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The Myth of Financial Prudence

KAMLOOPS — Quite often, after writing a column about the foibles of a particular political party (more often than not the BC Liberals simply because they provide a wealth of column-worthy material) I see a comment that goes something like…

‘I agree they are not the best and have their faults but given the alternative, I’ll hold my nose and vote for those Liberals.’

Or another favourite, ‘Look what they (being the NDP) did the last time they were government!  We can’t afford that again.’

First off, I think holding your nose and voting for a party that you know or at least feel (listen to that inner voice) a certain degree of distrust for, is the worst possible reason to vote for anyone. Imagine how that would work in other aspects of your life.

Would you pick a new car based on a similar set of conditions? Your online research has shown this car has been in a number of accidents, has the worst safety record in its class and will likely cause injury to your family. Despite all that knowledge are you really going to fall for all that fake plastic chrome?

It doesn’t work does it? Yet somehow we are willing to give someone our vote despite knowing full well that it is a bad choice.

Some seem to rationalize their decision by pointing out how bad the other guy is. ‘Look what they did the last time they (in this case the NDP) were government,’ they cry. ‘They made horrible decisions and mortgaged our souls and our future through spending sprees and massive debt.’

I hear this so often, where fact is replaced by an obsessive devotion to a party line and repeated so often as to have a feeling of truth to it. Donald Trump is a master of this type of deception. Yet it is only a mantra, an attempt to deflect and relieve one of any desire to verify or question.

Take this debt thing. The real facts show BC’s debt will exceed $66 billion for 2016. That’s a significant per-capita debt of $13,942. And the numbers surprise those who thought the past 16 years were all about balanced budgets with no debt.

By comparison, after four years of NDP, our debt had gone from $29.3 billion to just under $34 billion in 2001, working out to $8377 for every man, woman and child in BC.

Debt service alone is now costing us $245.5 million a month or $2.9 billion a year.  If you want to worry about something, imagine what that will cost when interest rates go up.

The numbers suggest claims of fiscal mismanagement during the NDP’s term as government are not necessarily founded in fact or even subjected to a comparative analysis by many.

So why, when just a few keystrokes on Google will provide real data, do commenters and some editorialists persist in supporting and even promoting fiscal folklore?

Bestowing financial prudence upon a party should not be founded upon myth. It is either real or it is not and, despite my biases, the facts I’m using in this column come from no other than the BC Liberal government.

Prudence, not imprudence, should be the hallmark of those you elect to govern. You can question and investigate the choices you are considering for MLA or, like sheep, you can do what they have always told you to do.

I recommend you take the lead and consider being a self-directed voter. The numbers used in this column took me less than three minutes to find online. It is so easy to do, so why not put the party brochures away and go online? Google your questions, concerns and suspicions and take back control of your decision.

The writ has dropped and it is so easy and so tempting to simply follow the instructions of the ones with the big empty smiles.

In less than 30 days, you get to decide what you believe is right or alternatively be told what to believe in and given instructions on how to act and obey.

Do you want to be the sheep or the Border Collie?

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 http://finance.alberta.ca/business/ahstf/index.html 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.

Dear America

Dear America:

Do you remember how we use to see each other on a regular basis? We had such great times and always left knowing it wouldn’t be long before we saw each other again.

You were so beautiful back then but I’ve noticed a change. We don’t see each other that often anymore and the last few times we met, it was different, almost awkward. Normally so positive and ready to set the world on fire with your unbridled enthusiasm and can-do attitude, you began to look at yourself and others differently.

I saw that always-optimistic glimmer of hope you had for everything and everybody, gradually evolve into suspicion, even fear. It was a new and growing wariness and mistrust, not just of outsiders but from within as well.

I miss those eyes that once sparkled with anticipation. I remember how you could once dream of great things, like travelling to the moon and turn it into reality. You once said, “Ask not what your country can do for you but what you can do for your country”. It was that quintessential American character that built your country and it seems to be slipping away.

Remember how you once welcomed everyone? How your Statue of Liberty greeted newcomers as they arrived by boat from every corner of the planet and every country of the world. You were the land of the free and the home of the brave.

