The Topline
- B.C. Premier David Eby criticized the federal government last week over what he described as unfair treatment of B.C. ferry passengers compared to those in Atlantic Canada
- He argued BC Ferries users get on average $1 in federal subsidy, compared to the $300 in federal subsidies that eastern ferry users get
- BC Ferries sparked backlash after announcing that four new ships would be built in China using a $1 billion loan from the Canada Infrastructure Bank
It's apples to oranges
On the surface, a subsidy of $1 versus $300 from the federal government seems outrageous. But there’s more to it than that.
BC Ferries was converted from a provincial crown corporation to a private company in 2003 when the BC government passed the Coastal Ferry Act . BC Ferries was established to be an independent operating company and mandated to operate on a “commercial” basis. That means BC Ferries can access private financing, manage its own debt, issue its own bonds, and maintain its own credit rating.
Essentially, the government wanted BC Ferries to run like a self-sustaining private operation, and it does. Roughly 75% of revenues for BC Ferries comes from direct sources like passenger fares, vehicle fares and, and revenue from those (oh so delicious) White Spot burgers.
Any federal subsidies were agreed to by the provincial and federal governments back in 1977. Yes, that was a long time ago, but those agreements unequivocally spell out the exact amount of funding to be provided and are indexed to inflation. No more, no less.
In fact, the 1977 agreement with the feds makes it super clear that the province was to assume sole responsibility of operating the ferries in return for an annual federal grant (which came to about $32 million last year).
Meanwhile, on the other side of the country, it’s a very different history. From day one, responsibility of operating ferries was put entirely on the shoulders of the federal government.
When Prince Edward Island joined Canada in 1873, the federal government agreed to pay for a link between the island and the mainland. Under the 1949 Terms of the Union, which set out conditions for Newfoundland joining Canada, the federal government agreed to operate ferries between Nova Social and Newfoundland.
Today, PEI is now connected by bridge, and Marine Atlantic is a federally owned crown corporation. And, like any federal crown corp, of course it’s going to receive significantly more federal money than a private provincial company like BC Ferries.
They’re simply not comparable. Last year, BC Ferries carried 9.7 million vehicles and 22.7 million passengers , the busiest fiscal year on record. They have 37 boats operating on 25 routes. Meanwhile, Marine Atlantic’s latest report shows it carried only 367,000 passengers . They have only four boats, running on two routes.
So what?
If Eby wants to ask Carney to revisit the agreements, that’s fair enough. But to suggest the federal government is choosing to treat British Columbians unfairly is playing politics and ignores the fact the existing 1977 agreement and 2003 restructure were both signed by the province.
What's fare is fair
Eby has a point, and frankly, the feds opened the door for it with their recent criticisms of the decision to buy sorely-needed replacement ferries from China.
BC Ferries isn’t a crown corporation. In 2003, it was converted to a private company. That means BC Ferries can access private financing, manage its own debt, issue its own bonds, and maintain its own credit rating.
It also means that when it comes to purchasing replacement ships, its priorities are clear – put it out to bid, and go with the best option. In this case, China was the only respondent who could deliver the boats on time and on budget.
No Canadian shipyard responded to the RFP, reportedly because they are tied up building ships for federal government contracts. The decision to choose a Chinese shipyard drew sharp criticism from Chrystia Freeland, who suggested in a letter she was “surprised” and “dismayed” at the decision.
But here’s the kicker. Her letter made it sound like she was unaware the federal government’s own Canada Infrastructure Bank was providing a loan to the tune of $1 billion for the purchase.
Freeland’s comments opened the door for Eby to point out not only the inequalities in ferry subsidies, but something even bigger. Back in June, he pointed out that Atlantic Canada has their ferries paid for by the exact same Chinese shipyard as the new B.C. ferries.
So let’s get this straight. Marine Atlantic received a new ferry fully paid for by the feds, built in China. Meanwhile, BC received a loan, and was then dumped on by the same government who issued the loan for buying the boats from the same Chinese shipyard the feds chose.
Help us make that make sense.
So what?
Eby is rightfully flagging the inequitable treatment by the federal government between the east coast and west coast with ferry subsidies and the national shipbuilding industry as a whole.
If the government wants to criticize the purchasing decisions of BC Ferries, then all Eby is saying is they should put their money where their mouth is and help pay for the new ships to be built, like they did for the east.
