Higgs government won't agree to fund last part of New Brunswick Naval Centre construction

The Higgs government says it won't be handing over any more money to build the last element of a controversial shipyard in northeast New Brunswick.

Ottawa dropped $4 million in taxpayer dollars on the provincially-owned New Brunswick Naval Centre in Bas-Caraquet this week, then challenged the province to kick in an additional $1 million for a slipway.

Groupe Océan, one of the shipyard's tenants, says it needed the slip in place so it could bid to build and repair larger boats. Liberals say the provincial money would be the final major chunk of public funding required.

"We're approaching the finish line," Acadie-Bathurst Liberal MP Serge Cormier said. "It's like you've been running a marathon and you've got 300 metres left and you decide to turn around. That's what the Higgs government is doing."

But Hélène Bouchard, the president and deputy minister of the Regional Development Corporation, told CBC News the province won't be funding the slip.

"We do not see that there is a business case at this point that has been proposed that we would be able to support," she said.

Groupe Océan's future in Bas-Caraquet left hanging

Higgs said last week in Question Period that previous provincial funding for the facility amounted to "abusing taxpayers' money."

Quebec-based Groupe Océan said the decision calls into question its future in Bas-Caraquet. "Without a slip, we don't have a business case," said spokesperson Philippe Fillion.

Fillion said the slip, which would allow boats to be moved between the water and the yard, was part of the contract it signed with the province and it was supposed to be finished in March 2018.

"And now they're saying there's no business case," he said. "I find that a little strange."

Several other companies also build and repair ships at the yard, employing about 125 people. "They're actually doing well," Bouchard said.

But Océan has missed the chance to bid on contracts for larger boats because the slip hasn't been built, Fillion said.

Bouchard said the government wants Groupe Océan to stay at the naval centre, noting some of the infrastructure there was built specifically for them. "If the company decides to withdraw, we'll evaluate our options at that point," she said.

The $4 million announced by Cormier this week was the last instalment of $10 million promised by the Atlantic Canada Opportunities Agency in 2017.

The naval centre has been a point of contention between the Liberals and Tories since 2016, when the Gallant government bought out the facility with an estimated cost to taxpayers of $38 million.

The Liberals blamed the previous PC government of David Alward for the fiasco, pointing to the way the deal was structured under a memorandum of understanding signed by the Tories just before the 2014 election.

The Naval Centre was established as a non-profit corporation overseen by the town of Caraquet and the village of Bas-Caraquet, a set-up the Liberals said they only learned of after taking office.

Because of legal limits on how much money municipalities can borrow, the shipyard was short on cash in 2015 and had to shut down.

The PCs said their initial deal was meant to eventually include private-sector investment and said the problems were due to Liberal mismanagement.

After the Liberal bailout, the government renegotiated the lease agreement with Groupe Océan in an effort to lower the cost to taxpayers.

Bouchard said the shipyard ran a deficit of $140,000 in 2017-18. "We are not to the point of making money yet, but we are progressing," she said.

Higgs has repeatedly denounced the entire arrangement, though he was the finance minister in the Alward government that approved the original agreement.

Last year ahead of the provincial election, the president of the PC riding association in Caraquet told a partisan crowd that Higgs had played a role in making the shipyard happen.

But in Question Period last week, the premier again criticized the operation, particularly the fact the floating drydock Océan has been building in Bas-Caraquet will be transported to its Quebec City shipyard to be used there.

"Here we are creating jobs in a shipyard in New Brunswick to set up competition in the province next door," he said in the legislature last week. "What kind of economic strategy is that?"

Fillion said the point all along was to use work on the drydock to train the Bas-Caraquet workforce so they could take on future contracts — contracts now in jeopardy with no slip.

"Rather than focus on where the drydock is going, Mr. Higgs should focus on what we did with that drydock," he says. "We created jobs, we trained a workforce, we created spinoffs."

Higgs said last week that he wants the facility to continue to operate, but not with ongoing subsidies.

"I want to work with the community of Bas-Caraquet," he said.

"I want to develop a sustainable long-term vision for that shipyard, one where we see a future for people staying and working there, not one that requires a continuous financial contribution from taxpayers to stay afloat."