Monday, August 20, 2018

It's Now Obvious Why We Needed a Change of Government in 2017

If you voted for the NDP in the last election because you wanted to stop the Site C project or halt the Kinder Morgan pipeline expansion, then you must be very disappointed. But if you did so because of the cesspools of patronage and mismanagement  at ICBC and BC Hydro, and the strong smell of dirty money in gambling and real estate suspiciously coupled with the BC Liberals’ avowed determination  to hang on to outdated campaign finance laws, then your choice has been powerfully vindicated. It was definitely time to have a change of government.

In 2001, the newly elected Liberal government vowed to take politics out of the management of BC Hydro and ICBC, as part of Gordon Campbell’s extensive “New Era” basket of promises.  Accordingly, the BC Utilities Commission had its authority to set BC Hydro’s rates restored, along with the authority to set the rates for ICBC’s compulsory Basic insurance. Following the 2009-10 recession, however, the Liberal government decided  to get more involved in the financial affairs of both major public corporations. Their profits gave the government some badly-needed revenues, and their cash transfers reduced the government’s direct borrowing requirements. The fiscal shell game had begun.  Starting in 2010, the government began to appropriate ICBC’s Optional insurance surplus capital.  In 2011, the Liberals exempted BC Hydro  from rate-regulated accounting rules; then, the following year, the government took direct control of BC Hydro’s annual rate setting authority.

  Richard McCandless  is a retired public servant  whose analysis of  the 40-year financial history of ICBC was published in the academic journal BC Studies in 2013.  His paper exposing the BC government’s manipulation of the finances of BC Hydro from 2008 to 2014 was published in that same journal  in November 2016.  As he described  it, “[t]he government’s politicization of the finances of BC Hydro and ICBC has come at the expense of future customers in a classic ‘pretend and extend’ gambit.”

McCandless shows how in  2013, cabinet imposed limits on the annual change in basic insurance rates, and suppressed  BC Hydro’s rate increases and enhanced  its apparent profits through deferring cost overruns and revenue shortfalls.  Cabinet orders in March 2014 required the Utilities Commission to approve a highly dubious “rate smoothing” deferral account  for BC Hydro, allowing it to count future unbilled revenue.  According to McCandless, “[this device allowed the government to continue to suppress electricity rates while reporting higher yearly profits as government revenue (and to extract dividends which added to BC Hydro’s debt).” 

As a result of these Liberal manoeuvres, BC Hydro customers now face a much higher debt liability, which, when coupled with  recent massive capital expenditures such as the Site C project, threaten to cause the province’s credit rating to be downgraded.  Meanwhile, over at ICBC, the failure to curb the growth in Basic claims costs, and the government’s suppression of the growth in Basic rates, has reduced the corporation’s once healthy capital reserves, making  a future  car insurance rate hike likely unavoidable.  As McCandless wrote on the eve of the election in May 2017, “The [Liberal] government’s  manipulation of the finances of the two public corporations has been incremental, and therefore has generally occurred out of the glare of the media spotlight.”   Now, the Liberals are no doubt hoping that it is the NDP who will be blamed for any rate hikes, tax increases  or credit rating downgrades necessitated by their own poor  governance.

You are probably thinking that it is only a matter of time before the NDP starts playing the same sort of games, or the Liberals get back in and start doing the same things all over again. But maybe this cycle of corruption can be broken by having a more democratic electoral system. If governments are composed of broad coalitions representing a true majority of voters, then we can hope that the parties who are  coalition partners (i.e. friendly competitors for each other’s share of the votes) can keep each other honest, making the kind of financial legerdemain  that we have seen from the BC Liberals more difficult to get away with in the future.

                                          Mark Crawford  is a professor of Political Science at Athabasca University.

Thursday, June 07, 2018

Trudeau fails to get optimal compromise between economy and the environment

For the past decade, Canada has lost $117 billion of economic value (about $ 30-40 million per day) simply because Alberta tar sands oil has not been readily exportable to Asia and we have been captive to the American market.

That money has simply flowed into the pockets of American oil execs, shareholders and consumers at our expense.

The only way to stop this hemorrhaging of economic value in the foreseeable future was to build the Trans Mountain pipeline, but legal and political delays from B.C. were going to make Kinder Morgan walk away from the project, damaging investor confidence in Canada even further.

That  is why a lot of people supported the federal government’s recent decision to buy Trans Mountain from Kinder Morgan for $4.5 billion —and remember, that doesn’t even include the costs of constructing the pipeline, which will be at least another $7.4 billion, and possibly much more.
But all of this makes me wonder: What if all of this legal and financial muscle had been used a couple of years earlier, in order to avoid being painted into this corner in the first place?

