Back when a certain German chancellor began the welfare state in the 1880s, state intervention was argued to be a necessity to provide universal education, accident insurance and universal pensions. (The chancellor, Otto von Bismarck, was clever, as he guaranteed pensions at age 65 when the average German lived to just 45.)
On the other side of the Atlantic in the early 21st century, apparently plenty of Canadians think government must protect us not just from illiteracy in childhood and poverty in old age. In addition, Ottawa or the provincial governments (or both) are meant to give us a divine right to unlimited Internet access and subsidized ferry crossings.
Let’s start with the last issue first. BC Ferries, that weird hybrid that’s neither quite a government entity nor a fully private company, responds to the predictable missing private check on bad business practice – bankruptcy – by appealing to the true masters of its many ships’ fate: government.
When the corporation-formerly-known-as-a-Crown needs money these days, the people who set its fiscal course become obvious: politicians. They in turn play to those who yell loudest: subsidized ferry riders on B.C.’s lightest-travelled routes.
BC Ferries, for those who missed it, is threatening to double ferry fares over four years.
It’s been nine years since I lived in Victoria and regularly took the Swartz Bay-Tsawwassen ferry but apparently the gorgeous scenery (thankfully) isn’t the only thing that hasn’t changed. Before I left, I commissioned a study that analyzed the major routes (think Tsawwassen-Swartz, Horseshoe Bay-Nanaimo, Tsawwassen-Nanaimo).
Back then, all brought in a lot more revenue than expenses, which is good because that’s normally how companies stay afloat.
In contrast, the smaller routes were all money-losers. When I brought that up publicly, those living along the lightly travelled routes thought it a quasi-constitutional right to have ferry passengers on the heavily travelled voyages pay more than would otherwise be required so the sparsely travelled routes could be subsidized.
The argument from the idyllic islands or along the northern coast was always hollow. After all, the cost of housing in Vancouver has always been far in excess of that paid by those in rural hamlets, Gulf Coast hideaways or on the north coast. If someone desires to live in a remote location, great. But the notion that others should subsidize that choice through higher fares and general taxes struck me then, as now, as another entitlement mentality run amok.
The math hasn’t changed. In its 2001 report, BC Ferries notes, “the greatest portion of our revenues, 58%, was earned on our three major routes.” The ferry corporation also points out that “neither ferry transportation fees [the province’s main subsidy] nor federal/provincial subsidies are received in support of service provided on our major routes.”
So the cross-subsidies still exist. So too does this: massive taxpayer support. In the 1990s, the province and Ottawa gave BC Ferries between $26 million and $41 million every year. In 1999, total subsidies amounted to $46 million. That almost doubled to $87 million in 2000. Now? $178 million according to the 2010 report, though that doesn’t include duty remission rebates, stimulus cash or interest rate “support.” So think close to $200 million.
Still, curious as is the notion that taxpayers who live in high-cost cities should also subsidize ferry travel instead of insisting on full-cost recovery, that entitlement almost pales in contrast to the recent decision by federal Industry Minister Tony Clement to overturn a CRTC decision on Internet service providers (ISPs).
As most readers know, the CRTC decided to force ISPs to move to use-based billing for their clients. This would be a change for some smaller ISPs that provided cheap or unlimited service at the expense of companies who spent billions and built the infrastructure all of us surf on, and on which small ISPs piggyback. But Clement – read: the prime minister’s office – played to consumers who think Internet use should never be based on use. Right. Good luck on applying that economic rationale to filling up your gas tank.
Nothing the federal Conservative government does on the industry file surprises me. From continued corporate welfare to declaring potash a “strategic asset” to throwing overboard the principle of user pay on the Internet, the federal Conservatives have managed to invent plenty of new welfare state rights. The Iron Chancellor would be amazed.