What was promised by the Province of British Columbia

For Immediate Release    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 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, 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 body modelled along the lines of the successful Vancouver International Airport Authority. An independent regulator will be appointed to regulate rates and protect consumers’ interests.

“BC Ferries has served British Columbians well in the past, but is clearly not meeting the needs of today’s customers,” Reid said. “Reports by Hugh Gordon, George Morfitt and Fred Wright, and our own comprehensive review of the corporation, have all confirmed the need for change. Mismanagement and bad business decisions have cost taxpayers over $1 billion in the past decade alone, including $454 million for the fast ferry fiasco. The fleet is aging, services are deteriorating, and new capital investment is urgently required.

“The new structure will help ensure services are delivered on time and on budget. It will create a vibrant, properly managed ferry system 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
• Guaranteed service levels and fair rates
• An independent regulator to protect the public interest
• Economic development and job creation
• Public ownership of ferry terminals
• No new public debt
• Ongoing accountability.

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. “Access to outside sources of capital is required to raise the $2 billion needed to modernize the fleet and terminals without adding to the government’s debt burden. It is also key to ensuring the ongoing safety of vessels and passengers,” he said.

The new structure will resemble the Vancouver International Airport Authority 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 through the establishment of a price cap. Service levels and routes will be assured for five years through a coastal ferry services contract that the provincial government 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.

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. Moreover, increases over the 10 years were erratic and variable.

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.

“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.

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.

What we got…