BC Shipbuilding

August 1, 2004

No Info from B.C. Ferries

BC Ferries CEO David Hahn and Premier Gordon Campbell have something in common. They both appear to think that the public has no right to know anything more than what BC Ferries chooses to reveal about its operations. The Campbell government passed legislation that removed BC Ferries from the scrutiny of the Auditor General and from the Freedom of Information and Protection of Privacy Act. On Friday, Hahn pushed back against critics of the decision to build three new super C class ferries in Europe. When asked why the Washington Marine Group wasn't put on the short list so as to be able to complete the bidding process, Hahn replied that there wasn't a single simple answer as there were many criteria in a complex evaluation. Asked if he would release the full list of criteria for selecting the short list, he said "no". It is probably a safe bet that what is best for BC's economy and the government's finances is not part of the selection criteria.

No one is saying that the ferries should be built in BC at any cost, but many are saying that the Washington Marine Group should have been allowed to complete the bidding process. The Group estimates it would cost $1 million to finish the bidding process, but that it would be willing to take that risk. BC Ferries is fighting back by pointing to Washington Marine Group's decision to build some of its own ships in Chinese yards, and it says that the Group's bid included having the hulls for the new ferries built in China. The Washington Marine Group admits that, but points out that it also included a BC only proposal.

It is legitimate to ask why BC Ferries should use the Washington Marine Group to build in BC if the Group builds its own ships in China, and proposes that at least part of the ferries be built the same way. The conflict is resolved by understanding that BC Ferries is not like any private company; its decisions should maximize the public interest. As noted by the Honourable Madam Justice Allan in her recent decision refusing to grant an injunction to BC Ferries against the park-and-ride operator, "…B.C. Ferries is simply not in the same position as a private homeowner or businessperson, regardless of the fact it is a private company rather than a Crown corporation. The public aspect of both the premises and the defendant's purpose for entering them is overwhelming. B.C. Ferries' website indicates that the B.C. Ferry Authority owns B.C. Ferries' common shares and appoints its Board of Directors and the B.C. Government owns its preferred shares, a debenture and the terminals." The Honourable Justice could also have mentioned that unlike a private company B.C. Ferries receives preferential treatment in labour relations through its statutory declaration as an essential service.

If Hahn has refused to make the selection criteria public because they fail to include the economic interests of the province and the financial interests of the government, the public has a right to know. The Premier should give B.C. Ferries a choice. Either release the selection criteria, or have the legislation amended so as to be subject to the Freedom of Information and Protection of Privacy Act.

July 26, 2004

BC Shipbuilding

The courts are making it clear that the Campbell government cannot hide from its responsibilities. Last year the court ruled that the Minister of Health cannot hide behind the Health Authorities. Last week the court ruled against the injunction application by BC Ferries in its attempt to shut down a small business that provides park and ride services. In its ruling the court dismissed the claim that B.C. Ferries is like any other business.

The government effectively owns and can choose to control or direct any aspect of BC Ferries. The legislation that restructured BC Ferries made some changes that put it in a unique position for what remains a public institution. It exempted it from Freedom of Information legislation, and it removed it from the scrutiny of the Auditor General. That means that there is no way to independently verify claims made by BC Ferries. We may never see the details of its offshore purchase of three large ferries.

Dan Jarvis has been an MLA for thirteen years. The Member from North Vancouver - Seymour has maintained a low profile until this week when he wrote a letter to a community newspaper criticizing the plan to purchase ferries offshore rather than build them in BC. Jarvis deserves credit for his bold criticism of the Campbell government. He is the first member of Campbell's caucus who has publicly criticized the government for what he called a "stupid" move. Two others left the caucus when they made their criticisms. It will be interesting to see if Jarvis will face discipline for his letter writing. We know that the Campbell caucus disciplines its members without disclosing who is in the penalty box. They might not be able to get away with that with Jarvis.

Jarvis isn't the only one who thinks it would be "blatantly stupid" to build ferries outside of British Columbia. According to news reports, Liberal MP Keith Martin and Conservative MP Gary Lunn both oppose waiving the federal import duties on the new ships. Jack Layton's NDP caucus can be counted on to stand on the side of BC shipyard workers. The Block is likely to share the opinion that if BC cannot build the ships, at least they should be built in Canada. The minority government of Paul Martin needs to pay attention when he hears from MPs of all parties. That means BC Ferries will probably have to pay a 25% duty on its offshore purchase.

There comes a point when no reasonable duty will stop offshore purchases. It would be unreasonable, for example, for Canada to grow bananas rather than import them. We don't have a banana industry, but we have proven that we can build ships. The Campbell government allowed BC Ferries to disqualify local yards from the final bidding process. We will never know how a BC bid would have compared with the price that will ultimately be paid.

Appearing on the Rafe Mair show on Friday, July 23rd, Premier Campbell appeared uncertain as to what criteria will be used by BC Ferries to select the successful bidder even though the purchase price will likely exceed $400 million. The government is very different from a private company when it comes to major purchases. It is perfectly rational for a private company to shop the world for the best deal and lowest price, but the government should factor into its calculation how much it recovers from increased tax revenues if it purchases locally. On a $400 million purchase the government would likely recover at least $50 million in income taxes paid by the shipyard workers. That doesn't count the further spin off benefits when those workers spend their pay cheques.

Premier Campbell should pay attention to the Hon. Madam Justice Allan. BC Ferries "is simply not in the same position as a private homeowner or businessperson". It is not too late for Campbell to direct BC Ferries to do the right thing, and at least let the Washington Marine Group or a coalition of BC yards bid on the work.