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Ferry Fare Hikes Slowed, Will Still Top Inflation

Next on to do list: 'develop a vision' for BC's ferry service, says Lekstrom.

By Andrew MacLeod 10 May 2012 | TheTyee.ca

Andrew MacLeod is The Tyee's legislative bureau chief in Victoria. Find him on Twitter or reach him here.

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Fares on major routes rose 47 per cent and nearly twice that on other routes over past eight years. Photo by Luton from Your BC: The Tyee Photo Pool.

The British Columbia government today introduced changes and provided money aimed at slowing the increase in fares on BC Ferries.

Fares are still likely to rise faster than inflation and BC Ferries will have to look for savings by doing things like cancelling underused sailings, Transportation and Infrastructure Minister Blair Lekstrom said.

There remain "some significant challenges," said Lekstrom, noting that the BC Liberal government was responding to recommendations made in a report by B.C. Ferry Commissioner Gord Macatee released in January. That report recommended bringing ferry fare increases in line with the inflation rate.

"We moved on 18 key recommendations today that required legislative change, out of that report that contained 31 recommendations," said Lekstrom.

The rest of the recommendations are about establishing a vision for the ferry service, he said. "We are also going to develop a vision, a longterm vision."

The government announced it will contribute an extra $79.5 million to BC Ferries over four or five years on top of the current annual $150 million subsidy.

"Although we're putting in a very significant amount of money to BC Ferries, we will not be able to get to the rate of inflation," said Lekstrom. "That will be a goal we're going to have to work towards."

Smaller increase expected

In 2003 the government changed BC Ferries from a Crown corporation to a publicly-owned private company with the instructions to move to a user pay system with financial sustainability of the operator as the top priority.

Between 2003 and 2011 fares on the major routes between Vancouver Island and the Lower Mainland increased by 47 per cent, while on the minor and northern routes the increase was 80 per cent. Over the same period the cost of living in Vancouver increased by just 14 per cent.

Macatee announced his review amid rising concern in ferry dependent communities about the rapid increase in fares.

Today he said he will have to run all the numbers before establishing price caps for the next three years, which are expected to be announced in the fall. The increases will likely be above the rate of inflation, but below the 8.23 per cent increase that was proposed for the minor and northern routes last year before the government intervened.

"What I do know is with the amount of money the government has announced today affordability is going to be vastly better than what we were faced with a year ago," he said. "Although the minister has said it won't get to CPI right away, I think it's a huge step in the right direction."

Tweaking services

The act also gives the commissioner greater latitude to approve or order service reductions and undertake performance reviews.

Ferry operators will again be able to use fares from the major routes between Vancouver Island and the mainland to subsidize smaller routes, a practice the government had ended with changes made in 2003.

It adds "ferry users" along with taxpayers and "the financial sustainability of ferry operators" as the commissioner's primary concerns. Users include passengers, their families, communities serviced by ferries and businesses that rely on or use ferry services.

Lekstrom said that besides the money the government is putting in, BC Ferries is expected to find $15 million in savings over the next four years as well as $30 million by adjusting its service levels.

"We have some routes that are very low-utilization and that creates a major issue," he said. "You cannot continue to operate a B.C. ferry system with routes running at less than 30 per cent capacity."

The reductions are manageable, considering BC Ferries has a $750 million a year budget, said president and CEO Mike Corrigan.

"It certainly isn't nirvana, but given the world we live in, it's very reasonable," he said. "They're reasonable cuts and if they're done properly there really won't be much of an effect on people because we're going to target services where people aren't using the product, so it makes a lot of sense."

The changes will involve "tweaking services here and there" rather than making large cuts, he said.

Business model broken

Corrigan said Commissioner Macatee had identified a target of $60 million to come from a combination of increased fares, a larger government subsidy and efficiencies. "I think when you look at the package that was delivered today it essentially does that for the short term," he said. "For the long term we have to get into the vision."

He said he doesn't anticipate job cuts in the short term, but the company still plans to cut 100 sailings a year on the major routes. The most likely sailings to cut would be the late night ones when there are few riders and the company often ends up paying overtime to workers, he said.

The NDP's critic for BC Ferries, Gary Coons, said the changes are a further admission that the government's 2003 changes to the ferry service have been a failure.

"It's some incremental steps in the right direction," said Coons, the MLA for North Coast. "It still doesn't deal with the tipping point of affordability and dealing with loss of ridership."

Ferry users will still see increases that exceed inflation and a loss of service, he said. "We have to acknowledge that BC Ferries is part of our highway system similar to the roads and there's a cost to it."

In 2003 the government wanted to move ferries to user pay, contract out routes, stop the major routes from subsidizing smaller ones and make financial sustainability of the operator the number one priority, he said. With the May 9 legislation the government has abandoned all of those principles, he said.

"It's just a sign this whole quasi-privatization scheme was a dismal failure," he said.

Gregg Dow, the president of the B.C. Coastal Transportation Society which runs the Save Our Ferries campaign, said he's disappointed the changes didn't go further.

"They should revisit the whole Coastal Ferry Act and the business model BC Ferries operates under," he said. "These ongoing changes to the Coastal Ferry Act show it's not working and will continue to not work in the best interests of British Columbians and coastal communities."  [Tyee]

Read more: Politics, Transportation

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