The NWT government has set out more detail about plans to turn its loss-making barge division into a Crown corporation, saying “financial sustainability is a key objective.”
Legislation that transforms Marine Transportation Services into a Crown corporation received a public hearing on Tuesday.
The GNWT says the move won’t change the way people access barging services for freight along the Mackenzie River and out into the Arctic Ocean.
The territory hopes having MTS run as an arm’s-length Crown corporation can help it generate more revenue and finds efficiencies.
Noting that MTS currently loses anywhere from $6 million to $15.5 million annually as a government division, Yellowknife North MLA Shauna Morgan asked at Tuesday’s hearing if changing to a Crown corporation would be expected to reduce that deficit.
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Menzie McEachern, an assistant deputy minister at the Department of Infrastructure, replied that “less subsidy payments to the Crown corporation are hoped for over time, once they get their legs under them.”
The Crown corporation is expected to take over MTS operations in 2028.
“I feel the frustration of everybody when it comes down to the constant debt of MTS,” said infrastructure minister Vince McKay.
“It shouldn’t be an annual thing … we’re not operating MTS efficiently right now, and we need to.”
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Some regular MLAs on Tuesday appeared skeptical that the Crown corporation would be able to find millions of dollars in annual savings. McEachern allowed that it “will certainly require subsidization for quite some time” given it serves many communities that are too small for the private sector to turn a profit.
Even so, he said, the charter business – leasing MTS tugs to clients in places like Nunavut and Alaska – is growing.
“Clearly, there’s also a lot of defence investment happening, so the opportunity is there to definitely grow the revenue side of the business,” McEachern said.
“At the same time, a Crown corporation can also be more nimble and flexible at dealing with assets and liabilities and saving costs throughout the business.”
The proposed legislation sets up the Crown corporation with a board of directors appointed by the NWT’s infrastructure minister.
GNWT staff say the proposal “creates a clear separation between operational decisions and government policy direction,” allowing the minister to maintain oversight while the Crown corporation runs day-to-day services.
Nicole Bonnell, director of the MTS transition initiative, said the goal is to “balance affordability for communities with long-term financial sustainability.”
Before a study helped the GNWT settle on the Crown corporation model, Bonnell said, efforts had been made to explore whether any company wanted to take MTS into the private sector. “No viable provider emerged,” she said.
The legislation would still allow the territory to sell MTS into the private sector at a later date if appropriate circumstances emerged.
The NWT government has operated MTS since 2017 after the previous operator, Northern Transportation Company Limited, filed for bankruptcy in late 2016.
