BC Ferries new CEO
Vaughan Palmer reports on the appointment of Mike Corrigan (David Hahn’s No 2) with a cut in pay and bonuses.
BC Ferries have always been a political football – just like transit – and the BC Liberals efforts to distance the corporation from “interference” has been a real mess, but one of their own ideological creation. Hahn was simply doing what was expected of him, and behaving like any private sector CEO does these days. Unsurprisingly, this incurred the wrath of the very same people who vote for the BC Liberals, but think that they are themselves a special case, when it comes to public sector cut backs.
Most of the adjustments to the pay package are expected and reasonable. Where I think the discussion gets interesting is when Corrigan describes the challenges
The main challenge,as he sees it, is to deal with the controversy over fare equity. Residents and businesses who rely on the service are bridling at what they see as too many fare increases in recent years. But most of the ferry costs are determined by matters beyond the control of the corporation.
The big three:
Fuel costs –three times higher than the worst case projection when Corrigan joined the company.
Staffing costs – determined by labour contracts and staffing levels set by Transport Canada.
Service levels – set by government contract and, despite utilization rates as low as 15 per cent on some of the smaller runs, highly sensitive to public protest at any hint of a reduction in services.
I think each of these requires some informed debate
Fuel costs – a big chunk of that is taxes. In other jurisdictions, transit and ferries are tax exempt, simply because they are also tax subsidized. It makes very little sense giving a public service entity public funds simply to claw them back again as taxes. This is more than just an accounting principle – and in Canada is confounded by the ridiculous way that governments levy tax on tax. Actually in terms of total percentage of costs, fuel is nearly always a smaller percentage of the total than labour.
Labour contracts are not of course determined by the feds – this is just sloppy editing. However, Transport Canada does require that there are enough trained people on board to help passengers in case of a vessel sinking. And that is determined by the vessel capacity and not its occupancy. Wage rates, and other work conditions and benefits, are determined by collective bargaining and the ferries are one of the few cases left where this is allowed to work. In most other public sector jobs, all kinds of pressures are being applied to “cut costs” i.e. reduce wages and benefits for the many in order to financially benefit the very few. Of course, the spin is all about the public interest and the virtue of balanced budgets. But the only reason that BC Ferries wages and befenefits now look generous is that the private sector has been busy rolling them back – spurred on by deregulation and privatization (or the threat of it).
“Service Levels are set by government.” This and the statement “utilization rates as low as 15 per cent on some of the smaller runs” are the Post Media talking points – and framed in a way that will get the predictable response from the readership. The 15% is a nice figure to fling around – especially in the absence of any context. Is that 15% on some sailings on the worst routes? Or is it a reasonable rounding of overall performance on all but the Mainland to Vancouver Island routes? I suspect it is the former, but will be treated as the latter. And I suppose I really ought to go read some of the Ferry Commissioner’s reports as it is bound to be buried in there somewhere. I will leave that to the commenters I expect to attract. Fair warning though – if you cite figures I want chapter and verse and a URL. Opinion is free but facts are sacred.
It is the principle that is important. BC seems to be stuck with the notion that cross subsidy in ferries and transit is inevitable and necessary. It is also applied by the Passenger Transport Board to long distance bus services, but is noticeably failing to secure public service in sparsely populated areas. Of course, it is easier to defend cross subsidy applied in general to a range of services: that way you get a big enough vested interest cheering section. If you piece out each route, and determine a way to fairly allocate overhead costs (i.e. those common to providing any service at all) it is possible to produce data that allows some more informed debate about how much subsidy goes to each route – or even each passenger. It also make it possible for those who have a principled objection to every public service expenditure (“wasteful” “inefficient” “let the market decide”) to pick off each route in turn as they rise up the ranks of “most subsidized” and fall one by one to the axe.
We have seen a steady erosion of public services in general at the same time as we have seen a steady reduction in what we now call “middle class” real incomes. We can be blinded by the impact of new technologies, which has enabled the steady reduction of employment of people who were actually really needed to provide quality services. We have seen this in health and education – and of course arts and culture too. Everything has been cheapened and dumbed down to a marketable commodity. We have lost librarians and teacher’s assistants, care aides and conductors. Anyone who was there to help and make the experience worthwhile for everyone. Of course, this was painted as “necessary” – but in reality was only necessary if you accept the argument that greater inequality was a worthwhile objective. That the “bottom line” actually measured something that was worthwhile instead of all those intangibles that make the right wing so uncomfortable.
At the same time, public spending on arms and militaria, “crime and punishment” and, of course, new roads was pretty much ring fenced against the cuts.
Ferry service is critical to many small communities. Indeed, those in the interior that required a lake or river crossing were generally exempt. But the coastal communities were always marginalized. The right even glorified their treatment of “the heartland” – the large rural constituencies where votes count for more, and the right is usually confident of a safe seat.
For transit systems, the weapon of choice has always been some form of local taxation – usually one as regressive as possible. That has been used steadily to limit the amount of publicly supported service – and, in terms of limiting spending has been quite successful. The costs, of course, have been widespread, borne mostly by those least able to afford them and often quite hard to quantify. Especially when there is a lobby group dedicated to ensuring as much confusion as possible to defend the status quo – which happens to benefit them.
For ferries the lines of conflict are a bit blurrier – but they follow the same fault lines. The truly wealthy have their own means of getting around and do not line up for anything, let alone a ferry. They also like the idea that some places are beyond the reach of the common people and can become steadily more exclusive.
There have also been some rather salutary failures of the private sector in ferry services in BC. Mostly because they tried to “cream” a market that was already well stratified thanks to competition from other modes (helicopters and float planes).
My own view is uncomplicated by attachment to any of the places that are impacted. I have no special affection for them simply due to the accidents of my history. I have been to the Sunshine Coast and Bowen Island, but I have no ties to either. I think it would be useful to see a list of routes with a breakdown of costs and revenues, with ridership data. Indeed, I was quite surprised when such data emerged from Coast Mountain Bus Company, and was used in the discussions over how much the South of the Fraser pays – and benefits – for bus service. I think that since we all pay for the “under utilized” ferry routes, we ought to be shown this information. And we ought to be able to trust the source too, and not be subject to spin and presentation. The more someone is a “communications professional” in these matters, the more they should be treated with scepticism.
And yes, at the end of the day, it is a political decision – and there is nothing wrong with that. Provided we have a representative and responsible democracy. Since the subsidy comes from provincial taxes, it is quite proper that the leg in Victoria has the final word. And that there are open committee hearings to inform their decision making. It is when the political process is corrupted by special interests that we need to be alert.
The BC Liberals have not ruled this province for the benefit of the entire population. Their track record is dismal and they have indeed lost the public’s trust. So any “reform” from them is of dubious value and unlikely to survive them now. Mike simply has to hold on until after the next election. The questions will not change very much. Just the way they are dealt with.