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Opinion  

Hydro's little fibs on Site C

By Dermod Travis

The hissing sound you may hear is the unmistakable sound of the air coming out of Site C's tires.

As the B.C. Utilities Commission continues its inquiry on the project, it's becoming more and more apparent that B.C. Hydro has been playing a bit loose with telling the whole truth when it comes to Site C.

Case in point: in December 2014, when the B.C. government announced its decision to move ahead with Site C, B.C. Hydro boasted that an independent analyst had reviewed its methodologies for future demand forecasts and found them to be “state-of-the-art methods.”

Which is true, but not the whole truth.

From his report: “The process will produce accurate forecasts about ten years out. However, the process of producing peak forecasts and sales forecasts are not linked as directly as they could be, and could impact the second ten years of the 20 year forecast.”

Due diligence also seemed to be in short supply when it came to awarding some Site C contracts.

In November 2015, B.C. Hydro announced that its preferred proponent for the Site C main civil works contract was Peace River Hydro Partners comprised of Acciona Infrastructure, Petrowest Corp. and Samsung C&T. 

First raised in this space more than a year ago, all three were facing problems of their own at the time.

Samsung Group was under investigation for bid-rigging and corruption in South Korea, Acciona was under investigation for corruption in Spain – two executives were arrested by Spanish authorities less than a month after the Site C deal was signed – and Petrowest was “living on borrowed time” from its lenders.

There have been a few developments since. 

In August, the head of Samsung, Jay Y. Lee, was sentenced to five years in prison for bribery, after being found guilty of “offering bribes to the country's former president and other crimes.”

Petrowest finally succumbed to borrowed time and went into receivership in August. 

As for “on time and on budget,” Site C is neither and likely never was, despite B.C. Hydro claiming otherwise.

Here's what then-president and CEO Jessica McDonald told B.C. Business Magazine in a July 2016 interview: “We can look at our estimates and see where we are, and that’s the best gauge on why we say that the project is very solidly on time and on budget.” 

According to court documents filed in the Supreme Court of B.C., “Shortly after work commenced on the Site C project, it became apparent that various project components, including the dam, were over budget and behind schedule.”

Last month, PRHP told the utility that it wouldn't meet the 2019 river diversion deadline, adding an additional $610 million to the project’s costs. 

No surprise that a report this year by accounting firm Ernst & Young – Spotlight on Canadian power and utility megaprojects: challenges in financing and delivery – found that Canadian infrastructure megaprojects on average run 39 per cent over budget and behind schedule by 12 months.

How did Site C get off the rails so fast and so early?

No one seems to have been entrusted with looking after the taxpayers' interest, just each other's interest.

In 2007, the utility looked to its boardroom for a consultant – former MLA and then B.C. hydro director Jack Weisberger – to lead community consultations on Site C.

Catana Advisory Services was engaged “to negotiate (Site C) legacy agreements with municipal and regional district governments in northeast B.C.”

You won't find it in any official biography, but as late as December 16, 2013, McDonald was a partner at Catana.

In 2014, another board member – former Partnerships B.C. CEO Larry Blain – left the utility and landed at KPMG as its Senior Director, Global Infrastructure Advisory where he joined Gary Webster, a partner at the accounting firm, who was advising B.C. Hydro on Site C, advice some might better characterize as cheer leading. 

None of this bodes well for an on time and on budget finish of Site C, if there is a Site C to finish after the B.C. Utilities Commission sends its final report to the government.

But no matter how it plays out, there are some tough questions that need to be asked.

First among them: how did an $8.7 billion project get so far down the road without any independent oversight?

– Dermod Travis is the executive direct of IntegrityBC.



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Back on shaky ground

 

By Jason Clemens and Niels Veldhuis

During the spring election campaign, John Horgan convinced many British Columbians that his NDP government would be different than the previous New Democrat regime, particularly when it came to finances.

Unfortunately, the first few months of NDP reign don't augur well for the future. Consider just how markedly B.C.'s finances have changed in the few months since the election.

In the spring of 2017, the then-governing Liberals estimated revenues for 2017-18 at $50.8 billion against spending of $50.2 billion, resulting in a surplus of just over $600 million.

Then the NDP's September budget update estimated that revenues would be higher than originally budgeted by almost $1.6 billion. That should have meant an estimated 2017-18 surplus of $2.2 billion. Instead, between July and mid-September, Horgan's government introduced $1.7 billion in new spending for this year.

And the government has said it plans to increase spending by $4.5 billion over the next three years. 

Notably, this increase doesn't include many of the spending initiatives outlined in the NDP-Green Party coalition agreement or the NDP's campaign platform. That agreement included a number of initiatives largely absent from the budget update:

  • Invest in transit and transportation infrastructure.
  • Long-term funding for transit.
  • Build hospitals, schools and other infrastructure.
  • Increase funding for health care, particularly preventive initiatives and services.
  • Introduce an essential drugs program.
  • New health spending focused on seniors, including home care.
  • Additional funding for kindergarten to Grade 12 and post-secondary education.
  • New investments in childcare and early childhood education.
  • A new pilot program on basic minimum income.
  • New investments in affordable housing.