You and I use to brag that we had the largest undefended border in the world and how the relationship between the two of us was so special. Damn we were good weren’t we? A perfect pair and the world knew and admired that we could work so well together.

We played together, argued on occasion, because we didn’t always agree but if one of us was challenged, we would stand united. We even fought beside each other through two world wars and sadly at times, we died together. Such strong memories but you’ve changed and I have to admit the change does not suit you well

I and your other friends have watched these changes build up over time and it is difficult to see such a good friend stumble. It’s like you know these things are happening to you but with your loss of spirit has come a lethargy and malaise that has darkened your mood and stolen your will.

Even your bold, proud name is failing you. You began as the “United” States of America, the ‘land of the free’ but have allowed divisiveness to erode our once shared confidence and common purpose. You are allowing open and free discussion and healthy debate, something you once called democracy and freedom, to deteriorate to the point of a distrust that now borders on open hostility.

I so admired your ability to once defend and champion freedom of religion and speech. You challenged racial discrimination, suffering through some terrible times as a result but like everything you took on, you survived and grew. You were so beautiful in those days, irresistible, confident and boldly determined to do what you could to make the world a better place. Sure, you weren’t perfect but your heart seemed to be in the right place.

But what happened and when did your natural love for freedom begin this decline? You started to fear other religions and races, even going to war with those who didn’t share in your beliefs.

Your cherished faith in the value of freedom of speech is now under attack and not by outsiders but by you. You along with your many friends fought so hard for these freedoms. In fact, for many it is why your ancestors first came to you. They were refugees, persecuted for the beliefs they held, so they came to you my friend, to established a new world founded on the concept of freedom of choice.

And now I see the once light of my life agreeing to the need to round up, detain and deport those not of your faith or colour. The excuses are the same heard in Germany during the 1930’s, “They are stealing our jobs”.

When do those implementing these plans come face to face with the numbing Nuremburg reality of the worst imaginable quote ever? “I was only following orders.”  Deportation and willingness to torture is a path you must not follow.

Remember, our blood was spilled in world wars so that others could regain the same freedoms you and I enjoyed? We sacrificed our lives for that future by defeating a tyranny founded upon fear and hate. We went after those who would kill innocents and murder millions simply because of their religion.

But now my dear friend you toy with the idea and willingness to commit the wrongs you once fought so hard to abolish.

You think the world is different now and that it is naive to not recognize that times have changed. But times always change and we’ve seen it again and again. What I haven’t seen before though is your growing despair.

America, you’re a good friend and I hate to see you stricken by this hate and fear.

 

The Fallacy of Carbon Tax

In this column I’ll be talking about British Columbia’s carbon tax.  But wait.  Don’t close this tab quite yet, as the next 600 or so words won’t necessarily be as boring as you might imagine.

You see I believe BC’s version of the carbon tax is ill thought out and wrong.  It makes me feel like I’m being tricked into thinking I have bought my way into carbon emission happiness…a greenhouse gas nirvana of sunshine and lollypops.

In particular, I’m bothered by the concept of revenue neutrality that states all revenue generated through the taxation of carbon will be offset by an equal reduction in our income tax.  Think about that for a moment and hopefully the foolishness of this being a credible tax policy will start to jell.

We acknowledge that carbon emissions are a huge problem and introduce a carbon tax as a way to attach a financial consequence to our continued practice and reliance on fossil fuels.  There is a cost attached and so far so good as people seem more responsive, aware and careful when their actions cost them money.

However, this revenue neutral shenanigans that promises no consequence, turns carbon tax into a meaningless, feel good PR stunt by government.  We are being duped in a number of ways and with our own money.

You are not helping climate change at the gas pump because the extra you pay in carbon tax goes nowhere but to general revenue.  Why does it go to general revenue?  It has to because our government promised to reduce taxes and as a result needs that carbon tax money to cover expenses those real tax dollars once paid for.  

Revenue neutrality has by its very nature made sure climate change is not a priority to this government. So, what is the answer or for that matter is there an answer?  

