The Crown corporation operating the ferry service that links Nova Scotia with Newfoundland is ineffective, inefficient and plagued with serious problems, the federal auditor general says in a report released Thursday.
The scathing, five-year study by Sheila Fraser's office cites Marine Atlantic Inc. for failing to deal with an aging and unreliable fleet, cost overruns, poor planning and maintenance, blown budgets and constant service delays during peak travel periods.
"Marine Atlantic has a lot of issues and I think people are aware of that," said Rob Crosbie, the corporation's chairman.
Crosbie, speaking from his office in St. John's, N.L., said the corporation is working hard to clean up its act, having accepted all of the audit's recommendations.
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He said management has already implemented many improvements over the past couple of years, including a restructuring process that started last fall.
Crosbie stressed the corporation has been preoccupied with drafting a 25-year plan, which is now in the hands of Rob Merifield, the federal minister of state for transport.
"It's an indication of how busy management was. ... It was a very small management group ... they didn't have the ability to deal with that, run the business, fight the fires and implement the initiatives that the auditor general highlighted" in a similar report released in 2004.
The corporation is looking for about $1.5 billion for its 25-year plan, the report says.
"It's a big ask," Crosbie said. "The No. 1 priority is getting an answer on long-term asset renewal."
He said he hopes the antagonistic relationship between Newfoundland and Labrador Premier Danny Williams and Prime Minister Stephen Harper won't get in the way.
The audit found the corporation had trouble meeting traffic demands and has been bedevilled by mechanical breakdowns because of poor maintenance planning.
In July and August of 2008, for example, the corporation's ferries sailed on time only 10 per cent of the time.
As well, the service has exceeded its operating budget in each of the last three years and has failed to meet its cost-recovery targets.
"If the vessels break down, then you're going to spend more money than what you planned," Crosbie said.
The audit also found that the corporation failed to recognize that a five-year charter for a new ferry, the MV Atlantic Vision, would cost significantly more than originally planned — $17 million more.
As for customer service, the report said an internal committee to improve customer satisfaction had stopped meeting.
Cape Breton MP Mark Eyking said it's clear the service needs an injection of cash.
"It's important that calls for investment in the ferry service is getting support from the auditor general," said Eyking, a Liberal whose riding includes the terminal in North Sydney, N.S.
"Clearly there needs to be a new terminal in North Sydney in order to deal with increased freight volume and new ferries are badly needed. It's a shame that at a time when there is so much invested across the country that this service has yet to receive what is required to keep it viable."
Newfoundland Tourism Minister Clyde Jackman said the report confirms what the province has been telling Ottawa for years: Marine Atlantic needs more money.
"We have been encouraged by .... indications that the federal government is taking this issue seriously," he said in a statement. "The auditor general's recommendations are important in that they represent an independent assessment of the situation."
The federal government is obligated to provide the service under the terms Newfoundland negotiated when it joined Confederation in 1949.
The corporation uses four passenger-vehicle ferries to provide year-round service between Port aux Basques, N.L., and North Sydney, and a seasonal service between Argentia, N.L., and North Sydney.
In 2007_08, its operating expenses were about $160 million, of which $73 million was covered by customers and $77 million from Ottawa.
Commercial customers carry about 50 per cent of the goods entering Newfoundland and Labrador, including about 90 per cent of the perishable items.