If the bottom line for environmentalists is avoiding the shipping of diluted bitumen along the B.C. coast, and the bottom line for Alberta and the energy industry is to get oil to tidewater, then the best solution is one that respects both of those bottom lines, by shipping something other than bitumen through a less congested route.

It is to the credit of B.C. newspaper publisher David Black and B.C. Green Party leader Andrew Weaver that they understood the importance of getting Alberta oil to tidewater.

Five to six years ago, (when China was more anxious to get an equity stake in the Canadian oil sector) a major Chinese company was lined up to invest in a refinery in Kitimat to go along with the Enbridge Northern Gateway pipeline.

Northern Gateway could have worked, created jobs, and reduced the need for the KM pipeline expansion.

Sending refined oil on a route with more open water would have been less risky environmentally; I believe that on balance it was the socially optimal compromise—and every First Nations group or environmentalist or opportunistic politician who opposed it should have realized that by blocking the Northern Gateway, they would be creating pressure for a $10-15 billion per year zero-sum game over the KM expansion.

So thank you, Adrian Dix, Elizabeth May, Justin Trudeau and David Suzuki, for helping to ensure a tripling of bitumen shipments along the B.C. coast!

Perhaps it is too late, and Trudeau’s nationalization of the Trans Mountain pipeline was the only remaining option.

But surely we could have done better.

Chalk it all up to too many professional political hacks gathering support from Nimbyist communities, and too few true leaders with long-term vision.

Mark Crawford teaches political science at Athabasca University

Sunday, April 22, 2018

Plenty of Blame to go Around on TMP

At the time of writing, I still have no idea how much money our “progressive”  governments in Victoria, Edmonton, and Ottawa are planning to shell out in order to persuade the (mostly Texan) shareholders of  Kinder Morgan to complete the $7.4 billion Trans Mountain Pipeline Project.  Justin Trudeau continues to utter  annoying banalities about “the national interest”  without providing any independent or detailed economic analysis justifying a major bailout.  Right-wing  pundits delight in  pointing  out that it wouldn’t be necessary to throw taxpayers money at the project if these three governments’ environmentalism hadn’t scared away private investors in the first place. For once, I am inclined to agree with them. Trudeau and Notley are potentially spending billions to bail out a company to do something that it was going to do anyway, until one NDP government's concern for the environment created too much uncertainty for the company.  My spin is different however: if billions in public money were available to invest, it should have been to produce and export something other than diluted raw bitumen so as to achieve something more like a win-win for both the economy and the environment.

I have been saying this for many years, but it is hardly original: David Black (B.C. local newspaper publisher) was promoting this notion for the Northern Gateway project sometime ago, with apparent support from Andrew Weaver.  If progressive politicians had been singing from this song book all along, they might not have backed into the current “reactive” posture, in which Premier Notley does not have time to contemplate changing the nature of Alberta’s  oilsands  industry, but simply must get the pipeline built if she is to have any hope of being competitive in next year’s provincial election. If all three governments had committed to putting money from carbon taxes to subsidize an “anything  but diluted bitumen” approach  to  tidewater oil exports, and promised to facilitate the export of anything else (bitumen pellets, refined crude, gas, diesel) ,  taxpayers  might have gotten value for their money.

Instead, politicians of all stripes at all levels have been working at cross purposes as they follow their own short-term, self-interested  political strategies. If I had been the provincial NDP leader in 2011 B.C. election, I would have put this approach clearly on the political agenda--back when there was conceivably still time for such a policy to work. It also would have been smart politically, since it would have suggested an openness and sensitivity to national economic interests as well as to local environmental ones. Instead , Adrian Dix’s trademark mixture of ignorance and arrogance (redolent of his time as Glen Clark’s closest advisor) yielded a last-minute unilateral decision to chase after green voters that backfired by playing into the hands of ‘pro-economy’ B.C. Liberals.  Meanwhile, Stephen Harper decided to use his newfound majority government to ham-fistedly provoke the Idle No More Movement with his Omnibus Budget legislation, bring the NEB and the pipeline approval process into disrepute with his narrowing of environmental criteria and attacks upon environmentalists,  and (eventually) a losing court case to First Nations over the Northern Gateway proposal.

But the real culprit now in my eyes is the Federal Liberal Government of Justin Trudeau.  The federal Liberal Party  has had much more room to manoeuvre on this file than either John Horgan or Rachel Notley over the past three years. A true ‘win-win’  was theoretically possible. Instead, Trudeau opted for an implicit bargain with Notley whereby she would support the National Climate Plan in exchange for his support for the Trans-Mountain pipeline. But what happens to that bargain if Jason Kenney’s Conservatives get elected next year?  Trudeau will be left holding the bag--which will have a big hole in the bottom of it.

