ROAD EQUIVALENT TARIFFS
Another Approach to Ferry Fares
While ferry users agree they should pay for part of their ferry service, they also believe the 'whole' community, the government, should pay the balance to support this public transportation service. But how much should the government reasonably be expected to pay, or 'what's fair?' One approach to fairness is highway equivalency, or road equivalent tariffs.
The first approach has government supporting the ferry system to the same extent it would fund roads between points of comparable distances. Ferry users would pay the difference.
The second approach has the users paying what they would pay to own and operate a car over equivalent distances to the ferry routes, with the government paying the difference.
As an example of the first approach, the BC Government long ago committed to fund and operate a comprehensive ferry system to the same extent they would pay to build and maintain 'two-lane paved highways in hilly country' between points the same distance apart as the ferry system destinations. The highway equivalency formula provided necessary transportation at a reasonable cost and the coastal communities developed as hoped. This model has since been abandoned.
The second approach is illustrated by the Scottish and the Newfoundland and Labrador ferry systems. The Scottish system is about to start on a 30-month pilot program with fares based on the equivalent cost to the operator of operating a car on roads of the same length as the ferry journey.
WHY LOWER FARES?
High ferry rates have been seen by many as a barrier to economic growth on the islands. Lowering the fares to a level analogous to mainland traffic costs could act as a boost to island economies by reducing freight costs to local businesses, lowering the cost of living for island residents and making the islands more attractive to tourists.
The governments of Scotland and 'Newfoundland and Labrador' saw the standard of living in their ferry-dependent communities (islands, outports and remote peninsula towns) falling well behind their mainland counterparts as a result of high and higher transportation costs. The result of these high costs was an exodus of young people and businesses from these slowly dying communities. They recognized and responded to the need for intervention.
QUOTABLE QUOTES
Scottish Transport Minister Stewart Stevenson:
“For years, our remote and fragile communities have been expressing concerns about the affordability of ferry travel and the impact this has on islanders. Expensive fares can be damaging, not only to local economies, but to our national economy, and this Scottish Government wants to take action. We believe the way forward is to consider the benefits of introducing a Road Equivalent Tariff (RET) approach to setting fares. This pilot will examine that case - delivering cheaper fares for islanders, tourists and businesses.”
Danny Williams, Premier of Newfoundland and Labrador (March 12/07)
“Today's announcement is a significant investment for rural communities in Newfoundland and Labrador, and a meaningful demonstration of our government's commitment to ensuring that the people using our ferry system have fairness and equity. The reduction in ferry rates will benefit individuals who live in smaller communities especially those who commute to work. It will also provide more cost-effective access to private and public sector services. Additionally, it will stimulate our tourism sector, as lower fares will encourage our tourists to use the ferry system to see even more of our beautiful province.”
John Hickey, Newfoundland and Labrador Minister of Transportation and Works:
“This standardization of ferry rates will benefit the province as a whole but most importantly those living in communities not accessible by road.
Kevin Falcon, BC Transportation Minister:
“Boo hoo.
SCOTLAND ROLLS BACK FERRY FARES
The Scottish Government, in August 2007, engaged an independent consultant to: Study approaches to fare setting for public service ferries in other countries, including the Road Equivalent Tariff (RET) approach; offer definitions of RET that could be applied to all the subsidized routes throughout the system; provide an initial analysis of the potential economic and social impacts of introducing an RET approach
Road-equivalent fares derived from information from the Royal Automobile Club and the Automobile Association will be as follows:
These rates represent fare reductions of up to 50%. No fares shall be increased.
NEWFOUNDLAND ROLLS BACK FERRY FARES
The Newfoundland provincial ferry system has already adjusted their fares to a road equivalent tariff. Substantial fare reductions are anticipated in the Scottish system and have already been realized in the NL system. In March of 2007, the Newfoundland Labrador Government cancelled a proposed 5% fare hike and implemented a Road Equivalent Tariff.
BC KEEPS RAMPING UP FERRY FARES, FUEL SURCHARGES, CARBON TAX
Scotland is on the other side of the world. Newfoundland is on the other side of Canada. Why should we care what's going on there?
BC Ferries' fares, including fuel surcharges, on the non-major routes have risen at an extraordinary rate. Fares, including fuel surcharges, have risen over 54% between Apr 1, 2003 and Apr 1, 2008 across the Minor Route Group.
Government contribution as percentage of total revenue:
2004/05 2005/06
82.0% 83.5%
There were no fuel or other surcharges beyond the posted fares
Brutish Columbia
Government contribution to BC Ferries as percentage of Minor Route Group revenue:
48.5% 47.2% 43.2%
Surcharges beyond the posted fares are nuts and do not apply to the delivery of other provincial essential services. Yet.
Already, these sustained sharp increases have severely impacted residents and businesses in the coastal communities, driving up the cost of living and the costs of all goods and services purchased on or off island.
As in BC, ferry fares are not the only cause of these problems. They are, however, a major contributing factor. The governments have responded with the Road Equivalent Tariff as a means of reducing the fares while maintaining a sense of equity with other citizens who do their traveling on government funded roads and highways. There is an independently established baseline each year that the government can use to adjust fares, with everyone feeling fairly treated.
Above all, the RET approach has had and will have the desired effect of reducing ferry fares to many fragile communities in distress. In both Scotland and 'Newfoundland and Labrador' the governments acknowledged the need for greater government support, if their ferry dependent communities are to survive.
In British Columbia, no such independent baseline exists. The legislation which governs ferry service in BC, the Coastal Ferry Act, requires the BC Ferry Commissioner to regulate ferry services and tariffs in accordance with the principle that “the designated ferry routes are to move towards a greater reliance on a user pay system to as to reduce, over time, the service fee contributed by the government.” There has been no process in place to address the impacts upon the communities, the region or the province in general that may result from this legislated requirement.
The Scotland and Newfoundland and Labrador models, and the rationale supporting them, may well warrant consideration in BC.
Support your community advocates. Donations are urgently needed to cover the escalating costs of this ongoing website coverage. Thank you! -William Thomas
