BC Ferries could be brought back under provincial government control

Mar 3 2022, 10:54 pm

New proposed legislation put forward last week could bring BC Ferries back under the direct control of the provincial government, but in a way that is just short of reverting it back into a crown corporation.

Currently, BC Ferries is operated as a private company, with the provincial government as the whole owner from being its single shareholder. The ferry corporation is governed by its own corporate board of directors.

If the legislation is approved, it would provide the BC Ferry Authority with new oversight powers that override the corporate board and other ferry corporation leaders.

This effectively creates two separate boards to oversee BC Ferries, with the authority board appointed by the provincial government, and the corporate board overseeing direct governance.

To exercise the will of the provincial government, the authority board would be able to “establish matters the authority considers important” and issue legally binding directions to BC Ferries and its corporate board. Resolutions approved by the authority board would then be posted publicly on the authority’s website.

BC Ferries would then be required to comply with any direction by the authority board, ensure its strategic and business plans take the authority’s resolution into account and ensure its annual report for the year describes the actions it took in response to the resolution.

Under the new legislation, the authority board would also be able to remove any directors of the corporate board and determine the compensation plan for BC Ferries’ corporate executives in alignment with the provincial government’s public sector.

Since forming provincial government, the BC NDP has been looking to rein in BC Ferries, starting with the 2018 completion of its Coastal Ferry Services Review on all aspects of the ferry corporation’s operations and performance. The provincial government also expressed disappointment during the first year of the pandemic when BC Ferries, troubled by the pandemic’s sudden collapse on ridership demand, made significant changes to curb its financial bleed by cutting routes, service levels, and staffing and making major layoffs to its unionized workforce. Later in 2020, an independent arbitrator ruled BC Ferries violated the collective agreement with the union representing workers.

The authority board’s new powers could determine fares to maintain the provincial government’s interests to ensure affordability, and determine service levels, especially for minor routes serving remote communities. The provincial government provides BC Ferries with an annual operating subsidy to cover the cost of ensuring remote communities are served.

But another key motive for the legislation could potentially be driven by Premier John Horgan’s desire to have new vessels ordered by BC Ferries built by BC shipyards. During the October 2020 provincial election, Horgan made a campaign promise to implement a long-term BC shipbuilding strategy to create more jobs and bring more work to local shipyards

“For years, shipbuilding was being outsourced to other countries — leaving BC workers and companies behind,” said Horgan in a statement in October 2020. “Our long-term strategy is about making strategic investments that will keep BC shipyards modern and competitive, able to win more contracts and create more jobs.

“The shipbuilding and marine industry in this province has become a critical and long-term economic engine, and we need to preserve and protect it. The Shipbuilding Strategy for BC represents an important next step in that journey.”

At times a hot issue, the vast majority of the new ships ordered by BC Ferries over the past two decades were built by European shipyards. But the ferry corporation repeatedly defended its contract decisions by stating that local shipyards did not express interest. Few formal bids have been submitted by local shipyards over the years.

In February 2021, BC Ferries told Daily Hive Urbanized it was in the process of considering a strategy to build seven additional Island Class electric-battery ships in Canada, but it would come at a significant cost premium given that Canadian shipyards do not have the same economies of scale as the far larger and more active European shipyards.

bc ferries island class victoria inner harbour

BC Ferries’ third Island Class vessel arriving at Victoria Inner Harbour on July 22, 2021. (BC Ferries)

The cost of seven additional Island Class ships and modifying nine terminals with charging infrastructure was estimated at $1.04 billion. Full electrification modifications to the first six Island Class vessels — fully arriving in BC this year — and adding charging infrastructure to the first nine terminals would cost $150 million, bringing the total future cost of the expanded Island Class fleet program to $1.19 billion. BC Ferries made it clear that such a strategy carrying higher capital costs would require funding from the federal and provincial governments.

BC Ferries is also looking to replace all five C-class ferries, which were built between the late 1970s and early 1980s. The C-class ferries are some of the fleet’s largest vessels and serve the major routes between Metro Vancouver and Vancouver Island. This includes replacements of the Queen of Alberni, Queen of Coquitlam, Queen of Cowichan, Queen of Oak Bay, and Queen of Surrey. Prior to the pandemic, the ferry corporation was aiming to have the first new C-class replacement vessel in service by 2024. The replacements could potentially offer the same size and capacity as the European-built Coastal-class vessels, completed in the late 2000s.

The last time the provincial government directed BC Ferries to conduct a major local shipbuilding contract was in the late 1990s, which produced the highly controversial PacifiCat fast ferries. This ill-fated, built-in-BC shipbuilding effort contributed to the BC NDP’s electoral demise at the turn of the century and motivated the BC Liberals’ provincial government to convert the Crown corporation into a government-owned private corporation in 2003.

Kenneth ChanKenneth Chan

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