Friday, September 17, 2010

Those B.C. Rail Canucks' tickets

It was probably just a sideshow in terms of the B.C. Rail trial.
But Brian Kenning's time in the witness box offered an interesting look at the deep divides in B.C. these days.
Kenning is a Liberal supporter who was appointed a B.C. Rail director after the 2001 election. He was part of the board that recommended selling the railway. That happened in 2003.
But in 2004, the shrunken corporation spent $72,276 on Canucks tickets. In 2005, the Crown corporation spend $29,000 on BC Lion's tickets. In 2006, $45,349 for prime Canucks seats.
Companies buy hockey tickets in an attempt to influence customers. It wouldn't be seemly to offer the purchasing agent for a client $300, but tickets to a Canucks-Canadiens game are OK.
B.C. Rail really didn't have any potential customers to woo. The corporation was reduced to selling real estate and administering a 40-km spur line used by real railway companies. So spending $150,000 on tickets to pro sports looks suspiciously like self-indulgence.
Meanwhile, Kenning testified he was paid $400,000 for sitting on the corporation's board for eight years. Even when it was down to 50 to 60 employees and less than $20 million in revenue, he collected about a $40,000 a year.
And CEO Kevin Mahoney received $570,000 in salary and benefits for heading a company with $18 million in revenues and a few dozen employees in 2007.
What's striking is that this was all going on as the Liberals were putting every government program through a core review.
Anything not considered essential - support for child sex abuse victims, legal aid for battered wives, courthouses - was getting chopped.
But Canucks' tickets for executives at a Crown corporation, generous directors' fees and big management salaries somehow escaped that kind of scrutiny.
Those at the top of the economic food chain did very well. Those at the other end of the economy did not.
Consider MLAs, for example. In 2002, their pay has risen more than 30 per cent since 2002; the premier's compensation is up more than 55 per cent. (The average wage rose about 22 per cent in the same period; the minimum wage didn't change at all.)
Which, if it was based on real market forces, could be defended. But real market forces wouldn't see directors paid hundreds of thousand of dollars to oversee a tiny Crown corporation.
It all suggests a double standard based in which some spending on average British Columbians received close scrutiny; on the powerful, not so much.
Which leads, in a roundabout way, to the latest report on the province's finances.
Finance Minister Colin Hansen presented the first quarterly update for this the fiscal year, covering from April 1 to June 30. Spending is on track, except for - again - higher than expected wildfire-fighting costs.
But, after three months, the government thinks it might have missed the mark on some of the revenue projections. The actual revenue, largely due to higher-than-forecast corporate taxes, will be $2.7 billion higher than expected over four years.
That's enough to let the government move out of deficits a year ahead of schedule. In fact, with a few breaks, it could use the money to deliver a balanced budget next year.
But Hansen said the government has decided about 10 per cent of the money will go to reducing the deficit.
The rest - about $700 million in each of the next three years - will fund tax cuts or program spending.
That's prudent. The current three-year plan freezes spending on the children's ministry and for the solicitor general for three years. It cuts funding for tourism and the arts. Without some extra cash, there will be big problems as the 2013 election draws closer.
And the Liberals would very much like to have some tax cuts to ease the HST anger.
There are tough decisions still ahead. Except, it could appear, when it comes to pricey taxpayer-paid hockey tickets and MLA raises.
Footnote: The quarterly update also included a revised economic forecast, which is mostly positive. Growth is likely to be stronger than forecast this year and the outlook is good, the government says. The big risks include a "double dip" return to recession in the U.S. and a drop in housing demand in Canada.

Thursday, September 16, 2010

The cloud over Elections B.C.

The Times Colonist on Elections B.C.

"It's troubling -- and wrong -- that Elections B.C. is being restructured when the party in power has weakened its independence.

"It is also troubling that the Liberal government failed to take the basic steps to preserve the non-partisan nature of the office that oversees elections, recall campaigns and initiatives in the province....

