Sailing, Subsidies, and Ferries
Author:
Mark Milke
2000/12/06
Most everyone in British Columbia knows about the disastrous fast ferry experiment. The almost half billion-dollar boondoggle was one reason why BC's place as the Crown Joker in confederation is secure for the foreseeable future.
Less in the forefront was the run-up of debt in BC Ferries itself. The billion-dollar write-off of ferry debt earlier this year was only half due to fast ferries. Even without a repeat of the fast ferry debacle, taxpayers ought to ask some tough questions about how BC Ferries is being run, whether it is as accountable as it should be, and what are appropriate subsidies.
Because there is now a permanent subsidy to BC Ferries ($87 million in the last fiscal year), the Canadian Taxpayers Federation commissioned a study to compare Washington State Ferries and the British Columbia Ferry Corporation, a report just recently released.
On the issue of accountability, there are three bi-partisan legislative committees in Washington state that regularly look at the publicly owned ferry system and report directly to the state legislature. In British Columbia, the Crown Corporation Secretariat, which is supposed to review Crowns is partisan-appointed and reports to Cabinet (which is itself, of course, made up of only one political party.) In the 1990s, the Secretariat was part of the problem. Back in 1994, Glen Clark appointments within the Secretariat arbitrarily sliced the initial $80 million estimate of each fast ferry to $70 million (both estimates which were wildly off the mark). There is also the BC Ferries board, but it too is stacked with partisan appointments. Independent directors were asked to resign in 1997 when they started to ask too many questions.
To give BC Ferries more freedom from partisan interference but at the same time promote better accountability, the CTF study recommended that a bi-partisan legislative committee be set up to monitor Crowns more regularly. That committee, which would be accountable to the legislature and not Cabinet, could serve as a valued check on any possible excesses. It would also allow MLAs to keep BC Ferries on its toes in terms of reporting relevant information.
As it is, there is a significant gap in what Washington State Ferries reports to the public and to the politicians when compared with BC Ferries. A comparison of the annual reports of both agencies shows a much more detailed presentation for out southern neighbour's ferry system.
This information difference is crucial in terms of the public debate over what sort of ferry system is appropriate. For example, over the last eight years, British Columbians have subsidized their ferry system to the tune of almost C$1.5 billion. Washington state spent more - C$1.8 billion, but that only reveals part of the story. Per capita in 2000 - and excluding the $1billion write-off in BC - Washingtonians subsidized the ferry system per capita at $10.43 vs $21.77 per capita in BC. Moreover, Washington's subsidies are set to drop dramatically while BC's subsidies are set to rise.
Some have argued that coast guard regulations prevent lower staffing on BC Ferries. But that fact has nothing to do with how many subsidized sailings should occur. For example, could some subsidized routes do with fewer daily sailings so as to save subsidy money for some other public priority Or how about the $87 million annually subsidy itself No doubt many taxpayers in greater Vancouver who don't want a new auto tax might like to see some that money transferred to Vancouver-area roads and transit.
Not all subsidies are a bad idea, but neither should they continue without analysis. (More on that next week.) As it concerns more information and better accountability from BC Ferries - both the government and BC Ferries should think seriously about reforms in those areas.