Category Archives: B.C. Liberal Government

We Lose When B.C. Government Listens To Bond Raters Over Citizens

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Susan Lambert  Susan Lambert     Past President, B.C. Teachers’ Federation

http://www.huffingtonpost.ca    05/05/2014

Peter Cameron’s warnings that the economic skies of B.C. will fall should government negotiate a fair contract for B.C.’s teachers reminded me of Doug Foster’s testimony in the historic court case won by the B.C. Teachers’ Federation this spring.

Foster, assistant deputy finance minister and unabashed fervent apostle of “free market” based economic policy, testified that the province invites bond raters to advise as provincial budgets are developed. That advice is designed to “keep taxes low and constrain spending” in return for a good credit rating.

Foster testified the bond raters are wary of all spending, including capital projects, and are staunchly opposed to deficit budgets. The net zero mandate was approved of by these raters who promised to maintain the triple AAA rating only with the caution that the mandate be maintained.

Foster also testified that government agreed with the raters that the economy was fragile, even though this analysis was contradicted in the government’s message to the people of B.C.

Colin Hansen, the finance minister at the time, painted a rosy picture of the economy in the province, talking about B.C. as one of the strongest leaders in economic growth in Canada attributable to the success of the Olympics, the ability to pay down the debt by $9 billion, and projections of personal income increases of three to four per cent among other favourable indicators.

So Cameron’s warnings connect some economic dots for me. Seems like the bond raters, firms like Standard and Poors found to be complicit in the 2008 global economic crisis, are once again “advising” government. These are the people in favour of an alternative vision of Canada, (one in which the 1% have both economic and political clout and can dictate policies that increase the numbers of homeless, impoverished and dispirited in an increasingly mean world), who are coercing our government with the financial equivalent of the fabled carrot and stick.

Rather than charting our own course as citizens of this province and probably this country, we are being held to ransom by the rogues and villains who profit from low taxes, smaller government and free markets.

These are the greedy charlatans who preach “trickle down” economics and promote private rather than public services. Who are supported by corporations with production and supply lines in Bangladesh where there are no regulations or unions to protect workers from exploitation, violation and death in order to profit when these goods are sold for enormous returns here in B.C.

And what effect has this “free market” driven economic policy had on public services in this province? You don’t have to look further than your local school board struggling to identify yet further cuts to the programs and services that once made the system the strongest in the world.

We have the highest child poverty rate in the country. Mary Ellen Turpel Lafond has recently revealed that we have, across the province, fewer services for children than there are in the city of Calgary.

As this government heeds the advice of free market economists, so does our investment in public services decline. These neo-liberal economic policies are supposed to be beneficial for all, but we see the stark reversal of that promise.

The hope of jobs is fading as the promise is pushed further and further back on the horizon. Public services are declining. And costs to ordinary citizens are increasing. When will we ever learn?

Follow Susan Lambert on Twitter: www.twitter.com/susant8404

BC Government Leaving School Districts In No Win Situation

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Just-saying

April 23, 201 4

By Andrew Chernoff     https://andrewchernoff.wordpress.com                                   

It should be clear by now. Talk is cheap.

The BC government is not open for business. The doors are closed and their ears are plugged.

The headlines say it all:

From angry teachers, to fuming Cupe education workers, boisterous parents, and frustrated school trustees, it is clear it is not working.

Can civil disobedience be far off the horizon? Just saying….

Or are all these headlines just full of talk, emotion, frustration with no real substance or desire to make real change….to make a real difference…to actually act and put it all on the line, in the streets, on the provincial legislature?

HELLO???!!!!!

For what should be a galvanizing issue….it sure is lonely out here all alone….just saying.

Public sector wage bonus tied to B.C. economic growth puzzles experts

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Proposed five-year contract has 5.5-per-cent increase guaranteed

By Gordon Hoekstra, Vancouver Sun December 4, 2013

A tentative five-year deal struck by the B.C. Liberal government with some public-sector unions that would tie additional wage increases to improvements in the economy is unusual, say labour experts.

In the private sector, prospective wage or income increases would normally be tied to workers’ efforts.

But there’s little government workers could do to improve the larger provincial economy, noted Ken Thornicroft, a professor of law and labour relations at the University of Victoria.

“The thing that differentiates this thing in my mind from private sector arrangements of the same ilk is that often in the private sector it’s a profit sharing arrangement, whereby the employees have a more direct linkage between the firm’s performance and their own efforts,” observed Thornicroft.

“Whereas here you are talking about the macro economy, and it’s hard for me to see how public sector employees could do much if anything to influence GDP,” he said.

GDP, or gross domestic product, is the value of all goods and services produced in an economy.

