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Numerous fare increases at BC Ferries over the past decade have driven down ridership and harmed the provincial economy, resulting in a $2.3-billion reduction in the provincial GDP, says a new report by the Union of BC Municipalities (UBCM).

At its annual convention later this month, members of the UBCM will be asked to pass a resolution calling on the government to reconsider its policy of cutting services and hiking prices in an attempt to make the ferry service economically sustainable.

The government began ratcheting up fares and reducing underperforming ferry routes starting in 2003.

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But UBCM spokesperson Claire Moglove says the new socioeconomic analysis, which is thought to be the first of its kind, shows that policy has been misguided.

"The increase in fares is counterproductive to what we want to achieve, which is a stronger economy and more jobs," she said Wednesday.

Between 2003 and 2012, fares went up 47 per cent on major routes, 78 per cent in the north and 80 per cent on minor routes. Since 2012, fare hikes have been capped at about 4 per cent a year, with the next scheduled increase set to take place in 2015.

The report estimates that if fare increases from 2003 to 2013 had been limited to the rate of inflation, passenger volumes would have gone up by 19 per cent. Instead, overall ridership fell by 11 per cent over that period.

"Foregone economic activity (gross) resulting from ferry traveller declines from 2003-2013 represents a reduction in GDP of $2.3-billion over the 10-year period," states the report.

It says the ridership decline came while all other transportation modes in the province were showing volume increases ranging from 5 to 68 per cent.

"Not only has a negative correlation between increasing fares and ridership been established, the quantitative impact of this reduced ridership across both coastal and non-coastal communities is significant," states the report. It says the "foregone economic activity resulted in an estimated total loss of $609-million in [federal, provincial and municipal] tax revenues."

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Transportation Minister Todd Stone said he hasn't had time to digest the report, but does agree with the broad conclusion that "fare increases can't continue" at the rates they have since 2003.

But he made no promise to stop the planned 2015 hike, suggesting that would depend on how well BC Ferries does on continued cost-cutting efforts.

Mr. Stone defended the government's decision to reduce services on underutilized routes and to pursue other efficiency measures which are designed to save $54-million this year.

"We were elected to balance our budget, to maintain fiscal discipline … and that means continuing to make tough decisions," he said. "It doesn't just involve the often suggested and quite simplistic solution of government opening up a chequebook and stroking a bigger cheque."

Claire Trevena, NDP transportation critic, said the report should be a wake-up call to the government.

"We are losing billions of dollars by allowing BC Ferries to continue to increase fares and to cut services. It's not just hurting coastal communities it's hurting the whole province," she said.

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Ms. Trevena, who lives on Quadra Island near Campbell River, said she has seen the negative economic impact of increasing fares in her own community.

"People have been leaving the islands because they can't afford to stay. Some businesses can't afford to keep going because they are losing customers," she said. "It's a downward spiral."

Deborah Marshall, a BC Ferries spokesperson, said the report is being studied.

"It's our job to provide a safe, efficient reliable service. It is the province that sets our service levels and the service fees as a matter of public policy," she said. "We are certainly aware that fare affordability is a concern for our customers so we're making every effort to reduce our costs wherever we can."

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