Kevin Falcon on CKNW’s Christy Clark show on Wednesday, July 23, 2008

Clark: News that BC Ferries prices will be going up again. I’m joined by Kevin Falcon, BC’s Minister of Transportation. Thank you for joining me, Minister.

Falcon: No problem, Christy. Good to be on.

Clark: There have been eight fare hikes over the last five years. In some routes that means an over 80% increase in fares since you have been in government. When is enough enough?

Falcon: Well, look, I first of all want to be clear that these fuel surcharges are real. They impact people, and I know it’s very, very tough, but you know Christy I think we have to recognize that this isn’t the only sector of the transportation industry that is getting hit by this-railways, airlines, the trucking weigh scale, the truckers are having to deal with it. It is tough. And I guess the question really becomes: Is the government, the Province, doing enough on behalf of island-dependent (sic) communities? That’s the nub of the debate. Now we provide 150 million dollars each and every year to subsidy minor routes and northern routes and try and keep fares affordable, and that is a substantial amount of money, and I get that people think we should spend a lot more but, you know, it gets very, very expensive very, very quickly.

Clark: Well, you are spending 14 billion dollars on a rapid transit plan for the lower mainland. You’ve got billions going into the Gateway project that will make it easier to get to your constituents, among others, out in Surrey, Minister. Why are you allowing all these increases to be borne solely by ferry users?

Falcon: First of all, you’ve got to remember that ferries is also making multiple billions of dollars of investments. Remember, when we got elected in ‘01, we inherited a bankrupt ferry corporation with an average fleet 42 years old. The NDP drove that organization into the ground. Now BC Ferries has spent hundreds of millions of dollars improving the terminals. They’ve spent-they’re literally on a two billion dollar ship building program for the next 15 years to try to get that fleet upgraded. They’ve just brought in three new ferries-Super C class ferries-that are much more fuel efficient. So they’re doing their bit too. There’s lots of investment being made in the ferry system itself. But the fact of the matter is fuel surcharges are there to deal with the fact that their cost of fuel has doubled. Last year they were paying 86 million dollars in fuel. This year it’s140 million dollars. That is a big jump, and, you know, someone’s got to pay for it. There’s no question about it.

Clark: Someone has to pay for it! Why not the government?

Falcon: Well, I’ll ask you this question slightly differently. We now provide $150 million a year. To put that in perspective, for the Southern Gulf Islands, part of what they call the Islands Trust area, that’s about $59 million a year for 25 thousand people. That works out to a subsidy of over $2,300 per person per year. There is no other community in the province that you can point to that receives that level of ongoing, sustained support to deal with subsidizing the cost of their transportation. So I would argue we actually are doing something. Having said that...

Clark: Now you say that, though I bet you couldn’t even tell me what the subsidy is for the people who live in Whistler that are going to benefit from the massive amounts of money your government’s spending on the Sea-to-Sky Highway.

Falcon: That’s true, but the people driving that highway-

Clark: So how can you make that statement when you can’t even tell me that?

Falcon: Well, I’m going to tell you that right now, because the same people who are utilizing that highway are also paying the increased fuel costs to get them back and forth. The people in Fort St. John who are driving to Dawson Creek, believe me, they’re paying for it in the increased cost of their transportation. No one from government is coming and subsidizing their cost.

Clark: But you haven’t increased the subsidy for BC Ferries, though, significantly. When you go out and you spend 14 billion dollars on a transit plan for the lower mainland, that is an increase. You haven’t seen the same kind of increase for the ferries. What you’ve done is you’ve dumped all those increases are the feet of users.

Falcon: No, that’s actually not true. Last year we put in an additional $7 million of extra capital to help subsidize the increases of the costs on the northern and minor routes . We’re looking at taking the $13.9 million rebate that we fought to get back from the federal government on the three new vessels that were built in Germany. The NDP opposed us. We supported it. We’re getting those dollars back. We’re going to put that into the system to help defray the costs. That’s another 14 million dollars-

Clark: And you’re going to take credit for that? It’s federal money.

