Tuesday, September 18, 2012

Dumb attack ads, and the real tax-cut winners

I'm baffled by the B.C. Liberals' focus on attacking the leaders of the other parties. So far, the efforts have looked amateurish and cynical, and have failed utterly to change public opinion.
Surely the critical issue for the party is finding ways to make people see Christy Clark more positively, not trying to slag the other guys.
The last Angus Reid poll found 28 per cent of British Columbians approve of Clark's work as premier; 53 per cent approve of the job Dix is doing as opposition leader. It's hard to see how any collection of low-budget attack ads are going to drag Dix down to less than 28 per cent.
There's certainly potential in pushing the NDP to commit to positions in advance of the election. (Though Dix will then remind people about the Liberals' promises not to bring in the HST, and ask what their positions are worth.)
But the attack ads seem pointless.
And they risk raising unintended issues.
The latest web attack, for example, says "When the NDP left government, a family of four earning $60,000 a year paid $1,970 more in provincial income tax than they do today," citing budget tables.
That's true enough. But the budget tables also calculate total provincial taxes - MSP, sales taxes, carbon tax.Those other taxes and fees went up $1,463 under the Liberals.
The family still pays less to the province - but $507 less, not $1,970. It's a dubious approach for a party trying to claim Dix is the one who can't be trusted.
And the ad opens the door to other tax questions.
The tax changes since 2001 under the Liberals have meant low income people pay much less to the province - 50 per cent less for a single person earning $25,000, 40 per cent less for a family of four earning $30,000.
But the next biggest beneficiary, given the budget examples, is a single person earning $80,000. He, or she, pays 28 per cent less than he did in 2001.
And a family of four earning $90,000 has received a bigger overall provincial tax cut - in dollars, and as a percentage - than a family earning $60,000.
Worse, the smallest reduction has been for a senior couple earning $30,000 in pension incomes. They're  paying three per cent less - $1.50 a week in tax relief.
Then, of course, there is the bigger assumption in the ads that tax cuts, in and of themselves, are automatically a good thing.
That family of four earning $60,000 is paying about $10 less a week to the province than it did in 2001. Maybe many of those families would consider it good value to pay the $10 if health care or education was improved for them and the people they care about.

Hey Honduras, you're making an airport mistake

I don't take public positions on what should or shouldn't happen in Honduras, mostly because I don't know anywhere near enough. (Though I've been surprised at the willingness of bloggers thousands of kilometres away in Canada to make firm and unsupported assertions about the country.)
But the plan to relocate the Tegucigalpa airport is an exception, in part because there's directly relevant Canadian experiences.
Tegucigalpa - Tegus - is the capital, a city of 1.3 million people. It's tightly nestled in a valley, and surrounded by mountains.
Which is not a good thing for airport construction. The existing airport, Toncontin, regularly makes the world's 10 scariest airport lists. A History Channel show, Extreme Airports, ranked it second. (Tenzing-Hillary Airport in Lukla, Nepal, topped the list.)
The Tegus approach requires pilots to skim the hills, make a sharp u-turn, plunge steeply and then hit the brakes hard once they're on the ground. Pilots receive special training if they're assigned to the route.
When we flew into the county in January, we were sitting next to a young Honduran flying back from the U.S. We took it as a bad sign when he began fervently praying as we started our approach.
But, on the positive side, the airport is just six kms from the city centre. And, while landings and takeoffs can be challenging, there hasn't been an 'incident,' as airlines like to say, since the runway was lengthened in 2009. (After a 2008 crash that killed five people.)
The government has decided it would be better to move the airport, which might not be a bad idea. But it has also decided to build a new $125 million airport at a military airfield at Comayagua, 80 kilometres from Tegucigalpa. (The airfield is used by the Honduran airforce and U.S. units.)
It's not an easy 80 kms to travel. The highway climbs through steep mountains and the entrance to the city is chronically congested. The trip is certainly over an hour. Anyone catching a flight out of Tegucigalpa would have to allow much more time in case of traffic problems.
This should all sound familiar to Canadians. In the mid-1970s, governments spent about $500 million building Mirabel Airport about 40 kms from Montreal. It was a complete flop, despite good highways, because travellers and airlines wanted to keep using the existing airport at Dorval, about 15 kilometres from the city. There is little or no use by airlines, and the runways have been leased for car racing.
ALG Europraxis, consultants hired by the Honduran Commission for the Promotion of Public-Private Investment, have offered warnings about the plan. Anything over 40 kms is considered a remote airport, the firm warns.
So I'm breaking my rule about the airport plan. Don't do it, Honduras.