Simon Fraser University professor Mark Thompson said essentially the deal provides a productivity bonus, but what is interesting is it depends on the productivity of everybody else.

“It’s not like people can say we are going to process twice as many welfare recipient claims in an hour. It sounds like the kind of thing that a government desperate to hammer out a deal might throw in to soften it,” said Thompson.

So far, three tentative five-year deals cover 51,000 workers in government, social services, environment, community living and aboriginal services. The workers are represented by a number of unions including the B.C. Government and Service Employees’ Union, the Canadian Union of Public Employees, the Hospital Employees’ Union, and the Health Sciences Association.

The government has yet to negotiate deals with teachers or nurses.

The three tentative agreements, which would expire in March 2019, includes wage increases amounting to about 5.5 per cent.

The agreement also provide the possibility of increased payments to workers if the province’s real gross domestic product exceeds the forecast by the independent Economic Forecast Council published each year in February. That will be determined using Statistic Canada data that will be compared against the forecast.

If the real GDP growth is one per cent above the forecast, then workers would receive a 0.5 per cent wage increase above the already-negotiated increase. Therefore, a worker earning $50,000 a year would receive an extra $250 if the economy outperformed the forecast by one per cent.

As the B.C. government would expect to increase revenues by at least $200 million a year for a one per cent growth in GDP, it would be able to fund the wage increase.

“There is a dimension to this that is new and novel, and one that I’d be kidding if I didn’t say I’m intensely interested and excited about,” said Finance Minister Mike de Jong. “Under this mechanism, public sector workers will share in the benefits that flow from that additional (economic) growth. We think that’s appropriate.”

A similar deal was struck in Quebec in 2010, although it was tied to nominal GDP growth, which is not adjusted for inflation. The five-year deal provided guaranteed wage increases of seven per cent, which could increase another 3.5 per cent if Quebec’s economy grew faster than government estimates used to achieve a balanced budget.

BCGEU president Darryl Walker said he didn’t necessarily disagree that public sector workers do not have a big impact on the province’s economic growth, but noted there are revenues that are produced in the work they do.

Crown agencies such as B.C. Timber Sales generate revenues for the province, which are indirectly accounted for in GDP.

Walker said the union was aware of the Quebec situation, but didn’t instantly jump at the idea. When they discovered an analysis of the past dozen years showed workers could have received an additional raise of 1.5 per cent, they decided to look at it, noted Walker.

“We thought it was worth agreeing to,” he said, noting they are already guaranteed the 5.5 per cent increase.

Thornicroft believes the unusual deal, ultimately, is a way for the B.C. government to get a longer deal than unions may have been willing to agree to because now workers will benefit if the economy improves more than forecast.

Normally, you’d expect unions to sign a three-year deal, he said.

The B.C. Liberal government under Premier Christy Clark has floated the idea of a 10-year contract with teachers.

Thornicroft believes that unionized workers will vote in favour of the five-year agreement.

Thompson said while not a lot of money is at stake in the portion of the agreement tied to economic growth, workers might be concerned that the unusual deal will set a precedent where future raises are tied to economy’s performance.

In some way, they’ve increased the risk on their paycheque, he said.

With file from Canadian Pressghoekstra@vancouversun.com

© Copyright (c) The Vancouver Sun

Hydro Rates and Liberal Errors

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December 5, 2013          David Schreck, StrategicThoughts.com

The Liberal platform from the May 2013 election is still on their website and it is easily searchable. BC Hydro was mentioned seven times. Hydro rates only received passing reference by way of a paragraph header:

“Reducing pressure on ratepayers”
“As the BC Prosperity Fund reduces public debt, this will include reducing the debt for BC Hydro and the Port Mann Bridge by allowing us to accelerate the paydown of debt for capital projects that are helping build the province.”

Five of the seven references to Hydro in the Liberal platform were in the context of paying down its debt through the use of LNG revenues. (The other two were to continue to purchase private power and a boast about implementing audit recommendations regarding executives and their compensation.)

Having opened Pandora’s box, the principle of reducing Hydro’s debt through the use of resource or other government revenue needs to be fully explored. Reducing the debt pressure on rate payers through such payments can be thought of as little more than repaying what amounted to a shift of debt from government to Hydro; that is what happened when Hydro paid water rentals and dividends to the province when those funds could have been used to reduced Hydro’s debt.

BC Hydro’s total revenue in the 2012-13 fiscal year was $4.9 billion. In that fiscal year, Hydro paid $348 million in water rentals as well as $509 million in dividends to the province, which amounted to 17.5% of the corporation’s total revenue.

Many families who use natural gas to heat water and their homes have very low electric bills. Reasonable attention to turning off the lights can result in monthly bills of under $40 for such families, but those who use electric baseboard heaters and electric hot water tanks face much higher bills, averaging over $200 per month.

