Connecting the dots

Well, I’ve been reading through that new BC Ferries report—the one that proposes ways for BCF to increase efficiencies and reduce costs. There are four proposed strategies:

  1. Replace existing ferries with 3 new ones and convert Spirit Class ferries to LNG for savings in fuel costs (in process already)
  2. Business transformation strategies enabled by technology
  3. Make changes to the Major Route Strategy
  4. Make changes to the Southern Gulf Islands Strategy.

I don’t have time to do an in-depth analysis of every item in the report (got work to do!), but here are some things I noted, and some thoughts on their implications.

  • The first two items are within the terms of the Coastal Ferries Service Contract. The second two would require changes to it. This opens the door for an important redefinition of what services BC Ferries provides.
  • The report states that “In simple terms, BC Ferries generates revenue from three sources: fares; ancillary services such as catering, retail, travel packages and parking; and service fees paid by the Province for the delivery of service on all but the Major Routes… The efficiencies that BC Ferries achieves during a performance term help the Company build equity, which is re-invested in vessels, terminals and other initiatives to ensure the sustainability of the coastal ferry system and to reduce pressure on future fares. In the subsequent performance term, those efficiencies are “captured” by customers through lower price caps and/or by the Province through lower service fees.” (p3) [my emphasis] If I understand this correctly, efficiencies may lead to lower fares—or the government may choose to pay less for BCF services. Hm. When a culture of government cost-cutting is so prevalent, reducing service fees may well seem like a better option than reducing fares. And what are the implications of that down the road? It strikes me as a recipe for a spiral of reducing support and services.
  • Business transformation strategies enabled by technology: essentially this comes down to adjusting fare structures, improving online booking, and encouraging people to use the self-service online system for accessing information and making purchases. Presumably the primary cost savings will come through staffing reductions. While this certainly has the potential to save money, it is also symptomatic of a larger social problem: the technology-mediated disappearance of jobs, as described in a recent Economist article: “Where the middle class is going: To those that have shall be given.”
  • Possible strategies for the mid-island corridor include increasing service efficiency (“These options may include such strategies as: consolidating the two mid-island routes, consolidating the two mid-island terminals, leveraging a passenger only service or shifting Route 2 service from Horseshoe Bay to Tsawwassen, either entirely or in part.” —p20) and optimizing the number of vessels serving (“Significant operational and capital efficiencies can be gained if the number of vessels serving the mid-island corridor can be reduced.” —p 21). As noted, “It is contemplated that the Major Routes Strategy will challenge historically established notions of how BC Ferries’ service is delivered to the mid-island corridor, and will require changes in customer behaviour.” (p17)

I’ll say.

I’m in favour of governments looking for efficiencies and ways to save money. I also think that other considerations must play into policy. But everything in these strategies seems focused on only cost-saving efficiencies. The statement “The Company has a culture of cost containment” (p 3) reinforces that assumption. The document does state that implementing cost-reduction strategies will require significant public consultation, but after watching the last round of “public consultation” I personally find it hard to believe such consultation would be more than window-dressing.

Economists argue about the importance of balanced budgets; some schools of thought maintain that budget deficits are always harmful, others argue that deficits provide fiscal stimulus in lean times and are therefore not just beneficial but necessary. This government clearly falls on the side arguing that deficits are harmful, as demonstrated over and over again by their policies: a balanced budget always seems to take priority over services. The highlights from the 2014 budget state proudly on the front page, “We have stayed true to the principle that government should not spend more money than taxpayers provide.” There apparently will be no trade-offs—no recognition that it is reasonable to priorize services over economics under certain circumstances. Spending must be reduced, full stop. The management approach to BC Ferries can be seen simply one more manifestation of this policy.

What does all this have to do with a bridge?

A lot.

It seems to me that if the primary duty of government is seen as managing costs to produce a balanced budget—something we would emphatically disagree with—a bridge makes perfect sense: it reduces BCF costs by eliminating a service and transferring the costs to the Ministry of Transportation. (Yes, it would still be a government expense, but presumably a lower one.) If other issues are not considered in any substantive way, and if financially it can be shown to save even a little money, it’s a no-brainer for any decision makers who consider only relative costs.

Todd Stone has now publicly stated that the government “has no interest in cancelling or seeing the cancellation of the Horseshoe Bay to Departure Bay run.” My cynical side notes that “has no interest in doing it” does not actually equate to “will never do it.” But if they truly do decide not to pursue this option, they’ll be looking for other cost savings.

I wonder where?

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