$3 billion in taxpayer money down the drain is no small thing

Taxpayers shouldn't be paying billions to subsidize cruise ship repairs

By -- Aaron Wudrick, Federal Director—— Bio and Archives--January 22, 2021

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It’s hard to believe spending $3 billion in taxpayer money to subsidize repairs for cruise ships and other private shipping made it on to Ottawa’s to-do list during the pandemic.

Yet the Ottawa Citizen’s David Pugliese broke the story that Canadian taxpayers will soon be forced to put billions into bankrolling a government shipyard that will overwhelmingly benefit a few private businesses.

The federal government’s plan to convert the Esquimalt Graving Dock (EGD) repair yard on Vancouver Island into a full-service ship construction facility.

The EGD is the last major government-owned shipyard in Canada, with other formerly government-owned facilities having mercifully been sold. The EGD has always been a repair shop rather than a full-service facility.

It may be government-owned, but around 80 per cent of EGD facilities are leased at heavily subsidized rates to private entities, including B.C. Ferries and Seaspan Shipyards, an American company.

But now, Public Services and Procurement Canada, which manages EGD, says spending billions to upgrade the facility is necessary to support the Royal Canadian Navy. Taxpayers should be skeptical.

Of the more than 200 ships projected to use the EGD in the next decade, only 27 are Navy, Coast Guard or other government-owned ships. The rest are all private vessels – including 34 cruise ships. 

Obviously, there are plenty of doubts about the ability of the cruise ship industry to rebound in the wake of the pandemic. That’s all the more reason to question the wisdom of the federal government committing taxpayer money to this project. After all, if the primary purpose of the shipyard is to be leased by private businesses for the purpose of servicing other private businesses, what are taxpayers getting out of it besides bearing risk and costs that should be borne by those businesses themselves?

It can’t be the need for a repair shipyard on the West Coast, since there are a number of private facilities already operating.

And this can’t be a job-creation scheme because jobs at the EGD would be coming at the expense of other large shipyards in Canada capable of servicing Navy vessels. At least two, Davie in Quebec City and Irving in Halifax, don’t enjoy the kind of pipeline of taxpayer cash planned for EGD. Is it really fair for these other private shipyards to compete for federal contracts against their west coast competitor that gets a $3-billion leg-up?

It goes without saying that the pandemic has crippled the federal government’s finances, between hundreds of billions in unplanned emergency spending and a sharp drop off in tax revenues. The federal debt now exceeds $1 trillion and this year’s deficit alone will be close to $400 billion. It’s a time for focusing on the essentials, not splashing out big-ticket projects with the flimsiest of pretexts.

Even in the pandemic spending era, $3 billion in taxpayer money down the drain is no small thing. Spending taxpayer dollars on misguided projects is outrageous at the best of times, but given how bad the books are in Ottawa these days, failing to nix this wasteful plan to subsidize cruise ship repairs would be truly missing the boat.

(This column originally appeared in the Ottawa Citizen)


Canadian Taxpayers Federation -- Aaron Wudrick, Federal Director -- Bio and Archives

Canadian Taxpayers Federation

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