Communication with the MoT February 10, 2008

Comments re Tony Law email February 8, 2008

Tony, I have spent some time reviewing information provided by the FAC Chairs during the ‘consultation period’ prior to setting the Price Caps for PT2. The documents I referenced are;  May 3, 2007 Press Release  May 8, 2007 letter to Kathie Miller and Nancy Merston  Tony Law conversation with Kathie and Nancy, May 2007  Letter to Cabinet, Speaker and 3 Deputy Ministers, May 2007

I also re-examined the draft CCFAC Terms of Reference and the three presentations discussed at our meeting January 25, 2008.

As a result of this review and my own concern about the economic and social viability of small, ferry dependent coastal communities I have the following comments:

1. I agree that we are looking for a strategic approach to sustaining the non- major routes. Last year the FAC chairs warned of a ‘crisis in ferry service’, largely due to clause 38(1)f in the Coastal Ferry Act and the lack of any information on fare elasticity on the minor routes. If corrective action is not taken soon, the predicted crisis will happen and the Government will likely move into a damage control mode. In my mind effective Government is about damage prevention, not damage control as we seen some of in the past. 2. The presentations made by Doug and Brian at the January 25th meeting provide an early indication that the BCF traffic forecasts for PT2 may be flawed and I agree we do need to have a follow-up meeting as soon as possible with MoT to hear their comments both on the data and the anecdotal observations presented. 3. If the above meeting with the MoT is scheduled, I think it is important that factual information related to changes in behavior of regular ferry users due to fare increases be submitted as well. In addition, there may be negative impacts on business and Economic Development that can be reported. Information like this was discussed at the January 25th meeting and, I think, provides a very powerful argument. 4. As I mentioned during the January 25th meeting there seems to be a strategy connection missing between the Economic Development, Tourism and Transportation Ministries with respect to support for communities negatively impacted by major events like the current restructuring of the Forest Industry. On the one hand, money is being made available to help those people directly impacted and on the other hand planned transportation cost increases are negatively affecting local economic activity. A long-term integrated Government strategy to support the viability of small ferry dependent coastal communities is needed. This notion is consistent with the CCFAC Objective included in our Terms of Reference.

Since BCF revenue has only two sources, passenger fares and the service fee, it should be very apparent later this year that the current model will result in a ‘crisis’ sooner rather than later. Our focus should be to use current information to justify an urgent model correction to support the strategic approach you mention.

Bill Cripps