Mortgaging B.C. one deal at a time
Sunday, January 27, 2013 @ 4:47 AM
This is the third article in a thre part series by Dermod Travis of Integrity BC. You can access the other two articles by clicking on the appropriate link:
B.C’s fiscal Tsunami : Picking our pockets.
by Dermod Travis,
If the B.C. government is ever on the hunt for a new slogan perhaps “spending our children’s inheritance” would be fitting.
Since 2001, British Columbians have been witness to the sale of key parts of B.C.’s infrastructure, transfers of its wealth to private interests and sweetheart deals for industries that can afford well-connected lobbyists.
There’s the scandalous: the sale of BC Rail; the infamous: the run of rivers; and the it would almost be funny if it weren’t true: the incorporation of Jumbo, B.C. a community with a council of three and not a single resident.
Sometimes the government gets called out on these deals by one of its own before they’re inked, as they were in November over a proposed tax break for Pacific Western Brewing, a major donor to the BC Liberal party.
After some initial hue and cry, cabinet minister Rich Coleman tinkered with it sufficiently to pick up the support of the NDP who called the politics of the deal “messy,” but the outcome “sound.”
But how many voters caught news of Coleman’s $10 million stocking stuffer for B.C.’s horse racing industry? Announced five days before Christmas, it would have been an easy miss. A little Yuletide cheer from Coleman and the BC Lottery Corporation.
Yet, for a government on its way to spending $44 billion in 2013, a few million here for microbreweries, a few million there for horse racing is relatively inconsequential in the grand scheme of public finances.
Governments have bigger fish to fry.
Within days of next month’s provincial budget, B.C.’s auditor-general is expected to release his report on the Pacific Carbon Trust, a crown corporation. Scuttlebutt says it’s not pretty and in all likelihood will be met with a well-orchestrated spontaneous show of criticism from friends of the government.
Another area of worry: the increasing use of deferral accounts by the government and its agencies to push the fiscal peanut down the road to another day.
In 2011, BC Hydro reported $2.2 billion in deferred expenses, a sum forecast to hit $5 billion by 2017. It’s money that the utility has spent, but for now can choose not to report as though they’ve actually spent it.
The auditor-general calls it “creating the illusion of profitability where there is none.” Others might describe it as hocus pocus accounting, but that doesn’t make the dollars any less real.
Some of these sweetheart deals, stocking stuffers and deferrals may be in the province’s long-term interest, but in the near total absence of any meaningful legislative oversight it’s difficult to know.
Legislative oversight is fundamental to good government. And with less-and-less of it, the government does more-and-more by decree. B.C. isn’t well-served by that.
In 2012, the B.C. legislature sat for 47 days. Among its numerous legislative duties: to debate and approve a $44 billion budget. Forty-seven days is simply insufficient to do that and everything else well.
The B.C. legislature has committees on paper, but not so much in practice. Regardless of who wakes up in government on May 15th, there must be a renewed commitment to the idea that committees can play a crucial role in legislative oversight through rigorous debate on government policy.
And with what may only be a 19 day session before the election, it will fall heavily on political pundits to scour next month’s budget for any sign of “fudge it” numbers.
But there should be another litmus test: will it be sufficiently transparent on the true costs of future financial commitments that the government has already made in the name of future governments?
Because fiscal policy doesn’t just have an impact on the here and now, it can also have an impact on taxpayers thirty years down the road, as the $53.1 billion in deals BC Hydro has signed with private energy producers prove.
It’s why the BC Liberals, the NDP and other parties have a duty to spell out how their campaign promises can be met in the context of B.C.’s overall fiscal reality.
B.C. taxpayers are all too familiar with that legendary post-election hokey-pokey that political parties have danced at one time or another. It’s the jig known as “public finances are even worse than we had imagined and we’ll have to postpone some of those electoral goodies that we promised you.”
After the HST debacle, it’s one dance voters could do without.
Dermod Travis is the executive director of IntegrityBC. www.integritybc.ca
Comments
Are you going to report on the NDP years prior to the Liberals Dermond? It would only be fair to remind everyone what happened when the NDP ruled. Please refresh our memories on how well the NDP ran our province back then. That way the young voters out there can decide which way they want to be screwed.
NoWay’s comment is a variation on two wrongs make a right, assuming the NDP left future expenses for the Liberals to pay.
Hey Noway, world markets were in the tank copper 78 cents a pound, coal hit bottom and Mills on the coast were shuting down because they put all their eggs in the China, japanese market. They dident want any part of the US softwood agreement and like copper, coal the bottom feel out of that market to. So liberals give them a billion in 2001 they dident start a mill but expanded raw logg export and bought mills in the US.Today the price of copper $3.56, coal best price in 30 years, lumber demand up as with the price and oil, gas and drilling up new mines so why are you broke??? answer the liberals continue to give billions away in tax credits and subs to these guys when they dont even need it.