For those families a rate increase of 9% on April 1, 2014 and another 6% on April 1, 2015 hurts. If they have wage earners who work in industries that will be facing millions in increased costs because of the 15% two year rate hike, they could be looking at job losses.

Boards of education and hospitals were told by the government to find “savings” elsewhere in their budgets to pay higher Hydro rates; schools and hospitals may have to cut services and layoff staff to pay the higher electric bills!

Premier Clark’s Liberals would have you believe the rate increases are necessary in order to make up for decisions made by the NDP more than twelve years ago. Even their strongest supporters can’t believe that nonsense. After more than a decade the Liberals must accept responsibility for their decisions and many of those decisions were massive mistakes that inflicted billions in unnecessary costs on Hydro.

BC Hydro’s power distribution was stripped away into BC Transmission Corporation in 2003 only to see the experimental company dissolved and reabsorbed by Hydro in 2010 under the inappropriately named “Clean Energy Act“.

Will McMartin described how many Liberal friends benefited from that failed experiment which cost rate payers $65 million. That was small potatoes as Liberal waste at Hydro goes.

The Clean Energy Act excluded many pet projects from independent review by the BC Utilities Commission (BCUC). Energy economist Marvin Shaffer warned that the Act would cost BC billions, and he has been proven right.

The Act essentially required Hydro to buy high and sell low. In the fiscal year ended March 31, 2013 Hydro paid Independent Power Producers (IPPs) $760 million (annual report page 45) for 10,675 gigawatt/hrs of power, an average cost of $71.23/MW/hr. Average power cost for Hydro was $17.96/MW/hr for 62,529 gigawatt/hrs of power. The Liberal’s concept of “self-sufficiency” required Hydro to buy expensive IPP power as if every year were a drought, even if it didn’t need the power.

The Clean Energy Act was really an Act to promote the profits of IPPs and to strip BCUC of its regulatory role in protecting ratepayers. Section 7 of the Act removed the following projects from BCUC scrutiny:

  • the Northwest Transmission Line, a 287 kilovolt transmission line between the Skeena substation and Bob Quinn Lake, and related facilities and contracts;
  • Mica Units 5 and 6, a project to install two additional turbines and related works and equipment at Mica;
  • Revelstoke Unit 6, a project to install an additional turbine and related works and equipment at Revelstoke;
  • Site C, a project to build a third dam on the Peace River in northeast British Columbia to provide approximately (i) 4 600 gigawatt hours of energy each year, and (ii) 900 megawatts of capacity;
  • a bio-energy phase 2 call to acquire up to 1 000 gigawatt hours per year of electricity;
  • one or more agreements with pulp and paper customers eligible for funding under Canada’s Green Transformation Program under which agreement or agreements the authority acquires, in aggregate, up to 1 200 gigawatt hours per year of electricity;
  • the clean power call request for proposals, issued on June 11, 2008, to acquire up to 5 000 gigawatt hours per year of electricity from clean or renewable resources, and

Section 17 of the Act imposed the smart meter program and exempted it from BCUC review.

It is hard to say whether some of the projects listed above would have proceeded if they had to satisfy BCUC. If some had not, ratepayers might not be looking at a 15% rate increase over the next two years.

Smart meters cost over $1 billion and there is no evidence of any significant savings. The cost of site C is anyone’s guess but some suggest it could reach $10 billion. Even Hydro’s 2011 estimate pegged it at $7.9 billion. Remember all that power is designated for producing LNG in BC and we’ve yet to see whether LNG can be sold at a profit for the province, let alone at rates that will pay off all provincial, Port Mann and BC Hydro debt. Nevertheless, the Liberal platform promised to accelerate the paydown of debt at BC Hydro, BC Ferries and the Port Mann Bridge once the core provincial debt is paid down.

While not acknowledging their mistakes, the Liberals could argue that (except for Site C) they are mostly water over the dam, or is that water under the bridge. One way or another, the promised pay-down of Hydro’s debt is a long way in the future and it needs money now. Of course part of the reason it needs money now is to continue paying the government almost a billion dollars a year in combined water rentals and dividends.

A background note to the government’s news release on the rate increase said government would be: “Reducing dividend payments to the Province over five years starting in Fiscal 2018 to allow BC Hydro to keep more cash for infrastructure investments.”

Those paying 9% more next year and another 6% more in 2015 might notice that the government’s promise to stop draining so much from Hydro doesn’t take effect until after the 2017 provincial election. When you think about it, much of what the Liberals promised for the May 2013 election won’t be seen or proven until after the 2017 election. It all requires a great deal of faith.