VICTORIA - It's just business, Tony Soprano likes to say.
Which is pretty much the way the B.C. government has decided to approach gambling.
Not entirely. The government could make more money with VLTs in bars, for example, but instead relies on Keno, a less addictive, slower way of losing money. (Although you have to wonder about the morality of trying to get people to gamble while they drink.)
And while gambling has been expanding like crazy in B.C., it has still not gone nearly as far as some other provinces.
But the Liberals' basic approach is clear - gambling is just business.
It wasn't always so. The Liberals fought expanded gambling when they were in opposition. And their New Era campaign promise was clear - a Liberal government would halt gambling expansion.
Instead they've done the opposite. By the end of this year the government will have doubled the number of slots in the province and moved them into bingo halls across B.C. The government's current plan calls for it to take $1 billion from gamblers within four years, double the profits when they were elected.
And the government's plan also calls for BC Lottery Corp. to persuade 200,000 more people to become regular gamblers, while getting everyone who buys lottery tickets or goes to casinos to lose more each month.
Solicitor General Rich Coleman, to his credit, has acknowledged that the Liberals have broken their campaign promise. "I'm not going to say that none of this is expanded gaming, because some of it is," he said in the legislature. "It is by virtue of the fact that we took what was structured gaming and tried to make it so that we gave the corporation the envelope within which to operate in order to actually do its business."
It's just business, in other words, although a business operating within some public interest limits.
But it's risky business. Letting a corporation "do its business" in the gambling world means leaving it to recruit more and more gamblers, while encouraging everyone who already gambles to lose more and more money.
Both goals are part of the BC Lottery Corp.'s business plan. We'll pump more than $3 billion in to government-run slots in B.C. this year, and the corporation hopes to increase that. It has just bought high tech equipment from a Las Vegas company that will give corporation managers in Kamloops the ability to monitor every bet and every turn of the cards at any B.C. casino. "With TableLink PT, profit-critical decisions, such as selecting bonus players, are no longer subject to human observation and guesswork," enthuses Mikohn Gaming Corp., the supplier.
Profit-critical decisions are the most important ones in the business world.
But gambling isn't just another business. Governments run gambling not just because they can make a ton of money, but because it involves serious, unavoidable damage to individuals and families.
None of this is a criticism of the BC Lottery Corp., which is just doing its job of trying to recruit more gamblers - in part through marketing campaigns that pitch gambling as both fun and a solution to your problems.
But the damage done along the way - as the Liberals used to note - is significant.
B.C. has more than 75,000 problem gamblers already; the government's efforts to recruit more gamblers ensures that number will increase every month.
And the next generation of gamblers - and problem gamblers - is already being recruited. A major study released by the McCreary Centre Society found that one-quarter of B.C. youths aged 12 to 17 said they had illegally bought lottery tickets in the last year. Young buyers are attracted by ads, prominent store displays and the chance of an instant win, according to another study of youth gambling.
The money is good. Gambling is on track to equal the forest industry as a revenue source for government.
But the cost is high - too high to treat gambling as just another business.
Footnote: The money is also good for municipal governments. Williams Lake council has just approved a bid for 120 slot machines in a new bingo hall. The town's revenue share is estimated at more than $700,000 a year, the Williams Lake Tribune reports.
Saturday, April 24, 2004
Wednesday, April 21, 2004
Buy ferries offshore if that's the best deal
VICTORIA - The Liberals have got it right on the issue of whether BC Ferries should go offshore to buy new ships.
The Liberals say BC Ferries should shop for the best price, which likely means future additions to the ferry fleet will be built somewhere like South Korea.
NDP leader Carole James, and shipyard unions, want the government to order the ferry corporation to insist on a "Made in B.C." label, even if the ships cost more.
That's a bad idea, both on principle and in practical economic terms.
James claims that it's worth paying a premium - she hasn't said how much - because the money would create jobs and economic activity in the province.
