BC Ferry Commissioner Gordon Macatee delivered his review of the Coastal Ferry Act to Transportation and Infrastructure Minister Blair Lekstrom.
The report contains 24 major recommendations for government, BC Ferries, ferry users and other stakeholders, all intended to better balance the interests of ferry users with the long-term financial sustainability of BC Ferries and the broader interests of B.C. taxpayers.
BC Ferries is one the largest ferry corporations in the world and, while it has made significant improvements recently, it needs to continue with efforts to minimize costs and generate more revenue. The report identifies that the ferry system is currently facing challenges, which are only expected to get larger in the years ahead.
Declining ridership and financial losses in the current year, coupled with substantial capital investment requirements for fleet renewal and terminal upgrades, is putting strain on the financial sustainability of BC Ferries. Ferry users consider further large fare increases to be unaffordable and are concerned that the operator is not sufficiently accountable. The Coastal Ferry Act, and its guiding principles, is not perceived to be giving consideration to the interests of ferry users.
The review clearly indicates that all of the principal stakeholders will need to be part of the solution in order to achieve a ferry system which is both affordable and financially sustainable. Specifically, ferry users will need to be receptive to changes in how services and levels of service are delivered; BC Ferries needs to accept additional oversight and accountability measures, and will have to focus even more on cost control and new sources of revenue; and the Province needs to define a vision for the future of ferry services and should consider additional financial support to ensure the system's sustainability.
To address this new direction for coastal ferry services, the review makes a number of key recommendations, including:
- Future price cap increases should be held to the rate of inflation.
- Capacity utilization of the ferry fleet should be improved.
- The commissioner should have more explicit authority to hold the operator accountable, and a new authority to conduct performance audits.
- There should be more oversight on capital plans and acquisitions.
- The Province should consider an increase in financial support for the ferry system and should further consider cushioning at least a portion of fuel price volatility, as is presently done on the northern routes.
- Municipal and regional governments should have the ability to play a role in keeping fares affordable and increasing ridership.
- BC Ferries should place a high priority on upgrading its reservation and point-of-sale systems.
- The commissioner should have additional tools when setting price caps to better consider the interests of ferry users and taxpayers.
In undertaking this review, Macatee and deputy commissioner Sheldon Stoilen conducted a comprehensive public consultation process, including 40 meetings in 27 communities, involving approximately 2,000 people. The public was also invited to comment on nine topics on the BC Ferry Commission's website, and meetings were held with BC Ferries, First Nations, municipal councils, chambers of commerce, tourism organizations, regional districts and other stakeholders.
As part of the larger review, PricewaterhouseCoopers LLP researched relevant price cap regulation systems in other parts of the world and other ferry systems in order to compare operating and governance models and the efficiency of BC Ferries. This research found some unique differences in the BC model, and also indicated that BC Ferries appears to be relatively efficient and well run.
The commissioner's role includes regulating core ferry services provided by BC Ferries that are defined in a Coastal Ferry Services Contract between the ferry operator and the Province, establishing price caps for each performance term and monitoring compliance with price caps.
Macatee was appointed commissioner effective May 1, 2011. He is an independent officer of the legislature.
To view the report and its recommendations in their entirety, visit: www.bcferrycommission.com/reports-press/whats-new/
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