Agree with noway,it appears to be a continuation of the NDP’s platform. Continually point out what the present govt is doing wrong loudly and long enough to hide the fact they have no real platform.I have heard nothing from Dix in the aspect of what they will do, being in opposition is easy. His junket to Hollywood was proof of that, lots of fluff, a lunch, and nothing else but a photo op.
LOl, funny ZigZag99,you missed the point Noway was making and what I stated, as for the platform all in good time,the cuts to the tax credit to banks to fund students was good start,let the fun begin.
There is no political choice in BC for the average worker. You either vote for the BC Liberals: the party of big business, or the BC NDP: The party of minority rule.
There is literally no other choice for your average working British Columbian. Other parties like the BC Conservative party are just wackos more concerned with backwards religious mythology, or the Green party, who’s message is chiefly concerned with flattening what’s left of working class people with crippling fees and taxes to “save the environment.”
Both parties have skewed visions of how the social caste system works here. The Liberals think business is the bedrock foundation of society, followed by working class people, everyone else are parasites. The NDP view the very poor and politically correct as the bedrock, followed by working class with business as the top.
The truth is that the real bedrock are the workers who supports both the very poor and very rich standing on them. The weight gets heavier every year and the layer of workers gets a little flatter and is starting to wear through in spots, yet both parties stick to their skewed vision and don’t give a rat, scraping away until there is nothing left.
Unions used to have some kind of relationship with working class people, now all that’s left is public sector unions, all they do is champion idiotic things like special bathrooms for transgendered or “twin spirited” people or write books on the conflict in the middle east, while the people paying their dues go ignored.
Like I said let the fun begin, Libs are best for BC workers??? tell that to all the people that lost jobs in the industry PG total over 2800, great Lib policys for sure helped a lot.
The Liberals like to blow their horn with all the jobs that they created. Thats a pile of bull. The natural resources have always been in our province and the demand has increase for theier use. Its a simplr as that.
But the huge debt has not alwys been there its a creation of the libersls in give away to their freinds. The NDP debt was peanuts as to what the liberals are giving to our children,
Cheers
Hind site is 20/20 maybe they should of logged Tweedsmire Park to try and control the spread of the pine beetle. But we will never know whether that would of worked or not.
I’m not saying I’m a liberal supporter all I’m saying is lets compare the wrongs and rights of both parties so that the voters can decide on their own what the lesser of the two evils are before they hold their breath close their eyes and mark the “X”.
Love it! Mired in Tweedsmire”. LOL …
“NoWay’s comment is a variation on two wrongs make a right” …
I would not call it a variation. I would call it a version of a truism ….. no government is perfect ….
Let’s face it, the federal government and many provincial governments as well as many countries are going the same way …. we are just lucky enough to have to live through this nonesense that private money knows it all ….
Correct me if I’m wrong, but I thought the pine beetle epidemic started in 1978.
??????????
It will be interesting to see how the wood tech cetnre proposals turned out – whether someone is willing to finance it and what the government will have to guarantee in return. P3 or not? Back to the drawing board or not?
Interestingly the above article does not mention P3s … but the author likely has a few more articles sitting around or on the order paper.
Pine Beetle started in the west chilcotin outside the park in a valley in 1969 and never stopped until 1987 when we had the cold blast in First week Nov stopped them dead, however with warmer winters they took off again.Only thing to do is manage around it something thats not happening today.
BC needs more independents in parliament that are not tied to political parties, but rather coalitions or leagues of like minded people.
We need a minority government to have good government.
The party system and its evil twin cousin the first past the post elections is destroying our province through special interest politics and an ever crushing level of debt. Everyone it seems knows this, but the forces of polarized monopolization are too strong and insurmountable for a uneducated in civics public.
One of the five greatest men that ever lived, and the man responsible for anything good in politics today… George Washington once warned that it will be political parties that will destroy the American republic as they concentrate power in fewer and fewer hands… seems to me this is the power of monopolization that we realize today is destroying our inheritance and our society one insider special interest give away at a time.
Good post, Pojeb. But the bedrock you’re talking about really isn’t made up of ‘workers’ but rather ‘consumers. ALL of us. We produce to consume. And it’s an unassailable fact that fewer and fewer ‘workers’ nowadays are actually ‘producers’ in the same sense they once were.
And not because they’re all lazy, spoiled, generation Y believers in ‘entitlements’, or overpaid, Union protected, seat-warmers for life either. Though we do have more than enough of both, they represent the same kind of a tiny, visible minority of employees as do those few employers who run businesses that could be described as being overly-profitable.
The larger problem, the one that’s continually overlooked, is that as a whole we’ve been working at putting ourselves out of work for well over a century, and succeeding quite admirably, too.
The only unfortunate consequence of that, or the main one in any case, is that ‘unemployment’ has been accompanied by ‘unemPAYment’. For when the job falls to automation and advancing technology, the income that went with the job disappears, too.
We do not pay a ‘machine’ a wage or a salary, even though it definitely has COSTS to its ’employer’,too, same as the human being replaced did. And those COSTS still have to be recovered, out of PRICES, if its ’employer’ is to pay them and get his investment in the machine back before it wears out and becomes obsolete.