Falcon: It’s federal money that we fought to make sure went back into the system instead of having to pay it because they went and did the right things and got ferries built where they should have, below budget, ahead of schedule, when others were saying we should have forced them to build them here. So, look, I think we’re doing everything we can, be reasonably expected to do, but, Christy, I ask you this simple question: If you want me to cover all the costs of the fuel increases, it’s not my money. It’s actually your money, it’s the people in Prince George, Prince Rupert, Kamloops, Dawson Creek that will be asked to increase the subsidy but you can ask the question, but you know 50 million dollars last year alone is a lot of money.

Clark: I don’t know how many people would be asking you to cover all of the increase for the surcharges, but I bet a lot of people would say you should chip in and do your bit at least.

Falcon: I told you how we are doing that: $20 million between the $7 million we put in last year and the 13.9 that we got back from the feds and I give the federal government credit for not taking those dollars so we could-

Clark: Seven million dollars went into capital; it didn’t go in surcharge-

Falcon: No, no, it went into the fuel account.

Clark: And most of that is going to subsidize the northern route, isn’t it?

Falcon: Northern and minor routes.

Clark: Now why is the northern route getting special treatment, getting subsidized for their fuel surcharges and the southern routes aren’t?

Falcon: First of all, they are, as I just said, and secondly the northern route is a particularly unique situation where they have a 16 hour journey. That utilizes a heck of a lot of fuel, and for small ferry-dependent communities, they clearly are going to need some help on a long journey like that.

Clark: So they’re getting a lot more help. How much more?

Falcon: Well, there getting some more help, and so they should.

Clark: Because their fares aren’t going up 18 per cent. Their fares are going up zero.

Falcon: Well, they’re getting some more help because it’s a unique situation where they’ve got a long travel time. It’s totally different from the lower mainland and the gulf islands.

Clark: Now at what point do you think the fares are going to get so high that coastal communities will be harmed, Minister?

Falcon: Well, look, frankly I’m a little surprised that you haven’t seen a drop-off in ridership. I think there-

Clark: Apparently there has been.

Falcon: Well, there’s been some, but I thought frankly it would have been higher. I think there’s some resiliency, obviously, in the system. I think people change their behaviours, etc. But I think the fact of the matter is we are going to have to sit down with the ferry advisory boards and the communities and figure out, we’re going to have to look at levels of service. We’re going to have to look at how we can try and deal with this, because it is a big challenge, and I’m very sympathetic. I, look, I just took the ferries on the weekend. I know exactly what we’re talking about. It is a big cost. I know that. But, you know, 150 million dollars a year is also a big subsidy, and we are subsidizing seniors and students and those that are traveling on medical issues so, look, I think we’re trying to do our best to deal with this, but it is a big challenge.

Clark: What is the difference in your mind between subsidizing roads out to, for example, Surrey and subsidizing a ferry service on the operating cost for fuel surcharges from Vancouver to Victoria?

Falcon: What is the big difference?

Clark: Yeah.

Falcon: Well, if you are driving from Vancouver to Surrey, you’re spending and you’re three hours in traffic. You’re going to be burning up a pretty fair chunk of fuel, and you’re going to be paying those costs yourself without any subsidy from the government.

Clark: But you are subsidizing the building of the road. In fact, you’re financing it.

Falcon: Well, sure, the ferry corporation is financing billions of dollars of improvements to the ferry service too, and I get that people would rather not pay for that or make any contribution, but, you know, I’ve been around politics long enough-and, you should know, Christy-that you don’t get something for nothing. Politicians try to tell you you can, but it ain’t true.

Clark: But people who use the ferries, Minister Falcon, will look at even just the capital investment you made in BC Ferries which you say is about seven million bucks or, ah, you-

Falcon: Not capital, that was a contribution into fuel cost.

Clark: Into your fuel cost deferral account, thank you, and the contribution that you are making to support the Gateway and the rapid transit around the lower mainland, and they’ll say your priorities are quite clear: they don’t lie with people who live in coastal communities.

Falcon: Well, explain that to me. Show me one other community that gets over $150 million every single year to support transportation. Name the community.