"The government knew for eight years a new chief electoral officer would be required in June, but failed to take the basic steps to ensure a smooth transition. Its failure has created controversy around Elections B.C.'s handling of the anti-HST petition and, now, this restructuring.

If, as expected, recall campaigns are launched, more concern about the office's independence is likely.

The restructuring should stop until a new chief electoral officer is in place. And the government should be prepared to recall the legislature this fall to ensure that happens as soon as possible."

The rest of the editorial can be found here.

Tuesday, September 14, 2010

Campbell gambles with an HST flipflop

The twists and turns on the HST roller coaster are getting dizzying.
Premier Gordon Campbell delivered the latest sudden change of direction this week.
After insisting the harmonized sales tax is critical to the province’s future and maintaining that he was prepared to pay the political price for bringing it in, Campbell abruptly abandoned that tack.
The Liberals on the legislative committee considering the anti-HST petition rejected an NDP proposal to send the bill to the legislature immediately, one of two options allowed under the act.
Instead, it will go to a referendum next Sept. 24.
The Liberals had signalled they were leaning toward that option.
That appeared to mean the anti-HST effort was doomed.
Under the initiative act, a majority of all registered voters would have to vote to kill the tax for the initiative to go ahead - not a majority of those who voted.
That means some 1.5 million people would have to vote to axe the tax - more than the number who voted for the Liberals and New Democrats together in 2009.
And in the tiny event that the initiative passed, it would not be binding.
The tax, it seemed, was here to stay.
But hours after the committee made its decision, Campbell changed everything. "If people decide they want to get rid of the HST next September, then I guess we'll get rid of the HST next September," he said.
Campbell was more specific. If a simple majority of those who vote in the referendum next oppose the tax a year from now, his government will repeal it.
It’s a remarkable flip-flop and a significant gamble.
What prompted the change? Perhaps Liberals inside and outside caucus convinced Campbell that the party’s bungled handling of the tax - especially its insistence that voters were just to dim to know what was good for them - was doing massive damage.
Perhaps he’s looking to stall recall campaigns against Liberal MLAs by arguing that the public will get a say on the tax.
Certainly Campbell is counting on being able to sell the benefits of the HST - and the complications of removing it - over the next 12 months.
That’s not a sure thing. The Liberals’ actions in bringing in the tax won’t soon be forgotten.
And there is a risk that the effort to sell the tax - with taxpayers’ money or the support of business groups - will backfire.
Meanwhile, expect the political squabbling to continue. Bill Vander Zalm, the anti-HST champion, wants Campbell to bring back the legislature and give his commitments the force of law by amending the initiatives act.
Concerns are already being raised about the referendum question and whether Elections B.C. or cabinet gets to draft it. It’s unclear whether a mail ballot - cost about $12 million - or a polling station approach - cost about $30 million - will be used.
Economically, the uncertainty is bad news. Will a homeowner considering a major renovation start the work next spring or put it off to see if the HST is defeated, cutting the cost significantly?
Companies considering an investment now have no way of knowing what taxes they would pay in the province.
And all this will keep the damaging issue front and centre for another year, taking the Liberals that much closer to the 2013 election.
The change of position on the HST smacks of desperation. But that’s not surprising. Campbell and the Liberals are desperate.
And many are likely realizing how much of this damage is self-inflicted. Rejecting the tax in the election campaign, starting work on introducing it days after the vote, failing to consult anyone, wasting $800,000 on pro-HST flyers and then throwing them in the garbage - it’s been a gong show.
The referendum might buy the Liberals some time. It’s not likely to write them a happy ending to this story.
Footnote: The government got $1.6 billion from the federal government to bring in the HST, which would have to be returned if the tax is killed. About $1.4 billion is budgeted for this year and next. The government would be prudent to remove that money from its budget plans until after the referendum, especially given projections of a smaller-than-expected deficit.