But what she's really saying is that ferry users - businesses, tourists and locals - should donate money to subsidize the owners of big shipyards and their employees. After all, the extra cost of the ships has to be recovered, and that means higher prices for ferry users. Every time a shipper transports goods on BC Ferries, he'd be paying a premium to subsidize the shipbuilding companies.
Sure, there is some benefit to having ships built in B.C., in terms of job creation.
But it would come at cost to the rest of the economy. BC Ferries plans to place orders for two new major ships this year, at a cost of about $225 million. Paying a 10-per-cent premium to buy B.C. means ferry users would be paying some $25 million as a subsidy to the shipyards.
Every ferry trip would cost more than it needed to, and that also has economic implications - for tourism, for businesses dependent on the ferries and for individuals.
It's not even as if the subsidies would be helping to establish a major shipbuilding industry that could someday stand on its own.
We've tried that. The $460-million fast ferry project was supposed to develop a global aluminum shipbuilding industry in the province. It failed. The Canadian shipbuilding industry has successfully lobbied for a 25-per-cent tariff on most foreign-built ships and a string of subsidies and handouts.
They haven't worked. Sales have fallen in half over the last decade, and employment across Canada has gone from 12,000 to fewer than 5,000.
Part of the problem is that other countries are doing the same thing, subsidizing their industry with tax dollars. But lower wages, especially in Asia, also mean ships can be built more cheaply there. (Slamming the door on foreign ships would deny those workers the chance to use their energy and skill - and current lower living standard - to improve their lot.)
B.C. shipyards deserve every chance to compete. And there is lots of work they will likely continue to win, especially in repair and maintenance projects where proximity is a big advantage.
But asking ferry travellers to pay a premium or hidden surcharge to subsidize B.C. shipyards is unfair and economically destructive. Unfair because there's no way a minimum wage worker who needs to use the ferries to make an involuntary contribution to the owners of B.C. shipyards. And economically destructive because the higher ferry costs created by the subsidy damage other businesses.
It's odd that James has grabbed on to this issue. The fast ferry fiasco shredded the NDP's credibility when it comes to shipbuilding policy. Leaping into this fray - on the side of unions and shipyard owners and against the interests of ferry users - just reminds voters of that disaster.
B.C. builders - which effectively means the U.S.-owned Washington Marine Group when it comes to large projects - should get every chance to bid.
But the deciding factor should be where the ferry corporation can get the best value.
That's the right thing to do for ferry users. And it's the right thing to do for the B.C. economy.
Footnote: It's ironic that while B.C. workers are suffering because of unfair U.S. trade barriers erected to keep our softwood out of their market, the New Democrats and some unions want to throw up the same kinds of barriers against foreign shipbuilders. Trade breaks down quickly when every country decides to bar the door to new competitors.
The Liberals say BC Ferries should shop for the best price, which likely means future additions to the ferry fleet will be built somewhere like South Korea.
NDP leader Carole James, and shipyard unions, want the government to order the ferry corporation to insist on a "Made in B.C." label, even if the ships cost more.
That's a bad idea, both on principle and in practical economic terms.
James claims that it's worth paying a premium - she hasn't said how much - because the money would create jobs and economic activity in the province.
But what she's really saying is that ferry users - businesses, tourists and locals - should donate money to subsidize the owners of big shipyards and their employees. After all, the extra cost of the ships has to be recovered, and that means higher prices for ferry users. Every time a shipper transports goods on BC Ferries, he'd be paying a premium to subsidize the shipbuilding companies.
Sure, there is some benefit to having ships built in B.C., in terms of job creation.
But it would come at cost to the rest of the economy. BC Ferries plans to place orders for two new major ships this year, at a cost of about $225 million. Paying a 10-per-cent premium to buy B.C. means ferry users would be paying some $25 million as a subsidy to the shipyards.
Every ferry trip would cost more than it needed to, and that also has economic implications - for tourism, for businesses dependent on the ferries and for individuals.
It's not even as if the subsidies would be helping to establish a major shipbuilding industry that could someday stand on its own.
We've tried that. The $460-million fast ferry project was supposed to develop a global aluminum shipbuilding industry in the province. It failed. The Canadian shipbuilding industry has successfully lobbied for a 25-per-cent tariff on most foreign-built ships and a string of subsidies and handouts.
