A report written by a former provincial minister responsible for BC Ferries calls for the company to be returned to its origins.
Gordon Wilson, former leader of the BC Liberals and past New Democratic Party transportation and ferries minister, was commissioned to write the report about fiscal fairness for ferry-dependent communities. It argues the current structure for BC Ferries fails the test of fiscal fairness and discriminates against residents of coastal communities, which make up 20 per cent of the province’s population. The report also examines BC Ferries’ finances.
“The issue is critical for people who live in communities such as Powell River because we’re so heavily dependent on the ferry service,” said Wilson, who lives in Powell River. “If costs continue to escalate, it’s going to become financially prohibitive for us to get goods and services in and out of the community and for us to travel in and out of the community.”
City of Powell River Mayor Dave Formosa helped to spearhead the report. He said a local businessman, who wants to remain anonymous, paid Wilson to prepare the report. “He’s been watching what we’ve been doing, as a city and as a community, trying to get government to somehow see the cost of running the ferry service is crippling our community,” Formosa said.
The mentality that the ferry system has to pay for itself is going to end up in “a worse disaster than we’re in,” Formosa added.
Wilson’s report addresses BC Ferries’ financial situation as well. “We’re just not talking about the $20-million operational deficit,” Wilson said. “They’re running roughly with $50-million annual shortfalls in capital expenditures for replacement of docks and ships.”
Additionally, the company has long-term debt of well over $1 billion, Wilson said, that’s owed to bond holders. “That simply is not going to be sustainable over the course of the next 10 to 15 years if we don’t do something substantial to change the situation,” he said. “The solution it seems so far is to either reduce service or increase fares, neither of which will solve the problem. In fact, they’ll compound the problem.”
Wilson reviewed various financing models, including how the ferry service was initially financed. Former BC Premier WAC Bennett built the corporation through Toll Highways and Bridges Authority, a government Crown corporation to provide public ownership of transportation routes previously serviced by the Canadian Pacific Railway and private carrier Blackball Ferries. “He amortized the cost of the service over the asset base of the province,” explained Wilson. “He had far greater borrowing power, he had much greater amortization capability and he was able to spread the costs to everybody in a more equitable way. That established the principle of fiscal fairness in the sense he treated the coastal region of British Columbia the same way he treated the interior.”
Since then, ferry service has evolved into a stand-alone, user-pay type corporation, Wilson added, that is “simply a model that doesn’t work. It can’t work and provide rates that are affordable for most people who live in these communities.”
In his report, Wilson compares two ferries, the MV Osprey 2000, which is part of the free interior ferry service financed by the ministry of transportation and infrastructure, and the MV Skeena Queen, built in 1996 to provide service to shorter Gulf Island routes. It’s free to sail on the Osprey, while it costs over $50 for a passenger and a vehicle on the Skeena Queen. “There’s no fiscal fairness in that notion at all, not that we’re asking for free ferries,” Wilson said. “What we’re saying is we understand there’s a cost to running them and we understand there has to be a tariff, we get it. But there has to be some fairness in the way this application is made, recognizing that this isn’t a luxury cruise that we’re all taking to beautiful summer residences. We live here, we work here and this is part of our daily function.”
To address the government’s violation of the principle of fiscal fairness, and to restore the economic integrity of the BC coastal economy, Wilson concluded in his report, BC Ferries should be treated as a tolled portion of the highways and financed through the BC Transportation and Finance Authority, where amortization of cost is more equitably shared by all British Columbians.