Clark: And show me how much you’ve increased the subsidy to BC Ferries over the last five years versus the subsidy for the increase for your roads and rapid transit construction budgets.

Falcon: But it’s gone up every year, Christy, and I’ve just told you that the ferries is undergoing the most massive reinvestment program to try to make up for the utter devastation that were wreaked upon the BC Ferry Corporation under the NDP where they built three vessels that didn’t operate and starved the system of money. There were no upgrades made, not only to terminals but to any of the vessels. The average age is 42 years old. They are the most expensive ferries to operate in terms of fuel efficiency. And the ferry corporation is now going through-I think very successfully, by the way-having to deal with upgrading all their assets, improving the service. I don’t think by any measurement people cannot say that the ferry service has improved dramatically in the last number of years. So, the only issue is, it would have been a great system had not fuel prices doubled in the last 12 months. And I get that that is a big hit. I’m not trying to take away from that. All I’m saying is we continue and we are trying to deal with that-20 million dollars, additional dollars, into the fuel deferral accounts to try to keep down future rate increases, $150 million a year, each and every year, to subsidize the cost to minor routes, northern routes. That is a pretty substantial commitment that taxpayers right across the province are making.

Clark: Has BC Ferries come to you and asked for help in deferring, in adding, I guess, in-have they come to you and asked for more money to try and help to keep down this increase, this fuel surcharge increase that may be coming in the future if fuel costs continue to rise?

Falcon: Well, I’ve had-I’ve certainly had a number of conversations with David Hahn where he’s told me he’s very concerned about the cost of fuel increases, and we’ve looked at things. We’ve tried to figure out ways we can help deal with this. That’s where making sure that all the rebate dollars we got back from the feds that we would have had to pay for the ferry corporation to make a smart decision that-we’ve taken all those dollars, we’re going to put it back in the deferral account, same with the $7 million we put in last year. That’s all about trying to deal with this, but, look, the cost has doubled in the last year. That is a huge-that’s over $50 million. Those are significant dollars. I don’t want to pretend it’s not a big challenge. $20 million almost seems like a drop in the bucket, doesn’t it,
when you think about the scale of the problem?

Clark: Is there going to be any more money from the Province to help bear the burden of these increased fuel costs or is the rest of it all going to go on users, Minister?

Falcon: Well, there’s-certainly not in the short term because the numbers, we’ve run some numbers on this trying to figure out how we can deal with it, and, Christy, I can tell you and I can tell all the listeners out there: it’s gets very, very expensive very, very quickly. So that’s not the answer. I think we’re going to have to look at, talk to the communities about service levels, try and figure out ways we can run the system maybe a little more intelligently. I think ferries is doing a very good job in that regard. We’re going to have to have discussions about that to try and reduce costs.

Clark: What will you be looking at in terms of service levels? You mean reducing service levels?

Falcon: Possibly reducing the number of trips to certain of the islands, possibly looking at, as ferries has talked about, maybe there’s got to be a separate card or fee that can be for those that live fulltime on island-dependent (sic) communities. There might be something they can do there. We’ll be as creative as we can. I’ll tell you I’ll do whatever I can to try and help deal with this with ferries in a way that makes some sense, but I just, I just, I’m not one of those people who tries to make promises you’re never going to be able to fulfill and pretend that the doubling of fuel prices isn’t something that’s going to have to be paid for and borne in part, at least, by people who are using the system.

Clark: Mr. Falcon, one last thing, lots of those ferries, at least on the smaller routes, are jammed, at least in the summer, if you reduce the level of service, if that’s one of the things that you’re considering, won’t you just make it way harder for people to get on the ferries?

Falcon: Yeah, and clearly you wouldn’t want to do in peak seasons. Nobody’s saying let’s do anything stupid here. I think that one of the discussions at least we can start to have with those communities is to say, look, if we can find some savings by reducing frequency, particularly during the times of the year where it’s not peak, where you haven’t got the jam situation, maybe that might make some sense. I don’t know. I just think that’s a discussion that’s probably worth having as part of a broader discussion to how we all work together to deal with this.

Clark: Minister Falcon, thank you.

Falcon: Thanks very much for having me, Christy.