Thursday, August 05, 2004

Mad cow aid went to fatten packers' profits

VICTORIA - We're quick to demand government action - and cash - when things go wrong.
But a $400-million program to help ranchers cope with the mad cow crisis actually delivered half the money as windfall profits to giant meatpackers, a reminder of how easily things can go wrong when politicians start handing out cash.
And we didn't even get any cheap beef out of the deal.
Alberta Auditor General Fred Dunn examined the federal-provincial plan cobbled together when the discovery of a single BSE-stricken cow led the U.S. to slam its border shut.
The plan worked, he found. Ranchers were cushioned from the worst of the short-term impact.
But because the Canada-Alberta BSE Recovery Program was poorly thought out, it also encouraged ranchers to dump a lot of cattle on to the market quickly. Prices fell as a result, but the ranchers were protected by taxpayers. No big windfall for the farmers; they just avoided disaster.
But the meatpackers, what a deal for them.
As cattle owners, they claimed about $45 million in direct assistance as part of the aid program.
And they scored much more because of the poorly planned aid scheme.
The plan only paid ranchers when they sent their cattle to slaughter.
Ranchers knew there was a limited pool of money available, and could check online to see how much was left in the pot. So they rushed to dump their cattle while there was still aid money. A four-legged stampede to market meant prices plummeted.
Good news for the three giant meatpackers that dominate the market in Alberta. They picked up cattle dirt cheap, kept on selling beef at normal prices and tripled the amount of profit they made on each cow - thanks to your tax dollars. Before BSE hit in May 2003, the packers were making $46 a head. That more than tripled to $176 a head in the six months after the subsidies were put in place, according to the auditor general.
But lousy news for taxpayers, and consumers. It's one thing to be asked to hand money over to cattle producers hit by an extraordinary event. It's quite another to find out that taxpayers are subsidizing corporations' huge profits.
There's several lessons here.
The most obvious is that governments should work harder at getting aid programs right, despite the pressure to act quickly. In this case, the program could have been need-based, eliminating the direct subsidy to the packing companies. It could have provided support for ranchers who chose to wait the crisis out, instead of forcing them all to dump cattle. It could have encouraged an orderly stock reduction. All would have protected taxpayers' dollars.
It's important to get these things right. This $400-million program was only one of several mad cow assistance programs worth a total of $2.5 billion. At the same time governments are being asked for cash to help poultry producers hit by avian flu fallout, fire victims and a host of others. The cost is enormous, and the public needs to be able to count on well-designed programs that achieve a legitimate public policy goal.
This affair should also be a wake-up call for those who have a blind faith in the power of the market to make things right.
In a functioning free market, consumers would at least have got cheaper steaks out of the deal. Faced with the chance to buy cows at low cost, the classic economic theory goes, meatpackers would compete for a larger share of the market by lowering prices.
But that didn't happen. It's too expensive to get into the business for a short time. The market is generally the most efficient way to manage supply, demand and price issues. But not always.
There's a place for government aid. But Alberta's auditor general has shown that attempts to spend our way out of a crisis can go badly wrong.
Footnote: The companies - Lakeside Packers, Cargill and XL Foods - had initially denied the windfall profits. They were also reliuctant to provide information on their operations to a House of Commons committee looking at the aid program. Dunn found the companies had made $117 million in profits in the year before the BSE crisis, and $197 million in just six months after it hit.