Mark Crawford  is a professor of Political Science at Athabasca University.

Saturday, March 24, 2018

When "Balance" Really isn't Balanced: An Example of Right-Wing Media Bias

Have you ever noticed a bias against climate change science in many of Canada’s newspapers?  I’ll give you a great example I saw recently in the Edmonton Sun in a column by its notorious right-wing columnist Lorne Gunter. In an article titled “CLIMATE CHANGE ALARMISTS: Cherry-picking facts about weather extremes to make their climate danger arguments”, Gunter of course makes much of the fact that there was more snow on March 3 than there had been in 25 years, followed by the coldest March 4 in 22 years.

Then there is a deceptive flash of intelligence: “Fine, I know, weather is not climate. But…when weather extremes fit the alarmists’ climate-change theory, we’re told it proves the environmental science is settled. But when the weather doesn’t reinforce their panicky message, it’s dismissed as meaningless.” [ Unfortunately, however, the inconvenient truth is that the past couple of harsher-than-usual winters actually do fit the theory. Warmer air being funneled to the poles by the Earth’s convection currents has caused sea ice to melt that had previously been holding the polar vortex in place. As a result, the vortex has weakened and drifted south, yielding longer, harsher winters for most of North America.]  Then Gunter lets loose an unsubstantiated whopper: “For decades now, the sun’s activity has been on the increase. Solar scientists predict it will now lessen for a couple (or three) decades. And as it lessens, global temperatures should fall , too. ..We can shut every coal plant on earth, ban SUVs and force everyone to ride transit, and it will have negligible impact on climate.”   

Here is the funny part: on the opposing page is an article by PostMedia’s science writer Hina Alam,  in which she interviews Katherine Hayhoe, director of the Climate Science Center at Texas Tech University, stating that the sun’s energy has been measured very accurately for about 4 decades now, and that its energy has been going down over the last few decades, once you control for the 11-year sunspot cycle: the precise opposite of what Gunter asserts. “So if we are being controlled by the sun’s energy right now, we should have been getting cooler, not warmer.”  Her facts are easily corroborated by NASA and university scientists.  “Humans are controlling the climate, and that means that our choices will determine our future.”

Now, here is the more subtle and insidious part: if you were to complain to the Editors of the Sun about Gunter’s error (prevarication?), they would point out that it was they who placed Alam’s report on the same page as Gunter’s column, and the interview with Hayhoe on the opposing page. Gunter is an opinion columnist and is therefore entitled to his opinion, and they also made the opposing opinion about climate change available to their readers, who could then make up their own minds.  What’s wrong with that?  Well, here’s what’s wrong with that: providing equal space to two different scientific “truths”--flat and round Earth, evolution and creation, sunlight falling or increasing,---  is not the same thing as providing a balance of opinion. Accurate measurements and scientific consensus should provide the common basis upon which  reasonable discussion and difference of opinion takes place, so that truth can be advanced. Instead, we get a complete relativization of truth itself--the kind of “fair and balanced” journalism more worthy of  Fox Television than a respectable Canadian news outlet.  Would the same media  relativize objective facts congenial to the right-wing point of view  in this fashion?  We should ask: who are the real cherry-pickers, and how are they operating?

Sunday, February 25, 2018

Addressing the Pipeline Dilemma

Tying up the Kinder Morgan pipeline in the courts may be a good move politically for premier John Horgan, but as a Canadian, I must say that all this strategic delay pains me terribly.  The cost of not getting our petroleum to tidewater has been more than $117 billion over the past seven years: that is a transfer of wealth that has varied between US $11 to almost $40 per barrel, typically averaging between 30 and 45 million dollars every day.  As long as we are forced to send 99% of our oil to a single customer, all of that money will be scooped up by American consumers and refiners at the expense of Canadians.  This is painful even from a green perspective because, if we are relying on a depleting and highly polluting resource for some transitional period, we should at least get the full market value for that resource!    

On the other hand, diluted bitumen is a toxic sludge that, if spilled, slowly sinks and leeches into the water, coating everything in the marine environment that it comes into contact with. Moreover, the process by which the pipeline was approved was widely discredited by experts.