When carbon tax was first brought in, the BC government of the time (Gordon Campbell’s Liberals) introduced a new fund called, the Innovative Clean Energy Fund or ICE.  Using the income from the carbon tax, ICE was to fund academic and private sector research and development in the field of alternative energy solutions and CO2 mitigation.  In other words, use the tax to reduce current emissions and look at new ways to develop alternatives.  

Unfortunately, in just a few short years, the amount going to ICE dwindled, R&D is going nowhere and mitigation is not happening. ICE still exists, is underfunded and has gone several years since it last called for ideas and submissions.  This concept of revenue neutrality combined with a cash starved government has pretty much killed it.

Personally I feel there is an answer and frankly, it is staring us in the face, already exists and is called carbon tax.  Weird eh?  The only missing component is a government with enough courage to make it do what it is suppose to do.

Forget this make believe game of a revenue neutral tax and let me honestly contribute towards a solution.  Don’t give it back to me in the guise of lower personal taxes but instead use that new money for what it was meant to do.  Make you and me responsible.

To those who selfishly whine of the economic doom and gloom that would result from an honest carbon tax?  I say, tough luck as I think it’s time you start thinking about how much your current in-action and irrational economic fears are going to cost your children.  Not someone else’s children, or those a few generations from now but your kids.  The ones who are already frightened about their future and are asking you…What are you going to do about it?

Political Transparency Would Silence Media Criticism

There’s an easy way to silence the press.

Almost all politicians will at some point in their career blame the media for the ills that are befalling them. With raised voice and fingers pointing, they cry out about unfair coverage, biased reporting and slanted editorials.

Those who find criticism difficult, cry foul more often or at least louder than those with thicker skins. They complain aloud about the brazen effrontery of those in the press who challenge or question their actions and judgment.

Yet a politician holds within his or her grasp the ability to easily silence the press. It’s called transparency.

Almost all who run for office do so on the keywords of “openness and transparency.” The norm is to portray the incumbent or opposing party as anything but transparent. This is quickly followed by a solemn promise of sweeping changes based on the publics right to unfettered access.

Of course once elected, transparency immediately morphs into a kind of selective opacity that eventually degrades into complete secrecy. And for a politician not ready to leave office, secrecy is usually the express bus to a shortened political career.

Imagine for a moment, what would happen if government were actually open and transparent. It is the lack of openness that quite often provides me with endless choices for column topics. It is secrecy that provides those first warning signals that something may not be right. It is the fog of political spin, that opacity I mentioned earlier, that creates distrust.

If those we elected kept that promise of transparency, I and many other pundits would have little to write about. More importantly, the public would have no cause for distrust, as everything that happens is out in the open for all to see.

I’m not so naive as to suggest there is not a role for secrecy in government. There are contracts, negotiations and privacy issues where the details must remain secret until they are concluded. That’s a given. However, transparency would accommodate acknowledging the existence of, and updating the public on, those issues that must remain temporarily secret.

or instance: Informing the public in a timely manner with an update explaining that progress is or isn’t being made does not harm negotiations. Advising that most key items have or have not been resolved. Forecasting a timetable and steps required to bring the process/project to a conclusion. Explaining that stakeholders are being kept up to date and are actively facilitating a process that will hopefully lead to cooperative and beneficial conclusion.

Specific details are not required. All that is needed is a progress update and confirmation that once completed, a full disclosure will be provided.  To ignore such basic courtesies and respect to those who elected you invites suspicion and distrust.

If you take the time to look at failed political careers, most come about as a result of the abuse or at least the taking for granted of political power and authority. Pierre Trudeau, Brian Mulroney, Stephen Harper and Gordon Campbell are just a few who decided they were smarter and more important than the citizens who elected them.

Secrecy became paramount as they came to believe their constituents could not be trusted with or were even capable of understanding the truth. Using the authority of their office, they took on those who dared to challenge their knowledge and their authority. Get mad, get even and get careless. Blame the press, blame outside global influences, blame the opposition, tout conspiracy theories but never would they acknowledge or accept personal responsibility. Perhaps that is why they all came to be known as ex-prime ministers and premiers.