Wednesday, August 04, 2004

Taser danger demands immediate review

VICTORIA - I wrote about Tasers with some enthusiasm back in 1998, when Victoria's police force became the first in Canada to give the high-tech weapons a try.
It seemed like a great breakthrough, a weapon that shoots darts that zap dangerous suspects with electricity, making them easier to subdue. The trial seemed to be a success, and then attorney general Ujjal Dosanjh approved the Taser for use across the province.
There's still a lot to recommend the gun.
But after four Taser-linked deaths in the last 12 months in the province, it's time for an independent review of the technology, and the way it's being used.
The deaths - in Prince George, Burnaby and Vancouver - don't appear to be aberrations. Another 45 people have died in the U.S. in the last three years after being zapped with the newer, more powerful Taser models.
That wasn't supposed to be the deal. When the high-tech weapons were introduced here, the manufacturer, Taser International, claimed they were completely safe. The company continues to make the same claim.
People may die after being zapped by a Taser, but that doesn't mean it killed them, the company argues, pointing to the hundreds of police officers who have gone through the experience themselves.
But in at least three deaths, medical examiners have disagreed. A report by the British government in 2002 found the Tasers could not be classified as safe, although British police forces have begun testing the weapons. And a recent New York Times article said reporters could find no independent studies confirming the safety of the devices.
The company argues that the death rate for people shot with a Taser is no higher than the overall death rate for people taken into custody. People aren't killed by the Taser; they're killed by a high heart rate.
But 90 per cent of the people shot with a Taser are going to have a heart rate that has already gone through the roof. They are on drugs, or mentally ill, agitated, angry or frightened. They're involved in a dangerous confrontation with police, teetering on the edge of violence or suicide.
Four deaths in barely 12 months should be enough to trigger a review of the safety of Tasers, and the way they are being used in the province.
Just because they are dangerous doesn't mean they should be banned. The risk may be balanced by the number of lives that saved by giving police a useful tool.
Officers must make split-second decisions about how to respond to a dangerous person. They have to decide whether to try and restrain him physically, or at the other end of the spectrum whether to shoot him dead. Tasers have specific advantages in those situations - they can be fired from eight metres away, incapacitate most victims instantly and usually don't kill.
Other responses - like pepper spray - must be used at close range, and because they rely on pain can be shaken off by some people. And they are useless against an armed suspect whose goal is to have the police shoot him.
But B.C.'s entire approach to Taser use has been based on the idea that there is no risk from the devices. It hs been sold to police and public as a device that immobilizes without causing injury or death.
Those claims have shaped the way the devices are used, with critics arguing Tasers are being used too frequently and in cases where other methods of restraint would have been as effective and safer.
If there is a risk of death - and the evidence appears clear that there is - then our approach must change, and the rules governing use must become much more stringent.
It's time for a thorough independent review of the risks of Tasers, and the way they are being used in the province.
Footnote: Some of these questions could have been answered by an inquest into Clay Willey's death after he was shot with a Taser in Prince George more than a year ago. But the inquest won't be held until October. That kind of delay is inexcusable when answers are badly needed.

Liberals running risk with ICBC overhaul

VICTORIA - Look for ICBC to be the next Crown corporation to get a makeover by the Liberal government, a risky move in the last months before an election.
The Liberals want to loosen ICBC's grip and let private insurance companies grab a bigger share of the business. Their campaign platform included a pledge to introduce "greater competition in auto insurance, to create increased choice and reduce motor vehicle premiums."
That hasn't happened.
Part of the problem was timing. As the Liberals took over, private car insurance rates were soaring across Canada and becoming a major political problem for provincial governments. But in B.C., rates were stable and the system was working.
The privatization push also ran into a problem in ICBC's new CEO, picked by the Liberals to run the company like a business. Nick Geer left his job as a vice-president in Jimmy Pattison's empire to run ICBC. And after taking a look at the company, he decided the current level of competition - which is tiny - served ICBC and its customers well.
Geer won the battles for a time, despite government grumbling. But earlier this summer he was pushed out with a $450,000 severance package. ICBC board member Ted Smith, a former broadcast industry executive, blamed the government. "In all my years in business, I have never seen a more stupid move in any company or corporation, public or private," he told the Vancouver Sun's Vaughn Palmer.
Geer's likely successor is Paul Taylor, who has been helping the Liberals cut costs since he was brought in right after the election. Taylor helped spearhead the Klein government's cost-cutting moves, and has done the same thing for the Liberals as finance deputy minister. His government role has just been cut back, clearing the way for the leap to ICBC, where he'll push the Liberal plan to shrink the corporation's role.
It's an initiative that should have Liberal MLAs cringing. The Campbell government has stumbled into a string of problems with its plans for Crown corporations, with the current BC Ferries' furore only the latest. Taking a fling at remaking another one, so close to the election, seems highly risky.
Especially when it's a Crown corporation that touches the pocketbook of almost every family in the province.
The idea of competition is appealing, because without it consumers will never know if they're paying too much for their car insurance. The basic principle, that competing companies will produce innovation and benefits for consumer, makes good sense.
Right now there is no real competition in car insurance in B.C. ICBC has a monopoly on basic insurance - the coverage you must have to cover the cost of dealing with injuries resulting from a car crash. That's about 60 per cent of the entire insurance market.
Optional insurance - the coverage to pay for repairs, for example - is theoretically open to competition. But ICBC's grip on the basic coverage means most people take the path of least resistance and buy their optional coverage from the Crown corporation as well. The result is that private companies have about 15 per cent of the optional coverage, a percentage that hasn't really changed under the Liberals.
Crunch the numbers, and you find ICBC has close to 95 per cent of the total vehicle insurance market. That's not meaningful competition.
But ideology aside, the government has been unable to justify selling off ICBC or ending its monopoly on basic insurance. (Asked what effect that would have, Geer said "You would find chaos in the marketplace, you would probably see the bankruptcy of ICBC.")
The Crown corporation has cut costs, raised rates by about 13 per cent over three years and reduced the level of coverage, and generally seems to remain well-viewed by British Columbians.
It hardly seems like the kind of thing that an unpopular government would want to mess with in the run-up to next May's election.
Footnote: Taylor's likely appointment sends a signal that the Liberals think the toughest part of the cost-cutting program are behind them. It also could mean a big raise: Taylor is paid $200,000; Geer was getting $262,000 to run ICBC, with hefty bonus potential.

