Friday, January 07, 2005

Liberals, NDP both failed with Huckleberry Mine subsidies

VICTORIA - It looks like the government did a pretty lame job of looking after your money when it came to dealing with the Huckleberry Mine.
The New Democrats got the ball rolling, coming up with a $14.5-million loan - 10 per cent of the mine development cost - back in 1997. That' s your money subsidizing the investors in a mine, a wrong-headed approach to the role of government in the first place.
The mine opened, and the company started scratching copper and molybdenum out of an open pit about 120 km southwest of Houston. There were buyers for the metals, but never quite enough money to send a cheque off to the government to pay down the loan. (Other creditors also faced similar payment problems.)
Unlike most creditors - try not paying your BC Hydro bill and see what happens - the government was patient. Years went by without a single dollar being repaid.
The election came, and the New Era, but the Liberal government didn't take any more action on collecting your money than the NDP had.
Things were challenging for the shareholders as well, it should be noted. Commodity prices were lower than they hoped and the mine's parent company, Imperial Metals, had to seek court protection from its creditors in 2002 while it re-organized.
But that's the risk shareholders and owners run, in return for the opportunity to profit when things do work out.
Still, it was just business as usual under the Liberals, sadly no better, but also no worse. The interest owed on the debt piled up on the government's books.
Until October. That's when the Liberal cabinet passed an order - not in one of those televised meetings, where we could have heard an explanation, but behind closed doors - that forgave the Huckleberry Mine for $3 million in interest payments that had piled up since 1997. Forget about it, we'll write it off.
You may find that surprising, from a government that promised to eliminate business subsidies. After all, if one mining company can borrow from the loosey-goosey government with no interest payments and no need to pay back the principle, while its competitors have to deal with those crabby banks, that's a pretty big advantage.
But Revenue Minister Rick Thorpe said he had no choice but to ask cabinet to give the company the break. The mine was in a precarious position, with only about four years of life left. If the government said no, it might close and 175 jobs would be lost. It wasn't a subsidy, just a business decision, he said, that made the best of the situation.
Here's where the government's assessment of the situation starts to look shaky.
Because while cabinet was giving up on collecting your money, the company was doing more test drilling. And now it says the results are encouraging, with a good possibility that new deposits will extend the life of the mine.
That's good news. But it's hard to justify writing off $3 million in debt when the mine might be able to spin profits for its owners for another decade.
That's not the only development to raise doubts about the government's judgment.
Huckleberry Mine is owned jointly by Imperial Metals of Vancouver, which has 50 per cent, and a consortium of Japanese companies. Barely one month after cabinet was persuaded that Huckleberry shouldn't have to pay the $3 million it owned you, the company repaid another loan. Huckleberry Mine came up with more than $3 million to pay the principle and all the interest it owed to co-owner Imperial Metals as a result of a 1998 loan.
It looks - admittedly from the outside - like the government faces some big questions about the decision to hand over your money. The mine has discovered indications of future potential; the company can pay a debt its owners. Why should taxpayers be giving up on collecting what is owed?
Footnote: How could Huckleberry come up with money to repay Imperial Metals one month after the province wrote off $3 million? "Higher copper prices have improved Huckleberry's cash flow during 2004 allowing Huckleberry repay this loan and accrued interest," Imperial reported in a public release.