Monday, September 17, 2012

Honduras' mysterious private-city plan

So who’s behind the mystery Canadian company ready to put up big money to build a private city in Honduras?
The concept’s appeal is clear. The “charter cities” being promoted by the Honduran government are as close as you could come to setting up your own country, with your own rules.
The cities would mostly have their own laws and taxes and police forces. They might, for example, contract with Canada to provide policing. They would set up their own schools and health systems. 
There would be an appointed governor and, at some point, an elected council to approve the laws recommended by the governor and city investors. But, during the startup particularly, the investors will decide on policing and schools and taxes and most everything else, limited only by basic constitutional rules. (The private city law is here.)
I wrote about Honduras’ interest in the idea a few months ago. The plan has now, apparently, moved into the action phase. The government has announced three sites, and signed a letter of intent with an unknown U.S. company - MGK Group - to start development on a city, most likely on the Caribbean coast.
But MGK, while saying it’s a consortium, hasn’t said much about who is in the group. It’s putting up $15 million to start on infrastructure, and hopes businesses will quickly move into the city. That’s not enough money to do much.
Press reports also say a major Canadian investor will soon be revealed.
The whole idea has been pitched by libertarian and technocratic theorists who see it as a way for countries like Honduras to start fresh. Cities would work better, they argue, if smart people made the rules starting from scratch. For a country like Honduras, where most institutions work badly or not at all, it’s an appealing pitch.
Once safe, secure cities with working systems were established, proponents say, businesses and Hondurans would move to them, the economy would improve and everyone would be better off.
As I noted in a previous post, it’s the kind of idea I would have dismissed out of hand before I lived here. I’m not so sure anymore.
But now that the first proposal, sketchy as it is, is out there, the problems and becoming more evident and the debate more intense.
One obvious problem is that countries that need model cities are much less likely to be able to manage and control the process.
The government’s legislation calls for an independent Transparency Commission to oversee the development process, particularly until the cities are large enough to have elections. 
The commission would appoint the governors - though the country’s president gets to name the first one. It would approve or disapprove the governor’s decisions, oversee the appointment of judges and generally make sure things didn’t spin out of control.
The government signed a memorandum of understanding last year that established the first Transparency Commission, an attempt to reduce concerns about oversight. It was to be headed by economist Paul Romer, an advocate of the cities, well-respected as a good, independent choice.
But Romer and the group have, politely, backed away. Their positions were never made official, and they weren’t consulted on the agreement with MKG or any aspect of the plans for the first city.
A key safeguard has already broken down.
The private-city law is also already facing constitutional challenges, mainly arguing it undermines Honduran sovereignty. It’s become a political issue as the country moves through it’s 16-month-long election campaign. 
And there are almost certain to be disputes over ownership of whatever land is chosen for the city. MKG says it won’t rely on land grants from the government, so presumably will buy land or work with existing owners. But land title is murky in Honduras, and clashes are frequent, and often violent.
The vision was for shiny new cities in Honduras - a “little Canada” in the middle of the country, a proponent suggested in a Globe and Mail column, a place where people would live and work happily and the economy would thrive.
The reality, at the moment, looks a lot more like another factory zone, offering low or no taxes and few rules.
If the project moves forward at all.