Last week, the CBC uncovered a major discrepancy in the federal government’s plan to build a series of ice-breakers for Canada’s Arctic waters. Public Works Minister Rona Ambrose has awarded a $288 million contract to Irving Shipbuilding for the design of new patrol vessels, which excludes the cost of actually building the ships. Other countries have been able to design and build similar ships for a fraction of the cost. Norway launched ice breaking patrol vessels for less $100 million in 2002.
Public Works has responded with a public statement claiming that project includes not only design but also a significant amount of preparatory work that accounts for 30% of the total project budget.
The government’s response to the CBC report: “This “design then build” plan will help mitigate cost and schedule risks in the build contract. Reducing design and production uncertainties up front also reduces risk for the Canadian taxpayer over the long term.”
The government news release also highlights the commitment to create high-skill jobs in Canada. If the project goes according to plan, proponents of the plan have suggested that it could revitalize Canada’s moribund shipbuilding industry. Residents of Canada’s west coast will remember this refrain well from the 1990s. Will the Arctic Offshore Patrol Ships program be Stephen Harper’s own Fast Ferries Scandal?
Fast Ferries Controversy
In 1994, the NDP government of British Columbia announced an ambitious plan to rebuild Canada’s shipbuilding industry, creating jobs, skills and using the domestic market as a launching pad to compete on the world stage. A $210 million contract for three high-speed catamarans for use on the high traffic routes connecting Vancouver Island and the mainland was the beginning of a ten-year capital plan that would meet the needs of BC Ferries and offer development opportunities across the province.
By the time the ships were ready in 1999, the cost of the project had more than doubled to $450 million. Worse yet, technical problems with the design led to service delays and the ships required costly repairs. A 1999 Auditor General report on the project effectively sunk the BC NDP’s chances for re-election and the party was reduced the two seats in the 2001 provincial election.
The report’s key findings concluded: “The decision to build fast ferries was not supported by sufficient information and analysis to demonstrate that the ferries would meet either BC Ferries’ needs or the government’s public policy goals in a cost-effective manner”
BC Liberals have frequently attempted to restoke the controversy throughout their three terms of power. Former premier Gordon Campbell conducted a scorched-earth fire sale of the assets in 2001, selling them below scrap value. The issue remains fodder for attack ads from the Liberals, the Canadian Taxpayers Federation and other right-wing groups and a millstone for current NDP leader Adrian Dix’s in his election campaign.
Despite the technical problems and financial overruns, there were significant achievements from the program. Over 350 workers received training from the project, including international welding certification. The BC Shipyards Workers General Federation lists the fast ferry program as “the only real bright spot for B.C. shipyards throughout this long period of uncertainty” since the 1980s.
More recently, in 2011, BC-based Seaspan won an $8 billion shipbuilding contract, part of the federal government’s plan to refurbish Canada’s navy, while promoting a Canadian shipbuilding industry. The BC government responded by creating a shipbuilding workforce table to help coordinate the local industry and workforce and touts the contract as a major opportunity for the province. The project figures centrally in the BC Liberals campaign as evidence of their economic acumen. Ironically, it was the Fast Ferries Program that built the capacity in British Columbia for Seaspan to be in a place to bid on the federal contract. Without the Fast Ferries, it is unlikely that the province would be projecting a billion dollar per year shipbuilding industry. This point is glossed over by both the BC media and Liberal premier Christy Clark.
Comparisons and lessons
Mutato nomine de te fabula narratur (Change the name and the story is about you). – Horace
In 2009, the federal government announced an ambitious plan to rebuild Canada’s shipbuilding industry, creating jobs, skills and using the domestic market as a launching pad for building an industry that could compete on the world stage. Already there are apparent cost overruns and, in the case of the Irving Arctic Offshore Patrol Ships contract, a lack of transparency. There are close parallels between Fast Ferries and the patrol ship design contract.
There is a major difference in how the project is being portrayed in the media and its political effects, at least up to now. While the Fast Ferry controversy dominated headlines in British Columbia for several years, thus far no major corporate-owned media has covered the cost controversy at Irving. As yet, the corporate and political elite in Canada still clings to Harper’s Conservative government and is unlikely to abandon it over a few unexplained hundreds of millions of dollars.
While the laissez-faire economy was a product of deliberate state action, subsequent restrictions on the economy started in a spontaneous way. Laissez-faire was planned; planning was not. – Karl Polanyi
This parallelism further underlines the irony, that despite the laisez-faire rhetoric, the Harper Conservatives, no less than the BC NDP, rely on government intervention to stimulate the economy. As University of Manitoba political economist Radhika Desai points out in her recent book Geopolitical Economy, industrial development has rarely occurred spontaneously and, in all but the most unique circumstances, has required state support for private industry, particularly to launch expensive and complex industries like shipbuilding.
This has been especially true at moments of economic crisis. In times of turmoil, even the most ardent supporters of the laissez-faire liberalism rely on state intervention to keep the economy moving.
The differences between political parties are not a matter of which party supports intervention in the economy, the myth of free-market conservatives versus free spending socialists notwithstanding. All governments get involved with the market. The differences come down to how which interests that intervention supports: is it primarily oriented to increasing profits, or does it work to improve the rights and conditions of working people and reduce inequality.