And while that ‘machine’ certainly does ‘consume’ ~ things like fuel, and oil, and electricity, spare parts, etc. ~ the COSTS of that consumption aren’t liquidated in the same way a human’s consumption are. Rather they, too, are carried forward into PRICE, which can ONLY be finally liquidated by human consumption of the end products of the machine.
So what is it, really, that we want to do? If we do as we are doing now, and pretend that every worker displaced by modern technology can find another job, be retrained, go somewhere else, etc., etc., which, in many cases, is true, we forget the FACT that the ‘new’ job has a separate set of COSTS in itself. Costs that will flow into, and be liquidated from, the eventual PRICE of ITS production. But we’ve done absolutely nothing about finding a way to liquidate the costs of the production of the machine that originally replaced the man from his previous job.
So here we have TWO sets of Costs, to be liquidated in full from TWO separate Prices of TWO separate products, but only ONE set of Incomes paid to human beings to do it. In the overall economy, it is a mathematical impossibility for this to happen, so long as ALL Incomes are based on ’employment’ alone.
The correction of this problem is not difficult. It involves finding a method, and there are two, by which ALL Consumers can be credited with sufficient augmentations to their ‘earned’ Incomes, to fully liquidate the overall Costs of Production through the Prices of final consumption. ‘Social Credit’, not the party, which in BC long lost the ‘thread of the story’, but the original concept.
It should be added to what I wrote above, that if we DON’T adopt a way to replace what we’re futilely trying now, through having all Parties subscribe to the exact SAME policy of “full employment”, we will continue to “mortgage our future” to those institutions that currently claim the “ownership” of financial credit through their current monopoly on its creation and withdrawal.
This is not to say that those institutions, the banks, should be brought under public ownership. For such would only mean a change of ‘Administration’, and that would most likely end up being a change for the worse.
What we want is a change of ‘POLICY’in regards to finance. To enable it to do what it’s supposed to always be able to do. Initiate ‘production’ to the order of the consuming public, and move it through to distribution as final ‘consumption’ as, when, and where required and desired.
To move away from this current, mindless focus on ‘jobs’ as the ultimate desiradum, and instead to a better means of distribution of first the necessary, and then the desired, goods and services we are already so more than capable of providing with only a fraction of the available workforce working. Only then can Consumer demand, to whatever degree it exists, be made fully “effective demand”. And ‘jobs’ will be, as they should be, a secondary outcome of this process.
Good stuff socredible. I dont know if we could ever get to the point that you suggest but there is an alternative. Swizerland that has one of the top economies in the world has capped the amount of profit thnat leaves the counry to 15% and the remainder has to be invested in new industry.
I think this is one of the problems we have is that all profits leave the country instead of being reinvested in secondary industry. Or one conglomeret uses the profit to buy up another does that make sence?.
Watched a program on Knowlegde network “The Parties is Over,” it tells us where we are heading and it dosent look pertty.
Cheers
Well, Retired 02, the only problem with that is that the profit that’s re-invested previously came out of the spending of Consumer incomes that were ‘costed’ into the price of some good or service in a previous cycle of production.
When they’re re-invested, with the financial system as it currently is, this creates ANOTHER set of ‘costs’, while the ORIGINAL set of ‘costs’ this money formed a part of then can’t be fully liquidated.
And the totality of what’s already been produced then can’t be sold for the costs of its making, unless there is an ADDITIONAL sum of money introduced into the economy equal to what’s been re-invested. And generally, there is.
Only it’s introduced as a further “debt”. Someone, either consumers, or industry, or the government, has to BORROW that money. From the banking system, which creates it.
Since the first two are only able to borrow in relation to what they can reasonably be expected to repay, ultimately this “debt”, even if it is incurred at first privately, ends up with a sum largely equal to it subsequently being incurred ‘publicly’ ~ it becomes a part of the National or Provincial Debts.
Which governments may occasionally be able to pay down a bit, but are never over any extended period of time ever able to reduce. The tax burden we bear ever increasingly today goes to pay the interest on this debt, and even with interest rates at their current near record low levels, governments everywhere are having a harder and harder time doing that.
Some are to the point where they have to openly borrow more just to keep current on their interest obligations, and of course, this is neither sensible nor sustainable.
So the Swiss do have perhaps some minute advantage in at least keeping ‘some’ of the profits foreign owned companies make retained in Switzerland, but long-term the overall problem remains.
Neither they, nor we, can correct the underlying problem without first changing the way the “accounting” as it relates to ‘money’, or more correctly, ‘financial credit’ itself, in the economy as a whole now functions. it has a correctable flaw in it.
This would not be particularly hard to do, and if it were undertaken fairly soon, we could avoid a larger repetition of the recession we’re still tenuously trying to throw off now, again at some point in the future.
But we can’t do anything so long as everyone wants to bury their heads in the quick-sand of thinking what we’ve been attempting to do to create ‘jobs’ is ever going to work. It won’t.
We need to get things in the proper perspective first, and the ‘jobs’ flow as a result of “effective” Consumer demand being there FIRST, not the other way around.
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