They haven't worked. Sales have fallen in half over the last decade, and employment across Canada has gone from 12,000 to fewer than 5,000.
Part of the problem is that other countries are doing the same thing, subsidizing their industry with tax dollars. But lower wages, especially in Asia, also mean ships can be built more cheaply there. (Slamming the door on foreign ships would deny those workers the chance to use their energy and skill - and current lower living standard - to improve their lot.)
B.C. shipyards deserve every chance to compete. And there is lots of work they will likely continue to win, especially in repair and maintenance projects where proximity is a big advantage.
But asking ferry travellers to pay a premium or hidden surcharge to subsidize B.C. shipyards is unfair and economically destructive. Unfair because there's no way a minimum wage worker who needs to use the ferries to make an involuntary contribution to the owners of B.C. shipyards. And economically destructive because the higher ferry costs created by the subsidy damage other businesses.
It's odd that James has grabbed on to this issue. The fast ferry fiasco shredded the NDP's credibility when it comes to shipbuilding policy. Leaping into this fray - on the side of unions and shipyard owners and against the interests of ferry users - just reminds voters of that disaster.
B.C. builders - which effectively means the U.S.-owned Washington Marine Group when it comes to large projects - should get every chance to bid.
But the deciding factor should be where the ferry corporation can get the best value.
That's the right thing to do for ferry users. And it's the right thing to do for the B.C. economy.
Footnote: It's ironic that while B.C. workers are suffering because of unfair U.S. trade barriers erected to keep our softwood out of their market, the New Democrats and some unions want to throw up the same kinds of barriers against foreign shipbuilders. Trade breaks down quickly when every country decides to bar the door to new competitors.
Tuesday, April 20, 2004
Thousand-year BC Rail deal leaves Liberals looking bad
VICTORIA - The BC Rail sale is turning into a huge problem for the Liberals.
Even people who don't think government should be running a railway are worried about the Liberals' slipperiness and self-serving secrecy, highlighted by the news that CN Rail is getting the right to run the railway for almost 1,000 years.
When the Liberals announced the deal in November, they released a summary of the terms designed to sell the public on the merits of the sale. Everything else was to stay secret until the federal competition bureau approved the deal - when it would be too late for any changes.
And a centrepiece of the Liberal spin was the claim that the deal was for 90 years, with CN Rail getting a 60-year lease with a 30-year renewal option.
That was part of Premier Gordon Campbell's bogus claim that he wasn't breaking a campaign promise not to sell BC Rail.
Now columnist Michael Smyth reports in The Province that the deal includes 15 more 60-year renewal options that the Liberals never mentioned. And CN won't have to pay the government a nickle more if it exercises those options and operates the railway on public land for 990 years.
Normal business practice, says Transportation MInister Kevin Falcon. Sure CN Rail can keep operating the line until 2994 (unless centuries of global warming mean parts of it are under water). But every 60 years government can decide to buy the business back from CN. No big deal.
But if it's normal business practice, and no big thing, why did the government not only keep it secret but mislead the public with its claim the deal was for 90 years? (One answer may be that the money CN paid works out to $750 a year on the longer term.)
The government also kept secret a contract clause that specifies that CN Rail can close parts of the line - after a five-year moratorium - and buy the land for $1.
Falcon defends the provision. It protects the province, he says. If the land is valuable, the government will exercise its right to keep it. But if it's contaminated and requires costly clean-up, the government will be able to force the burden on to CN Rail. It's good business.
But if it's good business, why the secrecy? Why, even now, does the government refuse to release the details of this and other provisions that could bind the people of the province for 1,000 years?
The deal faces other big problems. The courts have ruled that before any Crown land is transferred to private ownership, local First Nations with unresolved land claims must be consulted.
The Liberals maintain that because the government retains ownership of the dirt beneath the tracks, there is no duty to consult. And they set up a $15-million development fund to try and win support from the 25 First Nations along the rail line.
