More detail from Minister Lekstrom on Bill 47

VICTORIA – In response to the independent BC Ferry Commissioner’s review, today government introduced amendments to the Coastal Ferry Act.

The government’s vision is to connect coastal communities in an affordable, efficient and sustainable manner. Amendments to the act give the commissioner more flexibility to determine the amount of revenue needed to sustain operations and support ongoing investment. The commissioner will also be given additional responsibility to oversee the costs of providing the ferry service. These changes will help reduce the pressure on fares.

Government agrees with the ferry commissioner that the interests of all parties must be reasonably balanced. Taxpayers, users and the ferry operator need to contribute to solutions that link coastal communities affordably and efficiently.

While these are tough economic times and fiscal discipline must be maintained, government is committed to providing additional dollars to keep the system affordable. In addition to the legislative changes:

* The government will increase its financial contribution to BC Ferries by $79.5 million to reduce the pressure for higher fares.

* BC Ferries will need to find efficiencies to reduce operating costs.

* There will be significant adjustments to service levels, and discussions with communities about trade-offs among service adjustments, fare increases and potential community contributions.

* In addition, government will seek public input to develop strategies to support a vision for connecting coastal communities.

Coastal ferries are integral to the way of life for many British Columbians. For 52 years, British Columbia’s ferries have moved people and goods along the coast. However, travel patterns, demographics and coastal communities have changed, affecting how the ferry system is used. Like ferry systems around the world, it faces challenges of maintaining ridership amid rising operating costs, and changing customer preferences. Some routes in the current ferry system operate at less than 30 per cent of capacity, and some routes are losing millions of dollars despite annual government contributions. Without changes, the system is at considerable risk.

To ensure British Columbians have safe and reliable coastal transportation for future generations, long-term strategies will be developed and implemented. Future investments will look at providing greater interoperability of ferries between routes, reducing operating costs by implementing new technologies, such as LNG-fuelled and cable ferries, and allowing for alternative methods to connect coastal communities, such as passenger-only ferries and other service improvements.

Quote:

Transportation and Infrastructure Minister Blair Lekstrom –

“The legislation introduced today builds upon the BC Ferry Commissioner’s report and the concerns that the public have expressed about the affordability of BC Ferries. Despite the fiscal challenges this government faces, we are providing an additional $79.5 million – significant funding – over the next four years. We are following a three-pronged approach balancing the interests of ferry users, taxpayers and the ferry operator. I believe the changes we are making will address many of the issues identified, and I look forward to future discussions as we move forward to ensuring we have an affordable and sustainable B.C. ferry system.”

BACKGROUNDER

Legislation and fares addressed in changes proposed to Coastal Ferry Act

In May 2011, the Government of British Columbia passed legislation to support a review of the Coastal Ferry Act by the independent BC Ferry Commissioner to address public concern about rising ferry fares.

On Jan. 24, 2012, BC commissioner Gordon Macatee and deputy commissioner Sheldon Stoilen issued a report with recommendations on how to better balance the interests of ferry users, taxpayers, and the ferry operator.

Legislation:

The proposed legislative changes move toward striking a balance among the interests of ferry users, taxpayers and the sustainability of the ferry operator.

Some examples include:

* Cross-subsidization between routes will be permitted.

* The commissioner will be given more flexibility to determine the revenue needed to sustain operations and support ongoing investment. The ferry commissioner will set returns to enable the ferry operator to meet all its debt obligations and maintain an appropriate credit rating.

* The commissioner will be responsible for approving major capital expenditures with a view to furthering government’s long-term vision. For example, the commissioner will be able to consider vessel replacements that will meet the needs of the future rather than the traffic patterns of the past, in keeping with the government’s vision.

Other proposed legislative changes give the commissioner the authority to:

* Use measures, other than fare increases, to respond to extraordinary situations.

* Conduct routine performance reviews.

* Require the ferry operator to review its policies and undertake a public consultation.

Fares:

The Province has a long-term service contract with the operator, BC Ferry Services Inc., which defines the number of ferry sailings on 25 designated saltwater routes. The Province provides an annual ferry transportation fee to support these services.

Every four years, the commissioner reviews the costs to provide this service. The commissioner then sets a maximum average fare increase – called a price cap – for the following four-year performance term.

In addition to the ferry transportation fee, the Province provides annual subsidies for social programs which help keep fares affordable for seniors, students, people with disabilities and people travelling for medical reasons.

The total amount of provincial funding is currently more than $150 million. To address the current fiscal challenges facing the ferry system, the Province is providing an additional $79.5 million. This consists of a payment of $25 million and made at the end of 2011-12, and yearly payments of $21.5 million, $10.5 million, $11 million and $11.5 million in fiscal years 2012-13, 2013-14, 2014-15 and 2015-16.

For performance term 3, the commissioner set the preliminary annual price cap increases of 4.15 per cent for the major routes and 8.23 per cent for the northern and minor routes. The Province intervened to set the price cap increase for 2012-13 at 4.15 per cent for all routes. While the commissioner is responsible for setting the final price caps for the remaining three years, the Province’s actions today are intended to enable the price cap increase to decline over time.

Contact:

Kate Trotter
Government Communications and Public Engagement
Ministry of Transportation and Infrastructure
250 356-8241

A link to Bill 47 (as at First Reading) is provided here

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One thought on “More detail from Minister Lekstrom on Bill 47

  1. Good news and not-so-good news in this Ministerial statement. The additional Provincial funding will go some way to offsetting the losses being incurred by BC Ferries as traffic continues to decline and to reduce the pressure for yet higher fare increases. The pressure is on now for BC Ferries to identify cost-saving efficiency measures, and warnings of ‘significant’ adjustments in service levels signal yet further uncertainty for ferry users.

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