NAFTA – The Sucker Punch

With talk of NAFTA and America’s return to a 1930’s style of isolationism, I’m wondering if we are missing something.  Something, if you will pardon the pun, that trumps our oil, pipelines, natural gas, forestry and yes, even copper and gold.

It represents undreamed of national wealth yet holds the potential for unimaginable controversy and conflict.  It is an economic resource and we own close to 20% of the world’s supply.  And unlike oil and gas, it is impossible for humans and most of the planet to survive without it.

Recognizing the lucrative business case, the American biotech giant, Monsanto, in polite business-speak, proclaimed, “There are markets in which there are predictable sustainability challenges and therefore opportunities to create business value.” The untapped economic resource and opportunity Monsanto refers to is Canada’s fresh water.

The business case being put forward recognizes that seven per cent of the world’s population does not have access to an adequate supply of water and survival for many is increasingly questionable. According to Christopher Maravilla (The Canadian Bulk Water Moratorium and Its Implications for NAFTA), somewhere between two and five million people a year die due to a lack of water.  And Ismael Serageldin, retired VP of the World Bank predicted back in 1997 that, “the wars of the next century will be over water.”

For some like Monsanto, the shortage and resulting hardships and deaths are simply an indicator of a business opportunity. And with one fifth of the world’s freshwater supply in our hands, of which seven per cent is renewable, it is an opportunity that would need Canadian participation.

The irresistible siren’s call of wealth is real. For example: In 2008 the Montreal Economic Institute determined Quebec could earn $6.5 billion a year exporting just 10% of its freshwater resources. And the Frontier Centre for Public Policy estimated an annual income for Manitoba of $1.33 billion if that province were to export just 1% of its freshwater.

Obviously our nation’s fresh water supply is staggering in both volume and value, and this brings us back to NAFTA and President Trump.

The United States has 10 times our population but only one-tenth the amount of water we have.  One example of the consequences of these numbers can be seen in the American Southwest, where satisfying its unquenchable thirst is in jeopardy.

As Scott Gordon wrote in the Dalhousie Journal of Legal Studies, “…America has become reliant on unsustainable means to meet its current water demands”.  He explains, “Water is currently being pumped from subterranean aquifers at a rate eight times faster than it is replenished”.

The prosperity of the American Southwest and California appears to have been built on a false assumption of a continued and affordable supply of domestic fresh water.  As a result of management practices, demand and drought, the water supply is nearing a critical stage and Canada and British Columbia in particular, are looking more and more like their savior and a way out of this water shortage.

Do we want to sell our water?  If we don’t sell it, will it be taken from us through NAFTA or other means? Do we have any idea of the environmental impacts that would result from diverting water from our rivers?

The value of our fresh water can be measured in many ways and economic opportunity is not the only way. The late Joseph Sax, a professor at the Berkeley School of Law and an expert on environmental law once suggested, “water is more than just a common natural resource,” explaining it had a special and unique status, a “heritage resource” that could not be grouped in the same product category as oil, gas and forestry.

It’s a unique way of looking at our fresh water, yet trade experts have identified Chapters 3 and 11 of our current NAFTA treaty as, “potentially constraining Canada’s discretion over its water policy.”

It is Canada’s water, but in this current political climate and NAFTA uncertainty, do we commodify it and bargain it away in return for national security and economic prosperity?  Some legal experts fear that we have already done so and lost our ability to, “exert sovereign control over our water resources.”

Tax Break or Disguised LNG Subsidy

Bill McQuarrie – In an earlier blog, I mistakenly described BC Hydro’s eDrive rate as being dissimilar from their Industrial rate. In fact,  Jennifer Siddon, Associate Vice President, Corporate Communications of Woodfibre LNG, correctly pointed out that they are both the same and available to all large industrial users.

I agree with Ms. Siddon, but does that mean LNG proponents will be treated the same as all other industrial rate users?  That is a ‘taxing’ question but for the most part, the answers can be found in a report prepared by the Canadian Petroleum Tax Journal.

