The recent B.C. Ferries cuts announced by the minister of transportation are unpopular, and to say that some of the affected communities are upset might be an understatement.
In an ideal world, such cuts would be unnecessary because transportation would be free and available on demand. The challenge we all have to deal with is that the taxpayers鈥� ability to pay is limited, and we expect governments and听government-owned entities to be fiscally responsible.
In the case of ferries, we have to balance the amount of money collected in fares with amount of tax dollars available and the levels of service provided. We have seen significant increases in fares on all routes in recent years, and the level of subsidy was increased substantially by $79.5 million over four years and this was not enough to balance the books (achieve fiscal responsibility).
The next step taken was to adjust service levels. The major-route schedules were adjusted in 2012 to decrease underperforming sailings, realizing $4 million in savings. Similarly, Transportation Minister Todd Stone recently announced the first adjustments to minor routes since 2003.
Adjustments to ferry routes can be a very divisive issue for our coastal communities because they have the tendency to pit one community against another. If you accept the argument that taxpayers鈥� capacity to subsidize ferries is limited, then the question of where to make adjustments can result in efforts to have someone else鈥檚 route cut, not yours.
The challenges on each route are unique, and B.C. Ferries has a deep and longstanding relationship with all our communities.
There has been a recent call to return the ferries to ministry control and wind up the corporation. I am not confident this would change things for the better.
We created the ferry corporation in the main to facilitate the renewal of the ferry fleet. Political interference in ferry acquisition has been a disaster. The current system allows B.C. Ferries to renew the fleet without political interference.
This has allowed fleet renewal to take place and has drastically reduced the cost of the fleet-renewal program. A return to the ministry now would put a stop to fleet renewal, as every new ferry would be subject to political (Treasury Board) approval. The minor-vessel replacement is just commencing and needs to continue.
The B.C. Ferry Corp. has delivered reliable ferry service since its inception, and has addressed sorely needed terminal upgrades and ferry replacements. The corporation has done a good job.
Unfortunately, the ferry system is not immune to changes in economic conditions. The changes in ridership and patterns of travel have affected the ferry system and have resulted in the pressures we see on routes and fares.
If the coastal forestry industry were more active and tourism hadn鈥檛 slowed significantly and we hadn鈥檛 faced a global economic downturn, we wouldn鈥檛 be faced with some of the decisions we are faced with today.
The Swartz Bay-to-Tsawwassen route is a key route in the system that operates without any taxpayer funding and earns a profit of over $20 million annually that is used to support other routes. The only other profitable route is the Nanaimo-to-Horseshoe Bay route, earning approximately $11 million a year.
In the B.C. Ferries system,听such cross-subsidization of routes has traditionally been employed to achieve fiscal sustainability. Victoria needs to ensure that the Swartz Bay-to-Tsawwassen route remains profitable and ideally increases its profitability.
The Victoria Chamber of Commerce鈥檚 goal is to achieve that profitability through increased ridership while limiting fare increases.
There are further cost savings that need to be found in the major routes to the tune of $4.9 million. Ideally, we would not have to make changes, but we need to adapt to our economic environment.
There are three major routes, and we will to work with the ministry and B.C. Ferries to identify opportunities to address the $4.9-million shortfall without negatively affecting profits that support the entire system.
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Bruce Carter is chief executive officer of the Greater Victoria Chamber of Commerce.
