NORTH SYDNEY, N.S. –The Office of the Auditor General came down hard on Marine Atlantic in a special examination report submitted on Sept. 14, saying the Crown Corporation was at risk of being unable to provide services.

Marine Atlantic is responsible for ferry service between Nova Scotia and Newfoundland and Laborador -a floating leg of the Trans-Canada Highway. The report, a performance audit required under the Financial Administration Act, identified major concerns including Marine Atlantic’s aging fleet and facilities and inadequate management capacity.

Gord Peddle of the Atlantic Provinces Trucking Association (APTA) said the report confirms what was already widely known.

“The Auditor General’s report really backs up what a lot of the users and consultants and everything have said for years,” said Peddle, who chairs APTA’s marine committee. “The fleet is aging and needs replacement. It’s broken down a fair amount of the time.”

Peddle also said that repairs performed by Marine Atlantic in the past year have improved the situation somewhat.

The renovation of the fleet and shore facilities won’t be cheap. The Auditor General’s report said Marine Atlantic estimates it will need between $800 million and $1.4 billion in federal capital funding over 25 years for the fleet, plus $150 million for on-shore upgrades.

In a press release on Nov. 19, the chair of Marine Atlantic’s board of directors released the contents of the report to the public, laid out what steps the corporation had already taken and responded to the report’s 13 recommendations.

“The board acknowledges the issues raised in the special examination and supports each of the recommendations,” Rob Crosbie, chair of the board, said in the release. “Indeed the audit identified many of the same important issues that the board has been working to address over the past couple of years. The board has been working with the corporation’s executive management team to develop an action plan that addresses all of the issues raised in the report.”

The release pointed out that Marine Atlantic had begun to make changes already. It hired a new president and CEO in October 2008, and increased its management capacity with three new vice-presidents, responsible for customer service, operations and strategy. It also said Marine Atlantic has developed new, formal management processes, and a planning cycle and a corporate risk policy to be implemented in the spring of 2010.

As for physical capital, Marine Atlantic has brought a new two-level dock into service in Port aux Basques, Nfld. and plans upgrades to its dock in North Sydney, N.S. It has also chartered an additional ferry, the MV Atlantic Vision, which entered service in April. The Auditor General’s report said integration of the new ferry has not been smooth, however.

It said the capital costs of running the new ship are much higher than Marine Atlantic predicted due to modifications needed to port facilities and the need to pay withholding taxes, neither of which the corporation expected.

The APTA’s Peddle said he has seen some problems in Atlantic Vision’s first season of service, but is hopeful about its potential.

“She’s much larger and designed a little differently,” he said of the ferry. “Therefore she doesn’t fit hand-in-glove at both docks. Therefore there have been some operational challenges. For example, I think she ran most of this summer with very little or no traffic on the top deck because of ramp restraints.”

Peddle said he thinks Marine Atlantic has resolved that issue, and that other problems the Vision has had, including a fire, were just part of the learning curve of introducing a new vessel.

“She’s a faster ship, she’s a bigger ship, and when she’s in service she does a fantastic job of cleaning up the traffic,” said Peddle.

Despite the challenges, Marine Atlantic’s Crosbie expressed confidence in the Crown Corporation’s response to the report.

In the press release, he said “The board of directors and the executive management team have worked closely with the government of Canada in the development of a viable revitalization strategy that will help address the issues raised in the report and enable Marine Atlantic to fulfill its mandate to the people of Newfoundland and Labrador and Canada as an important component of the national transportation infrastructure.”