Only now, after twenty-five years and $857 million in asset write-offs later, a provincial government is finally taking up a royal commission recommendation to hitch BC Rail to a private operator.

Chaired by Justice Lloyd McKenzie in 1977, the Royal Commission on BC Rail urged the Bennett government to sell-off the beleaguered regional railway. Premier Bill Bennett opted instead for the Commission's alternate suggestion to transform BC Rail from a government-run operation into a Crown corporation.

At the time, BC Rail was losing market share to competing railways and the growing trucking industry. With $700 million of debt on its books, BC Rail moved only 15 percent of the value of the province's forest industry products. By 1977, the railway cost the public $1 billion in invested capital and operating losses as its earnings continued to slide.

Fast forward to February 2003 and Premier Gordon Campbell and Transportation Minister Judith Reid seem to have dusted off the Royal Commission's report and taken its suggestions to heart. In his televised state of the province address, the Premier announced upcoming improvements to the province's rail transportation system that were later expanded upon by Minister Reid.

The government's latest proposal falls short of the Commission's recommendation to sell-off the railway holus bolus. Instead, the province will issue a "request for proposals" for a private-sector investor to run the railway. Hard assets such as box cars and locomotives will likely be put up for sale while the province retains public ownership of the railbeds and rights-of-way and reserves the option to lease them out to a private operator for a fixed period of time.

One wonders why it took a quarter century for the government to realize that financing a capital-intensive business like a freight railway is a job best left to the private sector. It was no mystery to the Commission.

At the centre of their objections to a government-run railway was the "curious and durable political mythology" that fueled public control and expansion of the railway into unprofitable routes.

The $1 billion in subsidies spent on the railway for its "public policy function" to develop BC's central and northern regions deprived the government of the capacity to provide services to the public, such as for roads and highways. The "public policy function" was nothing more than an "attempted rationalization of the fact that [BC Rail] loses money at an enormous scale," reads the report.

The commission found that the public cost of the railway was out of proportion to any economic or social benefits conferred on the public. "We must conclude that there is no significant potential for future use of the railway as an ‘instrument of public policy'."

The commission's other compelling case to unload BC Rail strikes at the core of all Crown corporations: the "lack of the ‘ultimate free enterprise option', the right to close down."

Without the threat of insolvency nipping at its heels, the railway would be guided less by sound business decisions ensuring its survival than by political meddling ensuring votes from BC's central and northern communities. So long as BC Rail was declared an instrument of public policy, insulated from the market place and showered with subsidies, it could never be allowed to fail or succeed. "The ‘reason why' was never asked in BCR because the cost incurred had no significance."

The Royal Commission report is still right on the money. BC Rail today is as much a candidate for private sector ownership as it was for the Royal Commission 25 years ago and for the NDP government eight years ago.

A 1995 NDP cabinet document reportedly proposed to sell-off BC Rail through a "share offering" on account of "major threats to its commercial viability." The challenges to the railway's financial health outlined in the NDP cabinet document still hound BC Rail today, namely competitive pressures and a declining revenue stream.

BC Rail's present business model is cracking under the weight of competitive trucking and rail transportation industries. It is unable to access new capital and has limited prospects for reducing debt out of earnings.

Despite management's recent cost saving measures, BC Rail still has nearly half a billion dollars of debt on its books. The debt servicing charges alone wipe out earned profits.

The sale of BC Rail to a new investor would go a long way to release BC taxpayers from debt, risk and further liabilities. With the proper contractual protections in place, It would clear the way for a new investor to deliver freight services in British Columbia's central and northern communities. Provisions could also allow for new private tourist-oriented passenger service to start up.

The government's public policy goal of a safe, reliable, effective and competitive rail transportation system is best achieved by adopting the Royal Commission outlook that "the railway should not look again to the public to contribute to its support. It should henceforth be on its own."