In addition, while there's a great deal of overlap between the NDP-Green agreement and the original NDP campaign platform, there are also several major commitments that seem either underestimated in the budget update or altogether absent. For instance, while the agreement calls for greater investment in childcare and early childhood learning, it doesn't specifically introduce the $10-a-day childcare program proposed in the NDP platform.

The combination of immediate and marked spending increases, zero fiscal room for additional spending, and a large number of unfulfilled and expensive campaign promises means there's a strong likelihood that B.C. will slip back into deficit spending and/or face additional tax increases, perhaps as early as next spring's budget.

The Horgan government has sent a troubling signal with its first budget that big spending, tax increases and (more likely than not) deficits are back as the governing fiscal policies of the province.

Jason Clemens and Niels Veldhuis are economists with the Fraser Institute.

– Troy Media



Rural bus service essential

By Amanda West

The quality of life of rural British Columbians is being thrown under the bus.

If we are not careful, it will be done without a plan for the future. We can only hope that our provincial and federal politicians are paying attention.

We have been asking for a national transit strategy that includes inter-city bus transportation for many years, but this plea has continued to fall on deaf ears. Inter-city bus transportation is the transit of the rural community. Without it, rural citizens have limited access to out-of-town services.

Years of provincial cuts mean that many have no choice but to travel for specialists appointments and other vital services. Governments have a duty to ensure affordable and reliable ways to carry out this essential travel.

Canada, as a whole, does not provide for an alternative to bus travel – either by air or by rail – that most people can afford on a regular basis. Many small communities such as Lytton, Dawson Creek or Princeton are due to be adversely affected by Greyhound’s service withdrawal.

The inter-city bus industry has been all but deregulated – thanks in part to the federal government downloading responsibility for regulation to the provinces. The provinces are no longer willing to face the challenge and expense of providing safe, clean and reliable transportation to their own rural constituents. At worst, this constitutes serious neglect of rural needs.

Greyhound readily admits in its most recent application to the B.C. Passenger Transportation Board that its proposed route reductions and eliminations will deprive remote communities of vital service. While bemoaning a lack of revenue, Greyhound has failed to mention that its own changes of the past few years (running scheduled coaches at inconvenient times, eliminating route stops/agencies in smaller communities) have contributed to the results we see today.

Any funding provided to a private company such as Greyhound, must come with some form of reciprocation to the province and the citizens of British Columbia, such as a dedicated fleet, daily runs and mandatory service.

Further isolation also makes a bad situation worse when it comes to rural health care, where services are fewer.

Added to this, the lack of inter-city bus service puts an unfair financial burden on ordinary people. This leaves rural British Columbians in an increasingly precarious position that cannot be ignored. Factor in safety and the situation becomes more alarming, especially given what has transpired along the Highway of Tears. 

Safe and regularly scheduled transportation is a necessity in the small communities dotting British Columbia and every other province in Canada. It is essential for the safety and well being of all our residents.

It should also be the government’s concern to ensure that the most dangerous roads in this province are not left to private operators motivated solely by profit in a piece-meal system. The guarantee of regulated provincial bus service upholds the government obligation to provide vital and essential links to all British Columbians.

These links allow for fair and affordable access to services which have already been wiped out locally, services which urban British Columbians may take for granted. Rural families should not have to expect less. 

Amanda West is a former coach operator and is financial secretary treasurer of the Amalgamated Transit Union Local 1374.



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Don't forget the TPP

By Carlo Dade

Other than a chance for a selfie with Prime Minister Trudeau, one thing folks in the Central Okanagan should be looking for out of this week’s federal Liberal caucus meeting in Kelowna is whether the government has any concern for the trade agreement that will determine the region’s economic future.

Not the North American Free Trade Agreement. Rather, it’s the Trans-Pacific Partnership agreement, which is alive and well without the U.S. – and being ratified by other signatories that see a chance to get a leg up on the Americans in booming trade with Asia.

For a region like the Okanagan, in Pacific-facing British Columbia, a new agreement in Asia that lets us catch up with the Australians and surge past the Americans makes this agreement the most important trade development to date. Given that an agreement with China would likely take close to a decade to conclude, it’s also the only opportunity for the foreseeable future.

Japan, New Zealand and the Malaysian Congress have already ratified the TPP, with others planning to announce agreement to move ahead this November at the annual APEC summit. 

Rather than killing the TPP, President Trump’s withdrawal has strengthened the resolve of the remaining countries. It has also made the agreement better for Canada. Economic modeling in a Canada West Foundation report shows that Canada does better in a TPP without the U.S. in the agreement with huge tariff and other advantages over American exporters in timber, wine, seafood, fruits and vegetables and business services – all important to the Central Okanagan, B.C. and the West. 