Wednesday, January 05, 2005

The lessons from the those scenes of disaster

VICTORIA - So what should we learn from the tsunami? A host of lessons, big and small, remarkably random - like the event itself.
We should learn to rethink our eagerness to dispatch supposedly specialized grief counsellors to deal with this and other events. The Vancouver school district had its critical incident teams at the ready to fan out into schools and work with traumatized or troubled students.
It is a good time for teachers to discuss the events, linking them to the lessons students are learning in geography or history. And it's useful to be alert for individuals who are affected in some profound way. But death and disaster are part of life, and our children know that, and can deal with the images they see. The penchant for dispatching grief counsellors - who have been found to do more harm than good in many studies - is an unnecessary waste of scarce resources.
We should get a grip on our self-righteous and self-indulgent tendencies to assume the worst. News photos showing tourists on beaches days after the tsunamis sparked outraged letters to the editor about insensitive and selfish visitors. But maybe the people had spent the rest of the day clearing debris; maybe they were injured; maybe in shock. Why assume the worst? In any case, the tourists - and those who will press on with their vacations in coming months - are bringing needed income to the people in those communities.
The media also worked itself into a frenzy about the threat of children being abducted in the wake of the disaster, and forced into the sex trade or child labour. But the case that sparked the initial furore, involving fears a 12-year-old Swedish boy had been taken from a hospital - was proved unfounded. The risk may exist, and countries involved may need to take action. But there is little evidence of an immediate problem justifying the headlines and hand-wringing, and our response looks more prurient than prudent.
We should take lessons about our own level of preparation for a disaster, collectively and individually. Someday the earthquake or tsunami or forest fire could be here, and it's prudent to make sure we have sensible precautions in place. (Note the adjective sensible - sometimes safety measures aren't justifiable, given a reasonable assessment of the real risk and the costs.)
We should celebrate our generousity. Individuals, businesses, countries have all stepped forward to help people half-a-world away. There are lots of opportunities to learn from what we have done, and be more focused and effective in future. But it's important to recognize that faced with a crisis people responded.
At the same time we should recognize that need and suffering exist every day, even if we aren't faced with terrible images, and it's within our power to make a huge difference globally and locally. The tsunami disaster death toll so far is about 150,000 people, a number beyond imagining.
But it pales besides starvation and disease and the slow-motion disasters that kill far more people every year. Estimates of the death rate from AIDs in Africa range as high as 6,500 a day. Every three weeks, a loss of life on the scale of the tsunami takes place. About 700,000 children will die around the worlds this year of measles, a loss of life that is preventable with adequate resources. Some eight million child deaths each year are due to malnutrition, and are preventable.
We should still rightly celebrate our generousity. But we should also recognize that the need is great, and will continue long after the media have moved on.
And finally, we should take some time to give thanks for what we have, not just our homes and our comforts, but the people around us. The stories of miraculous escapes, and massive death, should remind us how fragile all this is and how quickly it can change. Every day must count.
Footnote: One of the greatest lessons from the disaster is the courage of the people who live there. The waves had barely receded; their friends and families had died; they had lost everything; and they began rebuilding their homes and small businesses. It's an act of desperation, to be sure, but it is also an act of hope.

Tuesday, January 04, 2005

B.C.'s leaky schools a reminder of rot

VICTORIA - The greatest scandal to hit B.C. continues to unfold.
Not the legislature raids, or the fast ferries. They're small potatoes compared to the rip-off of more than $1.5 billion from people who made the mistake of believing that they could safely buy a home in B.C.
Those people believed that builders were competent and honest, and government regulators could be trusted. They thought they could invest their life savings in a home and at least be confident that it would keep the rain out.
And they were wrong.
The scandal is back in the news, as B.C.'s architects complain that the provincial government shouldn't be chasing them just because schools they designed are leaking. Up to 500 schools built since 1985 leak and need repairs, which will cost taxpayers $50 million to $100 million. The provincial government has written the architects involved and warned that they may be sued.
That doesn't seem unreasonable. But the Architectural Institute of BC, which represents the profession, isn't happy.
Their concern is partly justified. B.C. liability law currently allows people who have been hurt to seek damages from anyone responsible. If most of them have no money or have vanished, then those that are left can be forced to pay most of the damages, even if they are found to be only partly responsible.
That raises the risk of unfairness. But it also recognizes that the real victim deserves compensation.
The architectural institute also argues that the government wanted low-cost construction, so it should share some of the blame. That will be a convincing argument only if an architect can find a copy of a letter he wrote advising that the school would leak.
And the institute maintains that collecting the money - even if the architect was clearly responsible - would be too harsh. Architects might have to file for bankruptcy, and lose their homes.
It's a bit much. The institute's members designed some 65,000 housing units across the province that leaked. Seniors spent everything they owned on retirement condos only to find they had to come up with $20,000 or $120,000 more as their share of repairs. Buyers have gone bankrupt, they've lost their homes and their lives have been ruined.
That's not all the fault of architects, although the institute's web site makes much of the architect's role in co-ordinating a team of engineering specialists. But if they are confident that they bear no responsibility, the architects can let the province take them to court. If they're blameless, they have few worries.
The education ministry has taken on the school problem, reckoning in part that it's too costly for each school district to try and find out who is responsible for the leaks and collect damages.
But homeowners don't have that option. Each strata council would have to wage its own battle for justice; and for most justice is just too expensive.
Personal responsibility is an important thing. But these people didn't do anything wrong. They bought condos from apparently responsible builders, with architects and engineers in place, and government inspectors supposedly vigilantly watching. Many of them asked all the right questions.
And they were ripped off, sold buildings that couldn't keep out the rain.
The provincial government has come up with $300 million in interest-free loans to help some people survive the disaster.
But it should have done much more. If school districts need help in dealing with the issue, then homeowners need assistance all the more.
Government can't step in and pay the rebuilding costs (although it is hard to see how some of the responsibility doesn't rest with all three levels of government, which had a role in setting and enforcing construction rules).
But it could find a way to offer the same kind of support in seeking justice to homeowners that it has to school districts, providing at least some hope for thousands of battered people.
Footnote: The leaky condo scandal remains one of the most astonishing events in the province's history. Some $1.5 billion to $2 billion has been plucked from thousands of homeowners' pockets, and almost no one has been held to account.