What really happened, a lot different then what was promised.

For Immediate Release   2002TRAN0054-001076 Dec. 9, 2002		Ministry of Transportation
NEW FERRIES MODEL MEANS BETTER SERVICE MORE JOBS, STABLE RATES

 

VICTORIA – BC Ferries will be transformed into a customer-focused(the Coastal Ferry Act is actually Company focused) and financially stable marine transportation system that improves services and revitalizes the economy of the province’s coastal communities, Minister of Transportation Judith Reid announced today.

BC Ferries, which currently operates as a taxpayer-supported Crown corporation (now it is a taxpayer supported kind of private company), will be restructured into an independent company under the B.C. Company Act and will be renamed BC Ferry Services. The new operating company will be governed by the British Columbia Ferry Authority, an oversight (they actually only hold the one voting share, select members for the board of directors, give themselves raises and have to hold a meeting once a year to tell everyone they still have the share.) body modelled along the lines of the successful Vancouver International Airport Authority. (The Vancouver Airport Authority does not actually own or operate any airplanes.) An independent regulator will be appointed to regulate rates and protect consumers’ interests. (The Commissioner just recently had to take protecting consumers’ interest into account, and is now doing a report about the Coastal Ferry Act.)

“BC Ferries has served British Columbians well in the past, but is clearly not meeting the needs of today’s customers,” Reid said. (Still is not meeting the needs of today’s customers eight and half years later.) “Reports by Hugh Gordon, George Morfitt and Fred Wright, and our own comprehensive review of the corporation, have all confirmed the need for change. (Maybe it is time for change again!) Mismanagement (REVENUE  Projected 2010   $ 56.8       Actual 2010   $ 3.4 –94% difference!) and bad business decisions (Corporate expenses have increased over 50% in the 2^nd performance term) have cost taxpayers over $1 billion in the past decade alone,(BC Ferries owes over $1.3 billion and counting) including $454 million for the fast ferry fiasco. The fleet is aging,(it still is BC Ferries needs to replace 10 ferries) services are deteriorating,(service reductions have been implemented and are also being proposed) and new capital investment is urgently required. (BC Ferries has hit their borrowing capability)

“The new structure will help ensure services are delivered on time and on budget. (cough, cough, Travel Center) It will create a vibrant, (acid wash the side of the ships to remove rust stains) properly managed ferry system (management has increased 61% since 2001) that improves customer service, creates new jobs for coastal communities, ensures stable rates and is sustainable for the future.”

Reid said a revitalized ferry system will mean:

        Improved service and customer choice (Service reduction on Route 3 that had to be reversed by the Province – Service Reduction on Route 2)

        Guaranteed service levels and fair rates (service reductions and eliminations have been implemented, and proposed by BC Ferries in their Efficiency Document)

        An independent regulator to protect the public interest (The Coastal Ferry Act was set up to protect the financial viability for the Ferry Operator)

        Economic development and job creation (Rising ferry fares are having a negative impact on Tourism and coastal communities)

        Public ownership of ferry terminals (now mortgaged against the debt)

        No new public debt (the Auditor General in his report on BC Ferries identified that the taxpayers are still at risk for BC Ferries debt)

        Ongoing accountability. (BC Government had the Comptroller Generals’ Office investigate BC Ferries, and then had to act on the recommendations, which included returning the Company under Freedom of Information)

BC Ferries’ chair David Emerson said that an independent ferry corporation with a capital structure similar to a private-sector company will be better able to compete in the capital markets for funds. (at a higher interest rate then the Province.) “Access to outside sources of capital is required to raise the $2 billion (well $1.3 billion) needed to modernize the fleet (still a long way to go, have you been on the Queen of Burnaby lately?) and terminals(the model is based on running terminals not ferries) without adding to the government’s debt burden. (Taxpayers are still on the hook according to the Auditor General) It is also key to ensuring the ongoing safety of vessels and passengers,” he said. (Safety is a can of worms that we will get to later)

 

The new structure will resemble the Vancouver International Airport Authority  (that does not own or run any airplanes) that Emerson played a key role in establishing in the early 1990s. Since then the airport has been transformed into a financially independent transportation gateway and has been rated one of the world’s top 10 airports for the fourth straight year by the International Air Transport Association’s global survey.

 

Unlike the airport authority, which is self regulating and able to set rates and fees, BC Ferry Services will be overseen by an independent regulator who will protect consumers from unreasonable rate hikes (it was never in the Coastal Ferry Act until it was amended recently) through the establishment of a price cap. Service levels and routes will be assured for five years (then all bets are off) through a coastal ferry services contract that the provincial government (here is some money now go away) will sign with BC Ferry Services.  The independent regulator will oversee the 60-year contract, which will be reviewed every five years.

 

The rate increases that have been established for the first five years of the term of the coastal ferry services contract are fair, stable and lower than historic averages. (then everything went crazy and some rates have increased over 100%)

 

Between 1991 and 2001, rates for major routes increased 4.6 per cent a year and for minor routes 4.4 per cent, for an average increase of 4.5 per cent a year. (ahhhh the good old days) Moreover, increases over the 10 years were erratic and variable. (Unlike the past 8 and half years which have been insane!)

 

An inflation-based increase outlined in the government’s 2002-03 provincial budget will take place as planned on Dec. 15, 2002.  This increase will be 3.8 per cent. For a car and driver travelling during off-peak periods, this is an increase of just $1.25 for a trip from Tsawwassen to Swartz Bay ($1.75 during peak periods); $1 for Horseshoe Bay to Langdale ($1.25 peak); and 75 cents for Swartz Bay to Saltspring Island ($1 peak) – less than the price of a cup of coffee.

Starting Nov. 1, 2003, average rate increases will be capped for five years at 2.8 per cent a year for the three major routes connecting Vancouver Island to the Lower Mainland, and 4.4 per cent a year for the remaining minor, northern and Sunshine Coast routes. (which gave a false sense of security then the Extraordinary Fare Increases came into play)

“The difference in the increase between the major and smaller routes is aimed at helping to address the historical problem of cross-subsidization,” Reid said. (which it didn’t since a major route group can impact the minor route group operating costs and vice versa, its’ an integrated system!)

Current labour agreements with the B.C. Ferry and Marine Workers’ Union, including successor and collective bargaining rights, will be transferred to the new entity. All pensions and benefits will remain in place for employees. (Again a whole different can of worms that we will open at a later date.)