Beyond agriculture and commodities, Canada will gain advantages in trade in services. In Singapore alone, demand for business services would increase C$200 million by 2035. The TPP will give companies in countries that are part of the agreement a huge competitive advantage for this business. U.S. companies that want in on these opportunities will have to either hope that Donald Trump changes his mind about the TPP, or move production and operations to a TPP11 country. For U.S. service and high-tech companies that want to take advantage of the agreement and remain close to home, B.C. and places with operating costs lower than Silicone Valley and good air connections like Kelowna, suddenly become more attractive.   

These advantages would continue for as long as it takes the Americans to catch up in signing trade agreements in Asia. Given the Trump administrations record so far, this is a window that is open but needs to be seized as soon as possible.

Even for companies worried only about North America, ratifying the TPP will give Canada new leverage in NAFTA. Since firms in Canada and Mexico would have TPP benefits but U.S. companies would not, pressure would be on American negotiators to make concessions to enable U.S. firms to catch up.

With so much on the table, ratifying the agreement would seem a slam dunk. Except that for some reason for this government it is not. Other than announcing 18 months of consultations, the government and western MPs including those from ridings that would benefit like Kelowna-Lake Country, Cloverdale-Langley City, South Surrey-White Rock and Langley-Aldergrove, have been silent. 

The government has done the bare minimum in attending TPP meetings. Its refusal to state clearly and publicly that it supports going ahead with the TPP is in stark contrast to other countries and should be worrying for business in B.C. and across the west. When the remaining TPP countries meet at the APEC summit in November, Canada needs to be ready to join them in moving ahead. Being ready means making the case to the Canadian public and stating clearly that doing so is in the national interest.

Hopefully this week in Kelowna, in a region and province that would benefit the most from opening Asia and getting a leg up on the Americans, we will see western MPs step up and get the government to commit to ratifying the TPP.

In the rest of the West, we are watching and hoping. 

Carlo Dade is the director of the Trade & Investment Centre at the Canada West Foundation



Money can't buy you love

By Dermod Travis

B.C.'s 2017 election will go down in the history books and in more ways than one.

The province’s closest election also turned out to be its most expensive.

While the final numbers will increase as a few stragglers report and additional candidate spending is tacked on, the B.C. Green party spent $905,000 on its campaign, the NDP ($7.9 million) and the B.C. Liberal party ($13.6 million), for a grand total of $20.3 million. 

With 3.15 million registered voters in B.C., the Greens spent 29 cents per voter, the NDP $2.50 and the Liberals $4.31. Quebec's limit is $1.37 per voter.

It's tough to do line-by-line spending comparisons between the parties, as each may report shared spending with local campaigns differently, however the Greens spent $47,040 on research and polling, the NDP ($209,300) and the Liberals ($277,460).

The NDP was the big spender on media advertising at $3 million, followed by the Liberals ($2.5 million) and the Greens ($143,000). 

In the “if you're going to spend it, you need to raise it department,” the Greens pulled in $869,000 between January 1 and May 9, the Liberals ($7.9 million) and the NDP ($9.4 million).

Not only did the NDP raise the most, they also won the award for single largest donor: the United Steelworkers at $749,622. 

The Liberals needed eight donors – four of them property developers – to hit $752,100. 

And the Greens needed every single one of their donations over $250 – all 2,068 of them – to reach $774,739.

Unions kicked in $3.3 million for the NDP and $40,050 for the Liberals. 

The top 160 corporate donors to the Liberals gave a total of $3.4 million.

At least eight corporate donors gave more than $25,000 to the NDP, including Concord Pacific ($25,000), Gateway Casinos ($26,490), Canadian Forest Products ($30,500), Teck Resources ($50,790) and Aquilini Investment Group ($101,000).

Not surprisingly – having sworn off corporate and unions donations altogether – the Greens saw nothing from either, but did see $20,000, its largest single cheque, from Elizabeth Beedie, wife of Vancouver property developer Ryan Beedie.

Airbnb checked in with the Liberals for $1,500, Super Save Shredding gave $300 to Rich Coleman's re-election effort and the B.C. Lions Football Club was in for $5,000.

Hockey Canada and the Telus Cup – Canada's annual national midget 'AAA' hockey championship – donated $300 to the Liberal campaign. Telus topped that up by another $13,580, but saved its biggest cheque for the NDP this time out ($20,000).

Four golf clubs and two golfing associations contributed $3,226 to Liberal coffers and, well, nothing to the NDP. Since 2005, assorted golf clubs have donated $324,439 to the Liberals and $3,775 to the NDP.

And the New Car Dealers Association didn't disappoint with $48,050 for the Liberal team, bringing its running total to more than $1.3 million.

The association doesn't appear on the 2017 NDP list, but it has given $82,790 to the party.

And to think, the most interesting numbers for 2017 are still to come. The donations between May 10 and the date that corporate and union donations are finally banned in the province, that is if Premier John Horgan would stop fundraising long enough to honour his “first order of business” commitment. 

– Dermod Travis is the executive director of IntegrityBC.



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