Thursday, June 08, 2006

Liberal leadership hopefuls hit money hurdles

VICTORIA - Just when the Harper government was looking a little rattled, along comes Joe Volpe to remind voters what they don't like about the Liberals.
The Conservatives looked to be stumbling this week, re-opening the pointless debate on gay marriage.
Pointless because given Stephen Harper's promise not to use the notwithstanding clause to override the charter of rights, the government can't actually do anything to stop same-sex marriages.
And anyway, same-sex marriages have been a fact for almost a year now. Nothing bad has happened. People have quit talking about the issue showing how irrelevant it was in the first place. The Conservatives, by dredging it up, revive fears that the party is intolerant and prescriptive. At the same time, they appear to be badly out of touch with the real concerns of Canada - Afghanistan, health care, crime.
But Harper didn't have to worry. The Volpe affair - and Liberal leadership fundraising issues generally - raised bigger questions about the Liberals.
Volpe is an Ontario MP who is one of 11 official candidates for the Liberal leadership. All the hopefuls are scrambling to raise money. The party demands $50,000 before candidates are allowed on the ballot. Then there's the cost of flying around the country to seek support, paid staff, mailings. Candidates are allowed spend up to $3.4 million; after the first $500,000 they will have to send $10,000 to the party for every $40,000 they spend.
But this is the first leadership race run under new financing rules that bar corporate and union donations and limit individual donations to $5,400.
Volpe's campaign was supported by a group of 20 people who all gave the maximum. Ten of them were current or former executives with one pharmaceutical company; the other 10 were their family members.
Including 11-year-old twins and their 14-year-old brother, who were among five minors who contributed $5,400 each.
Volpe didn't see anything wrong with that. The law doesn't bar minors from contributing. If a couple of Grade 6 kids to decide on their own to hand $5,400 each to his campaign instead of buying hockey cards, so what? He spoke at their school, Volpe said. Maybe they were really impressed.
And it's true - minors can contribute. But it is an offence to make a donation that really comes from another person or to plot to get around the limits.
Volpe eventually returned the kids' money, but he still saw nothing wrong with taking $5,400 cheques from children. "All the donations for our campaign have been in compliance with the law," he said. "We wanted to clear the air and public perception."
The Liberal party response was just as weird. Party brass defended the donations and rejected calls for an investigation.
Have the lost their minds? The Liberals were booted from office in part because of fund-raising scandals. A leadership campaign that reminds voters of past wrongs would be disastrous.
And they look to be risking that. Donations are limited by law. Loans are not. And nine of the 11 candidates - all except Volpe - have borrowed between $30,000 and $200,000 from backers to fund their campaigns. Nova Scotia MP Scott Brison borrowed $200,000 from four men with major business interests in the province. The theory is that the loans will be repaid from donations, but candidates can ask for repeated extensions on the repayment deadline. The potential for abuse - for using loans as a way to get around donation limits - is immense.
Candidates do face a tough fund-raising challenge now that corporate donations are barred. (Paul Martin raised more than $10 million for his leadership campaign, largely from corporate donors.)
There are too many of them, with no clear frontrunners, and the new leader could spend the next five years at least in opposition.
But Canadians are watching to see if the Liberals have learned from the sponsorship scandal. The last week has suggested they haven't.
Footnote: The field may shrink after two leadership debates. The first, in English will be this Saturday in Winnipeg; a French-language debate will follow June 17 in Moncton. The debates won't be decisive, but they will provide an occasion for all candidates to assess their chances.

