Along with some innovative suggestions for cutting costs and improving service on BC Ferries, Commissioner Gordon Macatee weighed in this week with a call for a fundamental rewrite of the enabling legislation for the government-owned monopoly.
The Coastal Ferries Act, a product of the first term of the B.C. Liberals, established the ferry service at arm's-length from government, still publicly owned but not directly controlled out of the cabinet room. Instead, the quasi-independent corporation was given its marching orders in a series of principles entrenched in the legislation, those to be overseen and enforced (though only lightly) by the independent ferry commission.
Those principles, as Macatee noted in a lengthy review of the legislation released this week, went a long way toward determining the current state of affairs at BC Ferries, for better and for worse. The prime goal was "financial sustainability of the ferry system." The company was to adopt a "commercial approach to service delivery." No longer could a portion of the fares collected on the heavily travelled major routes be used to offset costs on the minor and marginal routes.
Over time, the entire system was "to move toward a greater reliance on a user pay system, so as to reduce the service fee contributions [i.e., the subsidy] by the government." The intention was "to remove political involvement from ferry operations, apply a commercial approach to the business with a focus on efficiency, and leverage private
sector financing for fleet renewal."
On the plus side, he said, "it can be argued that many of these goals have been achieved." The fleet was renewed with marked improvements in customer satisfaction and safety levels.
BC Ferries began turning major profits on catering, retail sales and other ancillary services. Direct political
interference was reduced.
But the downside is well-documented in the Macatee report as well. Fares, driven upward by a combination of rising costs and government foot-dragging on subsidies, have reached the "tipping point" for commuters, tourists, shippers and other users. The minor and northern routes were especially hard hit, thanks to the ban on cross-subsidization. Powerless to stop this was the ferry commissioner, lately Macatee but for most of the past eight years Martin Crilly. Another of the entrenched principles of the act was "a light-handed approach to regulation, with a minimum of intrusion into the day-to-day
operations of the business."
But if the commissioner has his way, the ferry service will be getting a new set of guiding principles along with a somewhat heavier hand on the regulatory tiller. He'd start with that first principle, the one that says "priority is to be placed on the financial sustainability of the ferry operator."
Macatee and his deputy commissioner Sheldon Stoilen looked at other ferry services and found nothing like it anywhere in the world. "We can find no other examples where the primary responsibility of the regulator is to put the interests of a monopoly operator before those of the public."
So (presuming the recommendation were to be accepted) out goes that priority and in comes this one: "The primary responsibility should be to protect the interests of the ferry users and the
taxpayers. The term ferry user should be interpreted broadly to include ferry customers, their families, ferry-dependent communities and businesses which depend on ferry services to be affordable and reliable." He'd also scrap the requirement for user pay and lift the restriction on cross-subsidizing of minor routes by the majors.
Not to say that the goal of financial sustainability would be scrapped altogether. But it would take a back seat to the prime responsibilities. "It is very clear that a financially sustainable operation is in the interest of both ferry users and taxpayers," wrote Macatee. "The secondary responsibility of the commissioner is to protect the ongoing financial sustainability by encouraging the ferry operator to operate efficiently, take a commercial approach, be innovative and minimize its operating expenses."
Innovation, efficiency, cost cutting and service rationalization being the keys, lest Macatee's proposal to cap fare increases at the rate of inflation require too much in the way of increased government subsidies. But in order to encourage the better mix, the commissioner also recommended a strengthening of his own regulatory powers.
In passing judgment on fare increases, the regulator should have the power to order service reductions, put capital projects on hold, direct the ferry corporation to revise its plans or conduct public consultations, or to step in and conduct a performance audit of his own. All in the name of "protecting the interests of users and taxpayers."
"The goal of light-handedness should not be lost," added Macatee. But if the government goes that route, I have to think it would be, along with some other guiding principles of the B.C. Liberal vision for BC Ferries. Final call is up to the Liberals themselves. But I have to think they'll go some distance down that road, given the obvious political benefit in reining in those runaway fares.