Monday, August 02, 2004

Time to abandon failed marijuana strategy

VICTORIA - B.C.'s approach to marijuana makes about as much sense as America's great Prohibition experiment in the '20s.
In both cases, the governments took aim at substances which are widely accepted. And in both cases, they decided that the way to achieve the goal was to wipe out the supply.
It's a doomed approach, as Prohibition established. The only big winners are serious criminals.
StatsCan has just released a new survey on drug use, which found that 16 per cent of British Columbians 15 and over had used marijuana in 2002. That's about 525,000 people, not nearly as many who knocked back a few beer on a Friday night but still an awful lot of people to portray as criminals.
Among younger British Columbians marijuana use is even more prevalent. Across Canada, more than one-third of people from 15 and 24 has used marijuana in the last 12 months. The data suggests the percentage is about 45 per cent in B.C.
You can't arrest half-a-million people.
So Solicitor General Rich Coleman is advocating more enforcement, and tougher penalties, for the people who supply marijuana. He said the StatsCan results showed the need for the courts to get tough with people who run grow ops.
It's a doomed approach, like Prohibition.
Economic laws are just as powerful as the ones passed by politicians. When enough Americans wanted a drink after work, suppliers - from Al Capone to neighborhood bootleggers - emerged to meet the demand. When millions of Canadians have decided they want to smoke pot from time to time, then suppliers will emerge. That's the way markets work.
When demand is huge, attacking the supply side won't work. Too many people want to buy and the rewards are too great. And the public is not going to accept harsher and harsher penalties for people growing marijuana that one in six of them consume.
B.C. has tried. Despite the relaxed reputation, police lay a lot of charges. The StatsCan study found the rate of pot use in B.C. was about 25 per cent higher than the national average, the rate at which charges were laid was 75 per cent higher.
It hasn't worked. prompting calls for tougher penalties.
But look south of the border, where the war on drugs has been fought by locking up people.
Fewer than one in five people convicted in B.C. for running a grow op do jail time. In Washington State, almost half those convicted get a jail term of five years or more, Coleman says.
But the only result has been crowded jails. Marijuana is still readily available, and widely used. And despite concern about imports from Canada, most U.S. marijuana is grown domestically.
The B.C. government's stated concern is organized crime, and it's logical that any illegal activity with big cash profits is going to attract serious criminals.
But the current strategy isn't working. It's not reducing use, or the role of organized gangs.
That doesn't mean government has to give up. But it needs a new approach.
One obvious answer is to shift resources from indiscriminately busting grow ops to focusing specifically on organized crime. The Organized Crime Agency of BC - now rolled into the RCMP - complained that a budget freeze left it unable to do its job. That hardly fights with a commitment to tackling the problem.
Another is an education campaign on all drugs, from alcohol to heroin, aimed at young users. Many aren't going to stop using, but with good information they can make much more sensible choices.
And another is to simply be more creative. If the aim is to rob organized crime of marijuana profits, then an easy answer is to turn a blind eye to people growing a dozen plants. Supply increases, prices fall and there's no role for the gangs. (An obvious, more complicated solution would be to legalize marijuana, placing it under government regulation.)
The choices are complicated. But one thing is clear - what we're doing now isn't working.
Footnote: The government also needs to be on the alert for unintended consequences. The Organized Crime Agency noted last year that efforts against grow ops had driven gangs into the production of crystal meth, a drug taking a terrible toll on young British Columbians.