Tuesday, June 06, 2006

Secrecy surrounds huge taxpayer gift to forest company

VICTORIA - It’s not as if Weyerhaeuser made any sort of case for a $200-million gift from B.C. taxpayers.
But the Liberal government gave them one, without getting any identifiable benefit in return.
And both Mike de Jong, forest minister at the time, and Rich Coleman, in the job now, have not been able to come up with any answers to explain the gift.
Weyerhaeuser owned large tree farm licences on Vancouver Island. The licences covered both Crown lands and about 90,000 hectares the company owned as private lands, much of it in the Port Alberni area.
In 2004 Weyerhaeuser executives asked the government for a favour. They wanted the private lands - about the size of Manning Provincial Park - taken out of the tree farm licence.
The benefits for the corporation were huge. Land in the tree farm licence was controlled by the government as if it was Crown land. Stringent environmental and replanting requirements, a limit on the rate of harvest, a bar on selling the land for housing and strict controls on raw log exports - they were all part of the deal.
That’s why, in the 1950s the government encouraged forest companies to include their private lands in tree farm licences. Government wanted to be able to guarantee sustainable forest management and protect jobs for British Columbians.
Companies that agreed were compensated with additional Crown timber to make up for any lost profits. That’s how the private lands became part of these licences.
Now Weyerhaeuser wanted the deal cancelled. The benefits to the corporation would be huge - between $18 million and $24 million a year in extra profits.
But what about taxpayers? They had already compensated the company for including the land in the tree farm licence. The local communities and the province both stood to benefit for decades from the ability to manage the land in the best interests of British Columbians. Why give that up?
A ministry briefing note for de Jong at the time didn’t even contemplate the idea of a gift to the corporation. It assumed Weyerhaeuser would pay taxpayers compensation.
But even with that assumption, the ministry recommended that de Jong just say no to Weyerhaesuer.
For starters, the ministry briefing note warned de Jong that communities and forest workers considered the tree farm agreement a “social contract” that ensured local areas benefited from the forests and that sustainable management would mean jobs for their children. (That concern was prescient; the change allowed more log exports and cost local jobs.)
Senior ministry officials also said it would be difficult to get fair compensation from Weyerhaesuer and warned of a political backlash.
The only significant benefits cited were making the corporation happy and perhaps placating the U.S. in the softwood dispute (although that sure didn’t work).
But de Jong rejected the ministry recommendation. About 70,000 hectares were removed from the tree farm licence. Within a few months Weyerhaesuer was in negotiations to sell the whole operation business to Brascan, which ultimately paid $1.4 billion for it.
Nobody spoke up for taxpayers. But the Hupacasath First Nation took the government to B.C. Supreme Court, saying they should have been consulted. They won their case. (The Hupacasath, like local communities, had been kept in the dark.)
Brascan provided evidence in the case, because the company wanted to make sure the deal wasn’t undone. Getting the private land out of the tree farm licence was critical to Brascan’s decision to buy. Its profits from the private timberland were about $25 to $30 per cubic metre higher than on Crown land. The government’s gift was worth $15 million to $24 million a year in extra corporate profits.
Add to that the ability to take the land out of forest production and sell it for housing, and you have a benefit worth at least $200 million.
Why did the government do it? De Jong wouldn’t respond to questions. Coleman isn’t offering any answers. A deal was done, he says, but that’s it.
It’s none of your business.
Footnote: The New Democrats raised the issue in the legislature, but got no sensible answers from Coleman. “There was still a deal done,” he acknowledged in reply to a question from NDP forest critic Bob Simpson. “The member is telling the House pieces of what he thinks he understood took place at the time, but he actually has no idea what the total agreement was, because it isn't public.”

Monday, June 05, 2006

Liberal MLAs put financial watchdog on a chain

VICTORIA - A handful of Liberal MLAs have betrayed the public over the appointment of a new auditor general.
The auditor general is one of several independent officers who work for the legislature, not the government. His job is to make sure the government’s financial reporting is accurate and audit its performance on important issues - from finding out what went wrong with the fast ferries to examining the fairness and cost-effectiveness of pharmacare. He reports to the legislature and the public, not cabinet.
It’s an important job, one that has to be free of any political taint.
That’s why the hiring process is clear. The auditor general, appointed for a six-year term, must be unanimously supported by the legislature. The actual hiring decision is made by the public accounts committee, made up of 14 MLAs from both parties. They agree on a candidate which the legislature then supports.
That hasn’t happened this time. And the Liberals’ solution looks like a sneaky move to avoid the requirement for unanimity and impose a candidate of their choice.
The legislation allows the appointment of an acting auditor general without unanimity, a short-term solution if the auditor falls ill or the search is delayed.
The Liberals, with a majority on the committee, have approved their preferred candidate on that basis, with no limit on how long the acting appointment will last or any plans to continue to search for an acceptable candidate.
It looks like an attempt to subvert the law and turn an independent officer into a partisan appointment.
The committee has been looking for a candidate to replace outgoing auditor general Wayne Strelioff for months now. They had narrowed the field to three.
And, based on bits and pieces that have leaked from the search, the two parties split on their first choice for the job.
The Liberals wanted Arne van Iersel, a respected long-time government employee. Van Iersel was the comptroller general in the finance ministry, responsible for making sure the government’s books were accurate. He held that job under the NDP and the Liberals, and most recently has been helping sort out problems in the ministry of children and families. (Liberal John Yap has confirmed the party’s MLAs on the committee wanted him to get the job.)
This situation shouldn’t be a negative reflection on van Iersel, who has an excellent reputation.
The New Democrats reportedly backed a candidate from Ontario, who came with a recommendation from federal Auditor General Sheila Fraser.
You can see how that would make the Liberals nervous. B.C.’s auditors have been effective, but low key - alright, boring - in the way they presented the information. Fraser has taken a much more high-profile approach in her work, highlighting cases like the sponsorship scandal and the gun registry waste. No provincial government would be keen on that kind of publicity.
And despite van Iersel’s fine personal reputation, it’s easy to understand why the New Democrats were concerned about his appointment.
The auditor general has to look critically at the actions and decisions of government and senior public sector workers. Van Iersel would be auditing the work of people who were his peers only months before, and possibly even critiquing his own past decisions. The perception of conflict is huge.
The nature of this appointment is also damaging to Van Iersel’s ability to do the job. He is now tagged as the Liberals’ choice. His reports - no matter how thorough and even-handed - will be seen through that lens.
Worse, he can now be seen as under the Liberals’ thumb. Auditors general are appointed for a fixed six-year term to allow them independence. Van Iersel can be fired anytime the Liberals on the committee choose; his independence is hopeless compromised.
The Liberals on the committee have blundered. They should retreat now and the committee should come up with a compromise candidate both sides can support.
Footnote: How important is independence? The legislation currently allows the appointment of an auditor general for a second six-year term. Strelioff, in his final report, recommends that be changed becaus it could create the appearance that an auditor’s reports are being influenced by a desire to keep the job.