Rhona Martin, President
Union of BC Municipalities
10551 Shellbridge Way, Suite 60
Richmond BC V6X 2W9
Re: Response to UBCM Sponsored Analysis Boatswains to Bollards - A Socioeconomic Impact Analysis of BC Ferries
I am writing in response to the recent release of Boatswains to Bollards - A Socioeconomic Impact Analysis of BC Ferries prepared for the Association of Vancouver Island and Coastal Communities (AVICC) and the Union of BC Municipalities (UBCM) by Larose Research & Strategy.
While I appreciate that there is a link between fares and traffic levels, I am disappointed that UBCM and AVICC are using this analysis as the basis for a discussion at UBCM about the coastal ferry system. It is unfortunate that the analysis speculates on what might have been, rather than providing any concrete solutions on how to take the coastal ferry system into the future in a cost effective and sustainable way.
The analysis cites the results as estimates only and developed in order to provide initial assessments and guidance on the impacts of ferry services on British Columbia's coastal communities. Additionally, the author admits that the analysis is limited by the data yet still contends that the findings are reliable and that any further analysis would support the findings.
The author acknowledges the limitations and challenges of the data, and speculates about the impacts on ferry traffic and the provincial economy. It was irresponsible for UBCM to publicly release a document which outlines an unsubstantiated and sensational $2.3 billion impact on the provincial economy.
A preliminary technical assessment of the analysis has raised a number of concerns about the approach taken to measure the impacts of fare increases on ferry traffic and on the provincial GDP, including:
- The estimated growth of 19% is overstated. The analysis does not adequately account for other non-fare factors that may have influenced ferry traffic over the period, including:
- Global economic downturn;
- The Canada/US dollar exchange rate;
- New laws that require passports for travel to and from Canada have resulted in reductions in the number of overnight trips from the United States into Canada;
- Increased fuel prices;
- Communication and technology improvements have reduced business travel; and,
- An aging population in ferry dependent communities has impacted travel patterns. The proportion of population over 55 has risen from 29% in 2003 to 37% in 2013. Likewise, in the North Coast it has grown from 18% to 27%.
- The high fare sensitivity used in the analysis overstates the lost traffic. Fare sensitivity measures used for the major routes were three times higher than the ones calculated in 2010 by an external consultant for BC Ferries. The estimated ferry traffic increases of 19% seem unrealistic given the relatively flat ferry traffic levels between the mid-1990s and 2003 and population growth for ferry dependent areas. The population for Vancouver Island grew by 7% since 2003, while the North Coast actually declined by 10%. It is also inconsistent with reduced ferry traffic levels experienced in many other jurisdictions, such as Washington State.
- Selective comparisons of different transportation types and geographical locations can be misleading. It is noteworthy that air traffic between Vancouver Harbour and Victoria Harbour declined between 2007 and 2012 by over 31%.
- The analysis dismissed the decline in inland ferry traffic and incorrectly attributes the decline to the replacement of the Albion ferry, which is not an inland ferry.
- The estimated 31 million fewer passengers travelling during the period is overstated, and therefore the $2.3 billion calculation of loss to the BC economy overstates the GDP impact. Further, the analysis also assumes that those who did not travel on a coastal ferry, did not spend any money in BC. The analysis suggests that this is all new money to the provincial economy, and not a redistribution of spending.
- The analysis assumes 92% of the lost ferry users were tourists, which is much higher than the 22% estimate of tourists traditionally used by BC Ferries.
- Comparing lower property values and fewer business incorporations in coastal communities to non-coastal communities is a distortion. By including the Lower Mainland with non coastal communities, the comparison is skewed.
The analysis shows very little knowledge about the operation of ferry services. It understates the contributions made by government over the period in question and ignores the pressures facing the industry globally. Further, UBCM is using this analysis for its members to endorse a recommendation that the province restore service levels and reduce fares to 2013 levels without suggesting a source of funding and in doing so, expect the taxpayer to make up the entire financial gap that such actions would create. This would be irresponsible and would not be a sustainable approach.
The Province views ferry service as an integral part of the transportation system. That is why we have a vision of an affordable, reliable and sustainable coastal ferry system that respects the taxpayer while at the same time ensures basic service levels for coastal communities. Our vision for BC Ferries includes exploring a number of initiatives such as:
- Standardization and interoperability of vessels;
- LNG fuel propulsion;
- Passenger only ferries in complement to vehicle ferries;
- Alternative technologies such as the cable ferry to Denman Island which will save $2 Million per year;
- Changes to the Seniors Discount;
- Fixed links - such as the Gabriola feasibility study;
- Alternative service providers;
- Leverage additional federal investment; and
- Home porting changes.
Provincial taxpayers have provided $1.6 billion to the ferry system since 2003 and have increased their contribution by 70% over the same period. Despite the increase in funding, and in order to keep fares affordable, difficult choices had to be made to ensure that we could maintain a level of ferry service for coastal communities without burdening passengers with even higher fares. Therefore we made some tough decisions after extensive consultation and public engagement and reduced underutilized sailings to better align service levels to demand. I realize that some coastal communities may still be adjusting to the change in service levels. These service reductions were focused on sailings with chronically low ridership.
I am disappointed that UBCM has not taken a leadership role in facilitating a dialogue to discuss creative solutions instead of focusing the discussion on the past and a theoretical perspective on what could or might have been. This kind of analysis is unproductive and does not address the key issues that are facing British Columbians that live in coastal communities today.
With respect to the comparison of BC Transit service and BC Ferries funding, local governments play a very important role in funding BC Transit service in BC. I would look forward to discussing how local government can also contribute to the cost of providing ferry services to coastal communities. I believe it is time to have this conversation and look forward to participating in a positive dialogue to look at other creative solutions to address the problems that all levels of government can contribute to solving.
Todd G. Stone