In that report, the journal details the specifics of the tax relationship between British Columbia and LNG producers. In their introduction, the Tax Journal summarizes those changes, writing:

“In October 2014, the BC government released Bill 6 – 2014: Liquefied Natural Gas Income Tax Act (“Bill 6”) and Bill 2 – 2014: Greenhouse Gas Industrial Reporting and Control Act (“Bill 2” or the “GGIR”), both of which received royal assent on November 27, 2014. Bill 6 introduced legislation (the “LNG Act”) for a new BC provincial income tax on natural gas liquefaction activities (the “LNG Tax”), as well as a related BC provincial corporate income tax credit (the “Gas Credit”). In recognition of Canada’s challenges in competing in the global LNG industry, Bill 6 included a number of substantial revisions from BC’s initial February 2014 Budget proposals for the LNG Tax to make the tax less costly for proponents, including a reduction of the tier two tax rate and the introduction of the Gas Credit. Bill 2 addresses the management of greenhouse gas emissions from the point when gas enters a facility to where it is loaded on to ship or rail for market.”

The LNG Tax Act also allows LNG producers an accelerated method for deducting capital investment cost and states,  “…a taxpayer is entitled to deduct up to the full amount of its CIA (Capital Investment Allowance) balance in computing net income subject to tier two tax. Thus, an LNG taxpayer should not be subject to tier two tax on income from an LNG source until such time that the taxpayer has claimed the full amount of its CIA balance for that source.”

Bill 6 seems to be saying no tax until all costs have been written off as opposed to the depreciation method all other businesses must use.

The two-tiered system offers other advantages, with Tier One rates set at 1.5 per cent of net operating income and Tier Two set at 3.5 per cent of net income. The legislation goes on to state, “Tier One tax is creditable against Tier Two tax, such that the maximum aggregate LNG Tax payable will be at the tier two tax rate (3.5 per cent).”  This rate is locked in through to 2037.

The Act offers an additional credit (Natural Gas Credit) of 0.5 per cent for all “eligible costs of natural gas”.

The journal’s report was prepared in 2014 and it states, “As proponents continue to work with the BC Government on details of the LNG Tax, it is anticipated that amendments to the existing legislation will be proposed in 2015.”     

The standard business income tax rate in BC is 11 per cent and so it would appear the province is offering a tax inducement of 7.5 per cent.

So is it fair to say that LNG operations and industrial users are getting the same deal?  Special legislation was enacted to restructure the tax relationship with LNG proponents that has not been offered to industrial users, so is the playing field as level as Ms. Siddon implies?

It would appear that the cost to purchase power is indeed the same but tilted when it comes to contributing tax dollars to the province, giving the advantage to LNG as opposed to say, a pulp mill.

Is it a subsidy? It’s your call but we know that provincial shortfalls in taxes have to be made up somewhere and historically that is the regular taxpayer.

Glory Days Of Resource Jobs Gone – Bill McQuarrie

January 4, 2017
  • KAMLOOPS, BC

 McQUARRIE – Glory days of resource jobs gone

March 302016 3:11 A.M.

Old Ajax excavation.

BACK IN the 1900s — it sounds so long ago when you say it that way — I had an opportunity to attend a Guide & Outfitters conference and chat with several licensed hunting guides who were running their businesses in British Columbia.

It was in the mid 1990s and a new land management policy was being introduced by the provincial government, which would alter the way our forests and mines operated in the province.  At the time, I was president of the Cariboo, Chilcotin, Coast Tourism Association and our discussion was intended to look at the impact this new process would have on the tourism industry.

During the course of those conversations the guides and resort owners mentioned how valuable the fall moose hunt was to their business.  Wealthy clients would fly up and pay thousands of dollars to hunt but those in the industry were concerned about declining moose habitat and populations and the impact it would have on their businesses.

I innocently asked why they don’t “shoot” the same moose each time a hunting party came up.  By shoot, I meant with a camera instead of a rifle, not out of a sense of a “no hunting” mentality but as a businessman who saw an opportunity in what was then the infancy days of the Enviro-Tourism market.

