The Canada Infrastructure Bank is providing BC Ferries with a low-interest loan worth $1-billion to finance the purchase of four new ferries.DARRYL DYCK/The Canadian Press
The Conservative Party is calling for an urgent hearing into a $1-billion federal loan for BC Ferries’ purchase of four new vessels from China.
Conservative MP and transport critic Dan Albas has written a letter to his colleagues on the House of Commons transport committee, calling for a summer meeting that would hear from Transport Minister Chrystia Freeland and Ehren Cory, the chief executive of the Canada Infrastructure Bank, as part of a “full review” of the federal loan.
The Globe and Mail reported Thursday that the bank is providing BC Ferries with a low-interest loan worth $1-billion to finance the purchase of four new ferries, which the provincial body has decided to purchase from China Merchants Industry Weihai Shipyards.
The purchase has generated considerable controversy in light of widespread pledges by political leaders to do more to help Canadian manufacturers at a time when Canada is facing stiff new tariffs from both China and the United States, its two top trading partners.
The Editorial Board: Mr. Eby, you are the skipper of BC Ferries
BC Ferries, which provides passenger and vehicle ferry services for provincial coast and island communities, has said that no Canadian shipyards bid on the project and that the decision will help it keep costs down and ease pressure to raise fees for travellers.
Canadian shipbuilder Seaspan, which is currently building various ships for the Canadian Navy, said last year that it would not be bidding on the project because BC Ferries set cost as the primary issue, meaning no bidder would be rewarded for including significant Canadian content in their bids. The company said Canadian shipyards can’t compete with low-wage countries that have lower employment and environmental standards.
The Globe reported that the CIB and BC Ferries reached the loan agreement on March 28 for the new vessels and related infrastructure, but the bank only formally announced the loan on Thursday after The Globe reached out to the bank for comment about the financing.
Mr. Albas said Ms. Freeland must explain why she suggested to the House last week that no federal funding would go to the purchase of the Chinese vessels.
Mr. Albas asked Ms. Freeland last week in the House whether she would personally guarantee that not one cent of the federal government’s operating transfers would go to this purchase.
“I share the concern and anger of other members of this House about the purchase of Chinese ferries,” Ms. Freeland replied last Wednesday. “I have written to the Province of B.C. to make clear that the federal government’s support for BC Ferries, which is explicitly for operating support, must not be used for anything other than the operation of ferries.”
When another Conservative MP asked again about the purchase, Ms. Freeland distanced the federal government from the decision.
“There seems to be some confusion among the Conservative MPs about what is provincial jurisdiction and what is federal jurisdiction. There is no such confusion on this side of the House,” she said.
Ms. Freeland sent a strongly worded letter last week to B.C. Transportation Minister Mike Farnworth expressing her “great consternation and disappointment” with the planned purchase.
The letter referenced a previous $75-million loan by the CIB for four other ferries and Ottawa’s annual grant of about $37.8-million for ferry operations, but did not mention that the bank is also providing $1-billion in low-interest loans for the specific purchase she was criticizing.
Minister of Transport Chrystia Freeland sent a strongly worded letter last week to B.C. Transportation Minister Mike Farnworth expressing her 'great consternation and disappointment' with the planned purchase of the ferries.Sean Kilpatrick/The Canadian Press
The province changed BC Ferries’ governance in 2003 from a provincial Crown corporation to a private company that receives public funding.
Ms. Freeland’s letter was not well-received by B.C. Premier David Eby, who expressed his frustration last week during a radio interview with CKNW.
Mr. Eby said the federal government spends more supporting ferries on the East Coast than the West Coast.
“I’d love an East Coast-style relationship with the federal government on ferries, but if we don’t have that, then, honestly, just mind your own business,” he said.
Ferry service between Newfoundland and Labrador and Nova Scotia is managed by a federal Crown corporation called Marine Atlantic, which receives about $150-million a year in federal funding.
When BC Ferries announced its plan on June 10, it specifically mentioned Marine Atlantic’s history with the same Chinese shipyard.
“CMI Weihai has built vessels for Canada’s Marine Atlantic ferry company and other major ferry operators such as Corsica Linea and Brittany Ferries (France). CMI Weihai’s work on a vessel for Marine Atlantic gives the shipyard direct experience meeting Transport Canada regulatory requirements,” BC Ferries said.
Gary Mason: We have to do business with China – get over it
Shipping industry reports noted that Marine Atlantic took delivery of a vessel last year from the same Chinese shipyard.
For a second day in a row Thursday, Ms. Freeland’s office has declined to comment directly on the CIB loan for the project and whether she was aware of it when she wrote the letter or addressed the issue last week in the House of Commons.
Her office did provide a general statement Thursday. It said, in part, that “the world has changed, and we need to do more to buy and build domestically and from our allies.”
Ms. Freeland’s office has referred questions about the CIB loan to the office of Gregor Robertson, the Minister of Housing, Infrastructure and Communities and a former mayor of Vancouver.
The CIB reports to Parliament through the federal Infrastructure Minister, but Transport Canada is responsible for annual grants to BC Ferries for operational expenses.
Mr. Robertson’s office told The Globe that the minister has asked for a briefing from Mr. Cory, the CIB CEO, “on the kind of considerations this decision raises.”
In an interview, Mr. Albas described the federal support as shocking and said Ms. Freeland needs to provide MPs with an explanation.
“She should come clean and tell us what she knew and when,” said Mr. Albas, who is vice-chair of the transport committee.
“It appears that Chrystia Freeland was unaware of the CIB’s investments while she was tut-tutting the British Columbia government and raising all sorts of concerns about jobs and on national-security concerns.”
Mr. Albas said the federal loan is at odds with Prime Minister Mark Carney’s “elbows up” pledges to prioritize Canadian jobs and manufacturing during the recent federal election campaign.
“The hypocrisy of Prime Minister Carney’s government is that they are, in fact, writing checks to offshore these jobs to a Chinese State Owned Enterprise shipyard. So this is completely at odds with commitments that the Carney government has made to support Canadian jobs, particularly in steel, aluminum and shipbuilding,” he said.
Federal NDP MP Jenny Kwan said the loan shows there is a need for new investment guidelines for the infrastructure bank. “Minister Freeland needs to take action to focus on closing loopholes rather than engaging in performative criticism,” she said in a statement.
B.C. Conservative MLA Harman Bhangu sent an open letter to Ms. Freeland Thursday, calling on her to commit to renegotiating or withdrawing the federal contribution “to ensure it supports Canadian industry, not foreign competitors.”
“This deal is an insult to British Columbia workers and a direct threat to Canadian economic interests,” he said in a statement.