New Brunswick shipyard bailout draws heat over cost and risk

The New Brunswick government's plan to take over ownership and operations of a financially troubled northeastern shipyard is being met with mixed reviews.

• N.B. government to take over troubled Naval Centre
• Troubled Bas-Caraquet shipyard bailout could hit $15M

Regional Development Corp. Minister Victor Boudreau announced on Saturday a plan to invest up to $38 million to keep the New Brunswick Naval Centre in Bas-Caraquet afloat.

Kevin Lacey, the Atlantic Canada director for the Canadian Taxpayers Federation, said he doesn't think the province should get into the shipbuilding game.

"The government has tried already to invest millions of public money into this," he said. 

"It's failed to meet conditions of public money in the past."

Lacey also said the investment drew comparisons with the Atcon fiasco. 

"The government should have learned from its mistakes in the past," said Lacey. 

"It seems bent on repeating the very same problems that had happened before."

Opposition Leader Bruce Fitch called the shipyard plan "perplexing."

Fitch said the way the Liberals have changed their position on the file several times doesn't show much clarity.

"Now all of a sudden the province is in the shipbuilding business, taking on all the risk," he said.

Fitch would like to know more details, including what the cost is per job and how much of a return on the investment the province will get.

Several conditions attached

The New Brunswick Naval Centre is a private, non-profit entity incorporated by Caraquet and neighbouring Bas-Caraquet.

It's been crippled by financial problems since it was unable to secure a $4-million loan for its contribution to a $10-million infrastructure update.

If the government didn't step up, I don't think the municipalities would have been able to save it.- Kevin Haché, Caraquet mayor

"There's no doubt that the start of this project could have been planned better than what it was" said Boudreau.

But the minister said the bailout is no different from any other government-subsidized shipyard in Atlantic Canada.

The sale would include a number of conditions, including a 10-year guarantee from the local municipalities to support it financially.

Each would be required to contribute $80,000 annually to help ensure its future success.

Caraquet Mayor Kevin Haché said the municipalities had tried everything before the current plan was presented.

"If the government didn't step up, I don't think the municipalities would have been able to save it," he said.

While the province is offering to buy the naval centre for $1, the cost will be much higher.

Boudreau confirmed that the initial infrastructure upgrades have swelled to $15 million.

The federal government has only committed to $2 million in the original plan, but Boudreau said discussions to access more federal money are ongoing.

Additional costs to upgrade existing provincial property at the site will add another $10 million to the tab. That's all before factoring in the financing for the $13 million dry dock project.

28 employees could go back to work

The Naval Centre was to provide funding for the first phase of the the project. Its builder, Quebec-based Groupe Océan, will pay the money back over a 20-year rental agreement.

Groupe Océan is among several companies with liens against the New Brunswick Naval Centre, which has about $3.5 million in unpaid bills.

Philippe Filion, a company spokesperson, is enthused by the government's offer.

"Everyone wants the shipyard to move on and for us, we want to do business in New Brunswick," he said.

Filion added that the 28 local employees laid off when work stopped in December could return to work if the deal goes through.

The timeline on the sale is less clear. Boudreau gave no date for when it needed to be finalized.

Bas-Caraquet Mayor Agnes Doiron said she didn't think it would meet any opposition from the municipalities or the Naval Centre's board of directors. "We need that for the community so I don't think there will be a problem," she said.

Of the critics who think the government's plan is a waste of money, Doiron said it was desperately needed in the area.

"We need it in this region, we need jobs," she said.