Imagine where BC would be if we had treated our resource revenues as Norway has

I’m having a bit of a socialist moment today. A somewhat different kind of socialist moment though, as I want to be a millionaire like every man woman and child is in Norway. I mean let’s face it, if you’re going to be a socialist, it might as well be a rich socialist.

So how did all these Norwegians become so wealthy? It was a pretty straightforward approach but it did take political will and an ability to think, plan and act beyond the constraints of election cycles. It required a government acting in the best interests of its citizens as opposed to its own short-term political interests.

In Norway, this type of long term planning became known as the Government Pension Fund (Global) of Norway. Some still refer to it by the old name, The Petroleum Fund, but regardless of title, it is the largest pension fund in Europe with a January 2017 valuation of 7.5 trillion NOK or about $1.1 trillion Canadian.

Unlike a true pension fund, Norway funds the plan through income from oil profits as opposed to personal contributions from Norwegians. The revenue comes in the form of corporate taxes, exploration licenses (leases) and from dividends paid by the state owned Statoil.

Started in 1990, the fund was seen by government as the best way to prepare for the eventual decline in oil revenues and a way to “smooth out the disruptive effects of highly fluctuating oil prices.” It has been hugely successful and the Norwegian Ministry of Finance forecasts continued fund growth through 2030.

It is a plan that has been in place for 27 years and has provided Norwegians with universal daycare, free university and per capita healthcare spending that is 30 per cent higher than ours. It also provides for 25 days of paid vacation for everyone, every year. It might also help explain why Norway was just declared the happiest place on earth to live.

Norway is saving about $1 billion NOK per week and has so far resisted the urge to use these revenues on state day-to-day budget items — something Canadian provinces have been unable to resist doing with our resource revenues. As a result, Norway is far ahead of any province in Canada and likely to remain that way unless thinking changes here.

In Canada for example, Alberta’s Heritage Fund had an asset value of $19.1 billion as of December 31, 2016. The Heritage fund was established in 1976 with the stated objective, “to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans.” Yet by the 1990s, just as Norway was launching its resource-based fund, Alberta had decided to put a significant portion of their income into general revenues.

Since 1976, the Heritage Fund has earned over $190 billion, but the savings account has been raided again and again by successive governments and the value in the fund by 2014 was only $17.3 billion.

The Canadian correspondent for The Economist suggested, as did the IMF, that every Canadian province should, “establish a sovereign wealth fund and treat non-renewable resource revenue as capital to be saved and invested, rather than income to be spent.”

Good advice, yet governments, including British Columbia, have been unable to resist the temptation of the quick political fixes these large ‘savings’ funds offer.

For any government unable or unwilling to balance its budget via traditional measures, a quick raid of the rainy-day fund solves its immediate dilemma.  In the meantime, the concept of a fiscal ‘steady hand’ teeters on the brink of credibility while debt skyrockets in a world of artificial prosperity.

We have the tools to solve these issues. But unlike Norway, it seems we have neither the fortitude nor foresight to act decisively and on behalf of our future. It seems always to be about re-election and retention of power at any cost.

In Norway, the government does not just pretend to care about the future of its citizens. It actually does care and work towards long term strategic goals. Had Alberta followed Norway’s example, their Heritage Fund would be worth nearly $130 billion instead of just $19 billion.

Imagine where BC would be if we had treated our resource revenues as Norway has.


BC Liberals – The Arrogance of Power

Last Thursday, Deputy Premier Rich Coleman, speaking on Liberal Party campaign finances boasted, “As far as I’m concerned, we haven’t changed anything, we’re not about to change anything.” The following day, Elections BC announced they have turned their investigation of BC Liberal Party fundraising practices over to the RCMP

Prior to that announcement, Mr. Coleman also called the New York Times article on political donation regulations, “laughable.” That cavalier attitude set the tone and perhaps unintentionally has given us an insider’s glimpse of the ‘who cares what voters think’ approach Premier Clark and the BC Liberals have towards political financing rules.

In a recent editorial about BC’s “wild west” approach to campaign finances, the Globe and Mail summed it up, writing, “…her (Premier Clark) party, have become addicted to the money that is sluiced into their coffers every year by supplicant corporations, lobbyists and business owners.”

Despite Ms. Clark’s promise of reform (including a committee review that will report back after the election), there is nothing to suggest it will in any way interfere with, prevent or limit the amount companies and lobbyists can give to the Liberal Party. The party’s total disregard and disdain for voters has been noted across Canada and around the world.

MacLean’s Magazine goes a step further, writing, “British Columbians’ faith in democracy is being undermined…and there’s a growing concern that their government is essentially being bought and paid for by a wealthy clique.”

MacLean’s goes on to point out that some of “the planet’s most corrupt nations” are more transparent about party donations than is BC.

I have a very difficult time knowing that corrupt dictatorships treat party financing with more respect than our provincial government. The failure of Ms. Clark and her party to recognize this and the potential conflict of interest it creates is beyond comprehension.

