Fare freeze the ‘prudent’ plan for BC Ferries, Dix says

An NDP government would not proceed with planned fare hikes to BC Ferries, but would instead give the company $40-million over the next two years to help cover costs, Leader Adrian Dix said. He also said he would "audit" the company to find ways to reduce costs and protect services, adding that corporate salaries would be part of the audit.

Mr. Dix said Wednesday the company had reached a tipping point where rising fares were depressing the use of the service, which in turn reduced revenue.

A 4-per-cent fare hike went into effect on April 1 of this year. Two additional 4-per-cent hikes are planned for 2014 and 2015.

The announcement comes just two days into the election campaign and at a time when BC Ferries is struggling with an aging fleet of vessels and low ridership on many sailings. Sometimes the crew outnumbers the passengers.

The announcement has also raised fresh questions about how the government can best deal with the company's $1.2-billion debt.

The NDP says, if elected, it would pay BC Ferries $40-million over two years to cover the cost of the proposed increases.

"That's the plan. It's a prudent one," Mr. Dix told reporters during a scrum Wednesday.

The Liberals came out swinging later in the day, saying Mr. Dix's math was simply wrong, and his plan to axe the fare increase would cost the company millions of dollars.

The Liberals said fare increases would generate $60-million in revenue over the two years. Proposed route changes, which they say Mr. Dix also plans to cancel, would save the company an additional $26-million.

"It's time the NDP stopped playing games with voters and put out their full platform to let people know exactly which commitments they would break as government," Liberal MLA Mary Polak said in a statement. "To say that the NDP platform was made up on the back of a napkin, does a disservice to all napkins currently in use in British Columbia."

Some critics, however, see the issue as indicative of a larger problem with BC Ferries' current financial structure.

"Freezing fares without restructuring the way the corporation operates and without providing a broader base of financing for the company will do nothing but accelerate the rate at which the company will fall into a sea of red ink," said former MLA Gordon Wilson, a provincial Liberal leader from 1987 to 1993, who later crossed the floor to the NDP.

Mr. Wilson released a report this year dissecting BC Ferries' finances on behalf of several coastal businesses. He says the NDP's announcement of a fare freeze is simply "candy" that's being tossed out to ferry users at election time, lacking any in-depth analysis. Mr. Wilson says what's needed is a total restructuring of the finance model of the company. In his report, Mr. Wilson says BC Ferries is run as a government-sanctioned monopoly Crown corporation, but instead should be run with direct government control through the British Columbia Transportation Financing Authority. He says BC Ferries should be treated as a tolled portion of the highway, where the cost is shared equitably by all British Columbians. Currently, many ferries running in the Interior are free of charge.

Bringing BC Ferries under the BCTFA would allow the company to tap into a broader asset base to deal with debt and financing, Mr. Wilson said.

"You would have thought they would have learned from the 1990s when they tried exactly the same thing by freezing fares without structuring a broader base," Mr. Wilson said about the NDP.

Mr. Dix did not answer a reporter's question Wednesday about bringing BC Ferries back into government control.

The BC Liberals have said in their platform they plan on using a third of the revenue generated from liquified natural gas to pay off the BC Ferries' debt.

With a report from Ian Bailey