Sunday, August 01, 2004

Scary crime stats and the war on drugs

VICTORIA - We treat each batch of crime statistics like some campfire ghost story, eagerly looking for new reasons to be frightened by a dangerous world.
So when Statistics Canada reported a jump in property crime in B.C. this week it was big news and a hot discussion topic. The main theme was that our corner of the world is becoming less safe, and the most commonly offered solution was more police and longer sentences.
Except that the scary story was just about as made-up as those campfire tales about one-handed killers and midnight callers.
Violent crime in B.C. dropped again this year, as it has for at least the past seven years. The rate of violent crime - and your chances of becoming a victim - has fallen by 15 per cent since 1996. You're safer, not at greater risk.
Property crime did jump by almost six per cent last year. That's worrying. But it's no cause for panic, any more than the six-per-cent drop in 2000 was a cause for wild celebration. There are just too many variables for single-year statistics to have much meaning. (For example, Vancouver police started letting people report crimes over the Internet last year, a positive change that likely increased the number of reported offences.)
And again the long-term trend is positive. The property crime rate has fallen by about 10 per cent since 1996. Some of that improvement is likely because people no longer report minor offences, but the numbers show that things are not all that bad.
There's nothing wrong with ghost stories. Perhaps worrying about imaginary dangers offers us a distraction from the more complex, real ones out there.
But they're a dangerous basis for public policy, as revealed by our costly, failed efforts to deal with marijuana use.
Statistics Canada's latest survey on drug use found that 16 per cent of British Columbians 15 and over had used marijuana in 2002 - about 525,000 people. Across Canada, more than one-third of people from 15 to 24 has used marijuana in the last year. The likely rises to about 45 per cent in B.C., based on StatCan's numbers.
It's impractical for any government to think that it can enforce laws that make criminals of so many citizens.
The B.C. government disagrees and opposes the federal Liberals' move to decriminalize pot possession. Grow ops, trafficking and smuggling are enriching organized crime, it argues, and wants tougher penalties.
Facts about the extent of the problem are scarce. There's lots of talk about the need for tougher drug enforcement to stop a flood of B.C. marijuana into the U.S. But a recent RCMP report noted U.S. Customs seized 27 times more marijuana along the Mexican border than they did on the Canadian side, an indication that B.C.'s export role may be overblown.
And while there's also lots of talk about violence, an RCMP study of 12,000 B.C. grow -op reports revealed guns were found at six per cent; overall about 24 per cent of homes in the province have firearms.
An illegal, profitable activity is certain to attract some serious criminals.
But attempts to solve a drug problem by attacking sources of supply have consistently failed. America's Prohibition experiment in the '20s showed that if enough people want a drink, or any other product,, suppliers will meet the demand.
Tougher laws won't change that reality. The U.S. has also tried extreme penalties in drug cases. But the RCMP report noted that most American marijuana is still grown domestically and it's widely available. (In any case, jailing people for years for providing a product used by half-a-million British Columbians would bring justice into disrepute.)
There's no simple solution. But if the objective is to deal with organized crime, then perhaps resources should be shifted from dealing with the thousands of small grow ops to focused enforcement. Or perhaps cultivation of a few plants should be legalized, a change which would take the profits - and the gangs - out of the business.
There's nothing wrong with a good ghost story. But our sense of safety, and our response to crime, they're better based on fact.
- From the Vancouver Sun