Ferrycorp was created expressly to demonstrate that the corporate business model would be the best way to deliver social services and infrastructure to the people of B.C
The dream was big, the hopes high. We would be free from bureaucratic inefficiencies, political decision making, and we would get low cost, dependable, efficient service when and where it was needed. Ferrycorp was to be the flagship bringing a new era to the delivery of fundamental social services to the people of B.C.
The marine highway system was chosen for this experiment because it was easily severed from the main body of the overall provincial network. Unlike provincial highways in the rest of the province, the marine highway system was now to stand on its own, pay its own way, become a private sector entity.
The business model was simple. To acquire the cash needed to bridge the gap between revenue and expense, the marine highway system would now borrow from the private sector, rather than obtaining funds from the Treasury board. This way investors could make money, the marine highway system would operate as a business, and the province would save tax dollars. A win-win.
To raise funds for its new debt load the marine highway manager, Ferrycorp went to the private investment community and borrowed as needed guaranteeing fixed rates of return. It soon became apparent that the gap between revenue and costs, especially of servicing debt, was widening, resulting in more borrowing.
What to do? Increase fares was the answer. Over time the fare increases resulted in the forecast ridership growth disappearing, so revenue targets were not met. Thus costs continued to grow and Ferrycorp borrowed more money.
By the time 2012 rolled around, Ferrycorp was in trouble. There was a very real prospect that it could not service its debt load along with its other commitments.
But it was a much bigger problem than simply Ferrycorp. The people who give credit ratings to the province were worried. If the marine highway system defaulted, it would drag the overall provincial rating down, and that would be a very, very serious problem indeed.
So Ferrycorp was given its marching orders; fix the problem. Like any business in this situation, there were only two options. Reduce costs or increase revenue. Ferrycorp did both. Thus the unprecedented policy of raising fares while drastically cutting services was implemented. It had no choice. The provincial rating was at stake.
Based on these actions and hopeful forecasting, the new fiscal plan is out. The investors and the rating community are satisfied until 2016. After that, well, no one really knows.
No matter how you slice it, Ferrycorp has to shed debt. The current model is unsustainable and will result in eventual bankruptcy. One way to do this is for the province to bring the marine highway system back into government, retire the debt and the problem goes away. This can easily be done. It is not a problem of money, the government has the resources to do this.
It is a problem of ideology. There is a steadfast refusal by this government admit that the corporate business model applied to social services and infrastructure is an abject failure.
But wait! There may be another way to keep the social experiment alive. Following the corporate methodology of examining all parts of your operations and either selling off or closing down those parts which don’t make money, Ferrycorp can survive for a few more years.
Rearrange the ferry crossings to Gabe from the sand bar on the other side of the Salish Sea. With the Duke Point run gone, a major cash drain on the company is removed, and along with continued fare increases, the fiscal plan looks pretty good. Good enough for the investors which is all that matters.
So, that’s how Gabe fits in. A stepping stone to the big island. It is not about replacing the Quinsam for cost reasons. The money saved by eliminating this route is a pittance, it does nothing to fix the problems facing Ferrycorp.
As this government gets more and more desperate to save Ferrycorp, the schemes will get more and more bizarre.
This madness will only end when government admits that the corporate business model is not the way to deliver social services. The only solution is to administer the marine highway system as part of an overall transportation infrastructure run by the province for the benefit B.C citizens, not the investment community.