To me, several photo safaris a month that captured the same moose turned that moose from a one-time sale into a revenue machine that kept turning out a profit.  It would also open up the market, allowing guides to work beyond that short fall hunting season.

The response surprised me, as the answer was pretty much, “no way.”  When I asked why, they told me quite matter of factly that it simply wasn’t the way things were done.  People paid them to hunt, they took them hunting and that’s the way they did it, the way their fathers had done it before them and the way their children would do it in years to come.  Resource decline and changing attitudes be damned as they made decent money extracting a limited resource… a resource that was profitable but only once.

That conversation has stuck with me for years and has come back to mind more recently as we talk about resource sector jobs (Ajax) and diversifying the economy of Kamloops.

Are we still stuck in the nostalgia of those “good old days”?  A time where a kid could leave high school, step into a well-paying job at the mill and just like his father before him, work there until he retired.

Those were the glory days of the resource sector.  Think of all the mills that once existed in and around Kamloops and people they employed.  For the most part they are gone.  Corporate consolidation, market fluctuations and technology eliminated many mills along with their jobs.

So what about today and Kamloops?  Do we old men hang onto the belief the old ways will return or do we look at a new economic model that utilizes talent and resources in a different way?  Are the possible jobs at Ajax our salvation or simply a delay in recognizing the resource sector we once knew and counted on has and is changing?   Have we become so desperate for the jobs of those former glory days that we are willing to allow a huge open pit mine at our City’s boundaries?  At what point does nostalgia and dreams of the past become a hindrance to the future?

Do we sell our one-time extraction of ore for jobs that have no future and in the end will require workers to move somewhere else in order to try and repeat the process?  To me that approach seems more like shooting the moose until there are none left simply because that’s how we’ve always done it.

Forget what that kind of attitude does to the resource and others who share the resource with you. After all, it’s all about a few of you making a hundred grand or more a year on the backs of a community of 90,000 people.

In the end, even the company that hired you will abandon you without so much as a thought or concern.  Your legacy?  You dug a big hole beside our city for them and the hole and your services are no longer required.  No other developed country will allow what you did but of course there are many more impoverished and desperate towns in third world countries that will sell out to them as easily as you did.

Bill McQuarrie is a Kamloops entrepreneur. He can be contacted at billmcquarrie@gmail.com. He tweets @mcrider1.

 

Jason says:
March 30, 2016 08:45pm

I’d like to weigh in here. For all the talk of how bad this pit mine is going to be for the community from these people that have found a profitable means to sustain themselves without the resource sector, I’ll in courage you to consider that not everyone has the ability ither mentality or financially to progress through what the writer has rendered to as the “New” way of operating with talents. It would seem to me that a great majority of people that are protesting this mine are, for lack of a better word, “Other industry Environmentalists”, and old retired people that don’t have to worry about their income because they’re already retired from their resource industry job. So I’ll ask you this, what consideration do you people have for the under-privilged people who through no fault of their own, couldn’t get that post-secondary education? Also consider the secondary industries that supply, support, and cater to this mine. I believe that if Ajax can say beyond a shadow of a doubt that they’ll take every step foreseeable to protect the environment, and be willing to pay for any damages that they can’t forsee, then we should let them go ahead. And when their done, we flood the pit that’s about 1.5km x 3pm, and turn it into a water resort.

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bronwen scott says:
March 31, 2016 03:47pm

Even if Ajax said they’d protect the environment, i wouldn’t believe it, because the company has already been shown to be manipulative with data and unconcerned about potential health effects. Both the Interior Health Authority and the federal government, plus two independent application reviews, have shown this to be the case.

And about the pit being used for water sports: even Ajax had to admit that seepage of “Fluoride, Sulphate, Copper, Iron, Manganese, Molybdenum, and Zinc is likely to remain into Post Closure the duration is far future.” So we will be left with a toxic lake.

Please, read the application, not just the company’s propaganda.

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Frank says:
March 31, 2016 07:44am

I’d recommend at least reading the application before weighing in. Ajax expect the pit to fill to within 200m of the surface (not ideal for a water resort), and for it to take 700 – 1000 years for it to even get that full.

