economy is about $38 billion right now.

So Marine Atlantic ferry rates dropped by a mere hundred bucks would only make point zero seven percent of a ding in the economy.

Way less than one percent.

Put another way.

Gerry’s severance just from the government bit of his salary was supposed to be about $45,000, roughly 92% of his annual salary in one lump. He’s earned it. Not a problem. Why Gerry and his pals approved the cash and then ditched it without an explanation is a mystery.

But if we paid Gerry in severance the share of the better economy the ferry rate cuts will supposedly bring, Gerry’s severance would be 32 bucks.

Not $45,000.

Just $32.

We also know that ferry rates act as no obstacle for people coming here because the Marine Atlantic spokesman who showed up on television to talk about passenger refunds for August also noted the ferry was already booked up until September and they’ve been doing great business already. In other words, people who want to drive to Newfoundland do it now and pay the fees as they were.

If more people tried to book a crossing now, Marine Atlantic doesn’t have the space to take them. Same thing next year. There’d be sense in dropping fees if there was spare space, that is, if it were clear people were deterred from coming to Newfoundland and Labrador by the fees such that there were empty berths and the car decks were looking empty on more than a couple of crossings.

Lowering fees won’t bring more people if there are no ferries to carry them. People will call up and find there’s no space so they won’t come. What we need to watch out for is that the artificial increase in demand from subsidized crossing fees will become an excuse to add more capacity. More ships, in other words. Buy them or lease them. That will drive up costs but - because the fees don’t cover costs anyway - you will never make enough money to pay for the new capacity.

So what’s this ferry stuff about?

Well, it isn’t about economics. it makes no economic sense. The people behind this political scam are like Howard Luttnick, Don Trump’s commerce secretary, who Jonah Goldberg said has a thumbless grasp of the subject.

It’s about political nonsense. As another wag put it, the Marine Atlantic Ferry is to west coast Liberals what the seal hunt is to some Pea Seas. They are mad for it even though whatever they want to do won’t make a difference to anything or is never going to happen for a whole bunch of good reasons.

This ferry scheme is absolutely not about anything that would actually bring more tourists to the west coast, let people from Newfoundland drive off the island, and - to get to Gerry’s claim - create jobs and make the economy grow.

This is where we bring the words “in accordance with the traffic offering” itself to be carried by the passenger and freight steamship or a ship capable of taking cars. Marine Atlantic does that right now. One hundred percent. Terms of Union met. But let’s just play with this a bit. You can get that traffic by artificially lowering rates at public expense but that business will only last as long as the subsidy exists. And by definition, since the carrying capacity of the ferries is limited, once you are maxed out, the only way to add more capacity is to add more cost, that is leasing or building a new ferry. The drawback is that you are not adding more total revenue. In fact, the more cost you add (including the subsidy), you’ll never get your money back. The whole scheme is doomed to collapse.

Subsidy and its cousin Protectionism cannot fix the problem in Newfoundland and Labrador. Forget the passengers and their cars. What you need to lower the cost of the service and pay for any expansion is something to ship out on the trucks that are coming in loaded with lots of expensive goods and going back empty.

Trucking companies make money carrying loads. They are like ships, which for years carried fish from Newfoundland and Labrador to Europe, the Caribbean, and the United States and brought back food, clothing, furniture and all sorts of other things. Same as planes these days that need to carry passengers both ways to break even or make money. To make trucking and the ferry system work to and from Newfoundland, those trucks that come here with food and goods need to have something to take back the other way.

The way to increase traffic going out of the province is to change the rules so that manufacturers could set up business here and ship things out. Like beer, wine, and liquor. We’ve got craft breweries, wineries, and distilleries including ones owned by the provincial government’s liquor corporation. There’s a limited market for that product here but across North America, there’s a massive market of nearly 400 million. Easiest way to open that market is interprovincial free trade, for starters, but Gerry and his Cabinet buddies oppose absolutely any free trade in liquor, wine, and beer. Not gonna happen as long as they are in charge.

In fact, Gerry and his pals are so opposed to trade, generally, they just got caught trying a tax grab by redefining what low alcohol beer is. They targeted craft brewers as they try to push into a growing market. Right away, the provincial government - through its liquor monopoly/regulator - redefined what amount of alcohol means low alcohol so that only liquor corporation could sell it.

As it is an election year and the Liberals are desperate to stay in power, they have already promised to back off the tax grab. But otherwise, you’d bet they’d be sticking to their cash-grabbing guns. The importance of this example is that in grabbing the cash, no one in the provincial government obviously cared for the negative impact it would have on the people taking the risk to start a new business and create jobs. Lots of bad impact but the politicians and bureaucrats cared about it not one bit. None at all.

That’s where you get the real point not only of the cash grab by the liquor corporation but of Gerry’s nonsense about the ferry rate cut. It’s way easier for politicians to frig around with foolishness and distract people with nonsense than be serious about economic development or anything else.

Politics is far too serious to be playing games.

Gerry’s not running the next time around and his preferred successor lost the nomination fight to replace him.

Gonna be interesting to see what happens and on this trade things what the next government - Red or Blue - does about it.

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