That perception of a conflict of interest can be found on an almost weekly if not daily basis. Emil Anderson Construction gave $50,000 to the BC Liberals and later won a $36 Million highway contract. Imperial Metals of Polley Mine notoriety has donated $195,000 and later hosted a $1 million fundraiser in Calgary for Ms. Clark. Seven of the eight board members of the Fraser Health Board have donated a combined $130,938 since 2005. This list goes on.

There is absolutely nothing to suggest that any of these or the many other donor companies have violated the law. Only the RCMP investigation will determine that. However, it is the perception of influence peddling that should raise red flags when it comes to conflict of interest.

According to the Globe and Mail, even those who contribute to the BC Liberal Party are beginning to question the party’s ethics and morals. “It’s like you are getting strong-armed” complains one lobbyist. Another explains, “You are paying not to be blacklisted” “The whole thing is smelly.” While still another lobbyist laments, “It’s the price of doing business. It bugs me. It’s not right.”

Vicki Huntington, independent MLA for Delta South summed it up, when she wrote, “People are tired of seeing their government ignore the interests of citizens in favour of a free-for-all system where money talks and special interests are taken care of first.”

Locally, Ajax and Kinder Morgan donate to the BC Liberal Party and both companies have a vested interest in Kamloops and decisions made or being made by the province. The “wild west” descriptors, the apparent indifference towards party finances, the RCMP investigation and the first open signs of corporate fears about being blacklisted or strong-armed into donating, raise more than casual concern.

Neither Mr. Stone, Mr. Lake or candidate Milobar are stepping forward to explain how and why their government is not, as suggested by MacLean’s Magazine, being bought and paid for by a wealthy clique.

The party tried to suggest donations came for the most part from individual citizen donors but we are now discovering that many ‘citizen donors’ are in fact lobbyists or employees fronting for corporations.

The last time the BC Liberals became this arrogant, then-Premier Gordon Campbell lost his job. How will these episodes of disdain for the voter end? I suspect it will not end well for this government.

Buying Their Way Back Into Our Hearts & Minds

Okay everyone, I take a short break from this column, leave you alone with the province for just a few weeks and what do you do while I’m not looking? You let the pre-election silly season start without me is what you do.

It’s that special time of the year when MLAs, who have ignored us for four years, try to buy their way back into our hearts and minds with broad smiles and big promises.

First off the mark was Terry Lake with his breathless announcement that the BC Liberals would be spending nearly $500 million dollars to expand Royal Inland Hospital. A Terry Lake legacy moment if you will.

Like you, I think the proposed new tower is needed and will be even better if there’s money to staff it. However, the cynical me notes how it won’t even begin to happen until one year after the coming election. Pretty much standard operating procedure for these types of announcement and it leaves the door wide open for recycling the promise over several more elections.

Next up to bat was Todd Stone with the mandatory pre-election favourite: an announcement of improvements to the Trans Canada Highway. The fine art of election-time road improvement announcements was honed to perfection under the tutelage of the late Premier W.A.C. Bennett and then Transportation Minister, Phil Gaglardi.  Minister Stone keeps the tradition alive as he suddenly finds nearly half a billion dollars for new blacktop.

Both announcements came with great fanfare, liberal back patting and the suggestion that we were pretty damn lucky to be on the receiving end of their largesse. It’s the old Social Credit trick of bribing us with our own money and oddly enough, we fall for it every time.

Next up was Premier Clark with her overused promise of jobs, jobs, jobs. Unfortunately for Ms. Clark, the CIBC Economist released a report last month confirming that BC is the worst place to look for quality employment and the situation is worsening. We are trendsetters, though, in the growth of below-average wage work.

Then there was the funny, if it weren’t so sad story about the $1 million funding to support the Iron Horse Youth Safe House in Maple Ridge. The grand announcement by Maple Ridge MLAs lost a bit of its sheen when they discovered (post announcement) the facility had been closed for the past two years due to — are you ready for it — a lack of funding.

And speaking of recurring foot in mouth syndrome, Minister Rich Coleman managed to demonstrate his sensitivity toward those less fortunate than he when he proclaimed, “We have to remember that a single person living on social assistance in BC gets double the annual income of a person in the third world.”

Nice to see we are just one step ahead of third world countries when it comes to social responsibility. I wonder if he’s figured out why many view politicians as elitist, insensitive and self-serving?

I haven’t even touched upon the recent budget, but it does look like everyone has been working hard at selling that balanced budget concept.  Well, almost everyone, as it would seem the Auditor General has a few questions and concerns about what I call, Black Magic Accounting.

One example he refers to is the government’s use of deferral accounts to hide liabilities and pass them along to future generations. In his report, the Auditor General states, “But over time, government has now inappropriately deferred a total of $4.2 billion.”

Yes, silly season is well underway and I’m glad to be back behind the keyboard — sceptical as ever and not ready to drink the press release Kool-Aid but looking forward to hearing your views and comments.