It's not working. First Nations have already served notice that they believe the deal is a sale, and will exercise their legal rights.
BC Rail has turned into a nightmare for the Liberals. Campbell's 1996 campaign pledge to sell the railway helped lose him that election. In 2001, he said he had learned his lesson: BC Rail would not be sold or privatized.
But that's exactly what he's done. The government's claim that because the province continues to own the dirt beneath the tracks BC Rail hasn't been sold is bogus. CN owns all the equipment, and the business, and runs it with no strings attached.
Campbell could have defended the sale of BC Rail. He could have argued that the risk to taxpayers in owning a railway outweighs the potential economic development boost for resource communities. (It's a good argument.)
But it's much tougher to try and deny the broken New Era promise, or defend the unwarranted secrecy - and slipperiness - around this deal.
Footnote: Falcon made much of CN Rail's likely investment of some $3.5 billion in the railway over the next 90 years. But that is comparable to past BC Rail spending each year on maintenance and equipment, money that in recent years has come from the railway's profits.
Even people who don't think government should be running a railway are worried about the Liberals' slipperiness and self-serving secrecy, highlighted by the news that CN Rail is getting the right to run the railway for almost 1,000 years.
When the Liberals announced the deal in November, they released a summary of the terms designed to sell the public on the merits of the sale. Everything else was to stay secret until the federal competition bureau approved the deal - when it would be too late for any changes.
And a centrepiece of the Liberal spin was the claim that the deal was for 90 years, with CN Rail getting a 60-year lease with a 30-year renewal option.
That was part of Premier Gordon Campbell's bogus claim that he wasn't breaking a campaign promise not to sell BC Rail.
Now columnist Michael Smyth reports in The Province that the deal includes 15 more 60-year renewal options that the Liberals never mentioned. And CN won't have to pay the government a nickle more if it exercises those options and operates the railway on public land for 990 years.
Normal business practice, says Transportation MInister Kevin Falcon. Sure CN Rail can keep operating the line until 2994 (unless centuries of global warming mean parts of it are under water). But every 60 years government can decide to buy the business back from CN. No big deal.
But if it's normal business practice, and no big thing, why did the government not only keep it secret but mislead the public with its claim the deal was for 90 years? (One answer may be that the money CN paid works out to $750 a year on the longer term.)
The government also kept secret a contract clause that specifies that CN Rail can close parts of the line - after a five-year moratorium - and buy the land for $1.
Falcon defends the provision. It protects the province, he says. If the land is valuable, the government will exercise its right to keep it. But if it's contaminated and requires costly clean-up, the government will be able to force the burden on to CN Rail. It's good business.
But if it's good business, why the secrecy? Why, even now, does the government refuse to release the details of this and other provisions that could bind the people of the province for 1,000 years?
The deal faces other big problems. The courts have ruled that before any Crown land is transferred to private ownership, local First Nations with unresolved land claims must be consulted.
The Liberals maintain that because the government retains ownership of the dirt beneath the tracks, there is no duty to consult. And they set up a $15-million development fund to try and win support from the 25 First Nations along the rail line.
It's not working. First Nations have already served notice that they believe the deal is a sale, and will exercise their legal rights.
BC Rail has turned into a nightmare for the Liberals. Campbell's 1996 campaign pledge to sell the railway helped lose him that election. In 2001, he said he had learned his lesson: BC Rail would not be sold or privatized.
But that's exactly what he's done. The government's claim that because the province continues to own the dirt beneath the tracks BC Rail hasn't been sold is bogus. CN owns all the equipment, and the business, and runs it with no strings attached.
Campbell could have defended the sale of BC Rail. He could have argued that the risk to taxpayers in owning a railway outweighs the potential economic development boost for resource communities. (It's a good argument.)
But it's much tougher to try and deny the broken New Era promise, or defend the unwarranted secrecy - and slipperiness - around this deal.
Footnote: Falcon made much of CN Rail's likely investment of some $3.5 billion in the railway over the next 90 years. But that is comparable to past BC Rail spending each year on maintenance and equipment, money that in recent years has come from the railway's profits.
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