You seem to be under the delusion that Ajax will be hiring lots of under-privileged people who couldn’t get a post-secondary education. Aside from a few mine truck driving jobs (which will probably be automated after a short period of time) what jobs do you think these people are going to be doing at the mine? Just because Ajax seems to hire people without a clue for communications and public relations doesn’t mean that they will continue to do that when it comes to operations.

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yuri says:
March 30, 2016 03:21pm

Can someone explain glory days of resource jobs? Was always a tough and dangerous line of work. Only a keyboard warrior would call it glorious.

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Underground mine worker says:
March 30, 2016 02:30pm

Your story of the Moose and your “enviro-tourism” idea really paints an interesting picture. Killing the Moose is for food, clothing and survival – it’s necessary,Similar to mining and metal extraction. As you type your own “old school” perception of the Ajax mine on your computer, using electricity flowing through copper wires, making connections through gold contacts, take time to consider the mining industry is allowing you to share your opinions of it right now. Furthermore allowing you to have a business and do your hobbies. I don’t agree with everything behind the Ajax mine, but have an open mind – mining has come a long way since your ways of the 1900’s. Bill, you seem like the kind of person that would show to protest logging with a paper sign mounted on a wooden stick. Go back to not using electricity and live off the land and perhaps you would have some credibility. Maybe take the time to consider the big picture before slandering so many people’s livelihood,the mining industry promotes more than just mining business in Kamloops.

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Roy kahle says:
March 30, 2016 09:41am

To be consistent you should stop using copper wire, don’t drive cars and don’t use electronics. All of these are dependent on the resource extraction industry you so readily denigrate! But I forgot—-you would let the underdeveloped countries supply the minerals while you protect your own pristine back yard.

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Frank says:
March 31, 2016 07:52am

I guess that means you support sweat shops (after all I assume you’re wearing clothes so you must support all clothing manufacturing), prostitution (if you have sex you have to support all sex), and think having a landfill and sewage treatment plant as neighbours is a great idea. The argument of “you use copper so you have to support Ajax” is just as ridiculous as the comment above. Hopefully Ajax supporters realize just how foolish it makes them look and stop using it.

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Bianca says:
March 30, 2016 10:33pm

Do you wear clothing or shoes? Oh, you must support sweatshops! No? Exactly…

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John says:
March 30, 2016 12:26pm

And what of the gold that is to be mined? Some 78% of gold is used for jewelry. For the adornment of people, the adornment of the earth is sacrificed.

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Miles says:
March 30, 2016 11:58am

I don’t think Bill is being inconsistent. We’re all a prisoner of the system. We can live within and use the system that we, as a society, have built and still disagree with how it was built. Often it’s more prudent to lobby to change the system than to try to live outside that system in order to “be the change you want to see in the world”.

I agree that the root of the problem is the demand for the resources and that a “not in my back yard” attitude mainly just pushes the problem onto someone else and is possibly selfish but I also think that refusing this type of development as shortsighted encourages us to look for more long term solutions. Ultimately we will run out of accessible mineral resources on earth, the more we focus on reducing consumption the less of a system shock it will be when the growing demand exceeds the plummeting supply.

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Lee Kenney says:
March 31, 2016 10:03am

“We have met the enemy and he is us”,Walt Kelly .A 1971 cartoon for Earth Day since then we are the Anthropocene,this is our planet ! The doomsday clock is ticking !

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Pierre Filisetti says:
March 30, 2016 06:59am

The tragedy of the commons…a tale of self-interest, the doctrine of capitalism. But remember we cannot blame Peter Milobar…he is serving the community to the best of his ability…the “community”…

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bronwen scott says:
March 30, 2016 05:44am

Well said, Bill. Kamloops would profit more from mining copper from the garbage dump–likely more ore per tonne than the Ajax site 😉 Besides, the copper will still be in the ground if we don’t mine it right now. We can always have a mine if we want. What we can’t have if Ajax goes through is a Tournament Capital with relatively clean air and water, and sightlines that don’t include a huge hole and tailings pile that can be seen from anywhere in the city.

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