That sounds like a horrible dilemma. Either disingenuously flout constitutional law in order to suck billions out of the Alberta and Canadian economies to the financial benefit of Americans, or gamble that we can increase tanker traffic tenfold without a disastrous spill so that Asians can heat and pollute the atmosphere even more just so we (especially Albertans) can benefit from greater fossil fuel revenues here in Canada.  So what are we to do?

Well, I am nothing if not an inveterate policy wonk and an incurable optimist. Here is what I hope happens: that some combination of Indigenous, environmental and NDP legal delay and political resistance will force Alberta, Ottawa and the oil industry to re-think the pipeline strategy.  It is theoretically possible (according to recent findings by researchers at the University of Alberta), to turn bituminous sand into dry pellets that can be shipped by rail and which will not pose a serious environmental risk to the coastline.  It is also theoretically possible to process and refine bitumen here so that we are shipping regular oil and gas instead of diluted bitumen. It is even theoretically possible to do either one of these things, and boost our energy exports to Asia, without greatly increasing our net Greenhouse Gas Emissions. This could be done by diverting supply from the U.S. and from rail transport, using oil sands revenue to purchase green energy and efficiency offsets, and by cooperating with our Asian customers to reduce emissions.  None of these things are as easy or as profitable as simply building the pipeline extension as quickly as possible. But hey, who said it was going to be easy?

Sunday, September 03, 2017

Were the BC Liberals to Blame for Fire Season From Hell?

{This is a short column that I submitted last month to the Williams Lake Tribune, the 100 Mile Free Press, and Vanderhoof Omineca Express. So far it has not been accepted  by any of those papers,but I think it raises a pretty basic question and tries to come up with a fair answer.}

“Interface fires, which occur in places where wildland meets urban development, were at an all-time record high. The interface fires of last summer destroyed over 334 homes and many businesses, and forced the evacuation of over 45,000 people. The total cost of the Firestorm is estimated at $700 million.” Sound familiar?  Those words were written by the Hon. Gary Filmon thirteen and half years ago, in the Report of the Firestorm 2003 Review Committee.
That is why Bill Tieleman, a political columnist and left-wing political strategist in Vancouver,   recently wrote a piece provocatively titled “Blame BC Liberal Neglect, Not Climate Change, for Year of Fires”.  He alleges that that the Liberals ignored key recommendations of the Filmon report, pointing  out that over the years between 2006 and 2015, the government  spent only $8 million a year to remove fuels from just 80,000 of a total of 685,000 hectares of “high risk forest land”.  As then -NDP forest  critic Harry Bains pointed out in Question Period on March 3 2016, it took the government 12 years to treat just  8 percent of the land considered to be high risk by the Filmon Report.  Tieleman calls that the very epitome of the old saying: “Penny-wise, pound foolish.”
In fairness to the previous government, let me push back at Tieleman a bit.   I had initially reasoned that if it cost the government $80 million over a ten-year period to remove fuels from “just” 80,000 hectares, that would be only $1000 per hectare -- so it would have cost $685 million to fully implement the Filmon Report.   In fact, however the Forest Practices Board in its 2015 Report put the true cost of fully treating a hectare of land as somewhere between $5000 and $10,000, depending upon the terrain.  And the pine beetle epidemic and other factors have caused the amount of "high risk" forest to almost double  to 1, 347,000 hectares.   That means the total cost for treating all of the  high-risk forest land would be at least $6.7 billion.  ‘Money doesn’t grow on trees’. And no doubt land-use conflicts would arise closer to population centres, as thinning and prescribed burning would affect quality or value of privately-deeded or First Nations land.  As for Harry Bains and the NDP, why did they wait until March 2016 to start ringing the alarm bells in the Legislature? That leads me to wonder whether the NDP would have fully implemented  the Report’s recommendations, either: after all, politicians get more credit for responding to problems than they do for preventing them, most of the time.
Nevertheless, to those of us have been expecting another Big Fire season for years, the only wonder is that it didn’t happen much sooner. And the fact that the problem has grown bigger should have been a reason for doing more, not an excuse for doing less. It was always obvious that even the partial implementation of the Filmon Report--such as we might have expected under an NDP government--would have been a very worthwhile investment.  For example, an extra $16 million per year over 2006-2015 could have removed extraneous fuel from another 1000-2000 hectares on average surrounding  16 population centres in the interior.  Admittedly, one or two thousand hectares is not a lot to show for 10 years work  and $10 million dollars spent, but in the land adjacent to Williams Lake and 100 Mile House it would have made a significant difference, and would have freed up more firefighters to help smaller communities in the Chilcotin. As the B.C Forest Practices Board pointed out in its Report in 2015, “hazard mitigation costs less than wildfires when all costs are tallied.” No kidding.