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Rob Shaw: With BC Ferries on the rocks, NDP government scrambles to right the ship

The chair and CEO who addressed ICBC under John Horgan now has BC Ferries to fix under David Eby
BC Ferries is leaking red ink and sailings are being regularly cancelled due to staff shortages. VIA B.C. FERRIES

The NDP government claimed concern over cancelled sailings and ongoing staffing shortages when it took direct political control of BC Ferries last spring. But almost a year later, those problems are worse than ever — on Sunday, for example, every single sailing on the Brentwood Bay to Mill Bay route near Victoria was cancelled due to crew shortages.

The continued problems beg the question, what the heck have New Democrats been doing since they took the wheel at the quasi-private corporation?

Turns out, Premier David Eby’s government has been quietly scrambling to avert a financial catastrophe at BC Ferries.

The timeline of the crisis was made clear in a filing last week by the province’s independent ferry commissioner. It went a long way to explaining why the previous NDP administration of John Horgan started clawing back control of the company last year.
The financial picture is so bad that commissioner Eva Hage authorized an up to 9.2 per cent fare hike every year for the next four years. The government insists it can keep that under three per cent annually, with a last-minute bailout of $500 million.

You can trace all of this back to last spring.

BC Ferries was internally preparing a 163-page detailed analysis of its ferry loads, forecasts and financial projects for the ferry commissioner. Things looked bad.

CEO Mark Collins warned government (and the public, and pretty much anyone who would listen) that traffic had yet to return to pre-pandemic levels, the $304 million government pandemic bailout fund was dry, labour and fuel costs were skyrocketing, workers were leaving for higher-paying jobs elsewhere, and billions of necessary ship replacements and terminal upgrades that were deferred during the pandemic must be done to keep the ferry service operational.

The NDP, though, was not receptive to the warning. Premier John Horgan’s office had bad blood with Collins for trying to lay off workers during the pandemic, and for successfully squeezing more money for bailouts out of the province than it wanted to spend.

Horgan’s office decided the problem was Collins. Maybe if it threw him overboard, some of BC Ferries’ crises would go with him.

The government appointed former NDP cabinet minister Joy MacPhail to the BC Ferries board on June 20. Nine days later, she was named chair of the board. Then, in her first meeting with CEO Mark Collins on July 22, she executed the wishes of the premier’s office and fired him.

“There are no quick fixes to these systemic challenges but as a board, we believe it is time for renewal, fresh ideas and a renewed commitment to the highest standards of customer service, safety and affordability,” she said.

MacPhail, with the NDP’s blessing, sets about rejigging BC Ferries numbers. But, turns out, they were awful because they were true, not because of Collins.

Two months later, in late September, the now-leaderless BC Ferries was required by law to submit its report to the commissioner. Amidst the red ink, it admitted it needed 10.4 per cent fare increases every year for the next four years, to stay afloat. So much for blaming it on the CEO.

That little bomb was a nice welcome present for Premier David Eby, who took office Nov. 18 and immediately faced a series of dumpster fires on portfolios across government.

When McPhail outlined the dire ferry situation, the new premier sat up and took notice. After all, MacPhail and Eby were old friends and colleagues from when she was board chair of the Insurance Corporation of BC and he was attorney general overseeing the agency.

There was money available to help BC Ferries from the province’s multi-billion surplus, but the question facing the new premier was whether he could hand it over to a beleaguered corporation without a leader there to spend it wisely and ensure fares stayed low.

The solution was ICBC CEO Nicolas Jimenez. Eby trusted him because Jimenez helped him implement the contentious no-fault insurance reforms. Together, MacPhail, Jimenez and Eby pulled off an extraordinarily difficult financial turnaround at a longstanding problematic Crown corporation. Maybe, together, they could do it again at BC Ferries.

Jimenez agreed to give it a shot. He was announced as the new CEO Jan. 17.

“Nicolas Jimenez is the right leader at the right time for BC Ferries,” MacPhail said at the time. The right guy being someone both Eby and MacPhail trust. The right time being while the corporation was sitting on a bombshell request for enormous fare hikes that would infuriate the public.

With the CEO in place, the premier could dispense the money. He coordinated a half-billion dollar bailout within a month, and announced it on Feb. 26.

“By acting now, we can prevent double-digit fare increases from hitting people who depend on our ferries,” said Eby.

There were only two problems with the bailout — it was too late for the independent ferry commissioner to include in her March 31 report to recalculate the 9.4 per cent fare increases, and, also, nobody knew how it was actually going to be spent to keep fares low.

“The commissioner’s preliminary decision does not take into account the provincial government’s recently announced $500 million in new funding, as the details as to how this funding will be applied have not yet been determined,” the ferry commissioner’s office said in a news release accompanying her report on Friday.

No matter, insisted Transportation Minister Rob Fleming.

“I want to assure British Columbians, particularly those who rely on our coastal ferry service, that our goal of holding annual average fare increases to no more than three per cent remains,” he said in a statement.

All of which brings us to the present.

BC Ferries remains in big-time trouble. In just 10 months, it has changed its CEO and board chair, and received the biggest financial aid package in its history. Yet, sailings continue to be cancelled, workers continue to leave and the public continues to grumble at unreliable service.

Jimenez, MacPhail and Eby have their work cut out for them. There’s every reason to believe they’ll be successful in fixing BC Ferries, given their track record of reforms at ICBC.

But, the public should all be clear about what's happening.

The government’s latest bailout effectively made BC Ferries a Crown corporation. It’s no longer arms-length from the government. Its leadership team was approved by the premier, it’s accountable to the premier’s office, and it requires, at the very least, the tacit approval of the premier and his government before any major changes are made that could make waves with the public.

Maybe that’s the way it should be, to fix the crisis. Or, maybe like in the past, the involvement of politicians at BC Ferries will just make the problems worse.

Either way, this government should be honest about what it’s doing. And then, it should be judged accordingly by whether anything changes.

Rob Shaw has spent more than 15 years covering B.C. politics, now reporting for CHEK News and writing for Glacier Media. He is the co-author of the national bestselling book A Matter of Confidence, host of the weekly podcast Political Capital, and a regular guest on CBC Radio.

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