First, over just over 100 candidates have responded to the Open Letter issued by the Living Wage for Families campaign, covering almost every Lower Mainland municipality. Almost all have expressed support for this proposal or at least indicated interest in exploring the implications for their city.

In Vancouver, COPE has said it is supportive of undertaking a city study to investigate the feasibility of passing a living wage policy. Vision Vancouver and the NPA are a little more cautious, saying they are interested, but want to find out more before deciding how to proceed.

In Burnaby, both main parties have expressed a clear interest in exploring the possibilities of a living wage policy. Both Richmond and Surrey have a number of candidates running on a living wage platform, while the City of North Vancouver has already unanimously agreed to study this issue.

In the outer suburbs of Maple Ridge, Pitt Meadows and Coquitlam a large number of candidates have expressed an interest in pursuing this issue.

You can see all the candidate responses here.

Second, today our friends at the Columbia Institute Centre for Civic Governance released some very interesting poll results related to the municipal elections. Among the results: 67.1% of respondents asked about a Living Wage said they would favour their municipality adopting a bylaw. You can read more results here.

Hopefully we will see new activity on this front after Saturday.

The following are just a few of the issues that hit the convention floor.

The RCMP and public private partnerships

There was a lot of coverage in the media about the breakdown in negotiations over a new RCMP contract between British Columbia and the federal government. A side bar issue that got no coverage dealt with the new RCMP Division Headquarters in Surrey.

Solicitor General Shirley Bond complained to a UBCM panel about the province’s inability to control rising RCMP costs. The example she gave was the RCMP’s new Division E headquarters that saw costs balloon from $300 million to $1 billion.

However, it turns out that the new headquarters is a federal public private partnerships and that so far the province’s privatization agency, Partnerships BC, has billed $2.5 million in consulting fees on the project. Remember when the government argued that P3s offered fixed costs and price stability?

The Municipal Auditor General

Mayors and councilors were not happy about the province’s decision to impose a Municipal Auditor General on them. Councilors argued from the convention floor that they were already forbidden by law to run a deficit and had many of their major projects subject to referendum.

However, the province backed down on most of the issues promising to pay for the new office (but not for the cost of audits) as well as swearing that new MAG would not have the power to second guess local policies, including tax policy.

The big issue that still remains is governance. The UBCM wants the same model the province enjoys in its relationship with its own AGM. That would mean an MAG would report to an accounting board made up of local government representatives. No dice Communities Minister Ida Chong told the convention. Apparently local governments will make up only a minority of the board. The business community has been promised its own chair at the table.

The business community (primarily the Canadian Federation of Independent Business) is on a full-court press to see business property taxes cut with the cost being shifted to homeowners. Of course business, unlike homeowners, can write off their property taxes against federal and provincial taxes.

Government downloading and rural areas

Every UBCM convention holds individual forums for different sized communities. My favorite is always the Electoral Area Directors’ forum made up of mainly people representing spread out rural areas. While diplomacy is the order of the day when big communities talk to the provincial government, with Area Directors you get a lot more down-to-earth candor.

Over the years Area directors have had a continuing complaint about downloading of costs. This year the complaint was over diking policy. As a Central Kootenay Director told the provincial officials at the forum, “One of the reasons you are downloading is that you lack resources. If you can’t handle it, we sure can’t.” The chair of the presentation on diking sent the provincial officials away with this message:

We don’t have the expertise, equipment or money. Flood mitigation needs more funding. Send the message back.

Extended Producer Responsibility (EPR)

Over the years residents, particularly in urban areas, have become used to a growing level of recycling. Blue boxes take away our newspapers, cans and plastics. For many of us there will soon be recycling of kitchen scraps.

It turns out there is some risk of things going the other direction. The Area Directors heard a presentation on Extended Producer Responsibility. Under this program producers and consumers or products will have responsibility for them. It sounds attractive but what will it actually mean?

A Director from the Sunshine Coast told the panel they were planning to extend their blue box program and asked for advice considering the EPR policy. An industry spokesman advised the Director that they couldn’t give practical advice but that it would be “prudent to wait.”  An industry spokesman reported that some governments were putting a pause on such projects. “Remain nimble” she advised.

It turns out we may all have to be more nimble if we have to start taking our newspapers to depots rather than having them picked up in blue boxes.

Wages for public employees

It appears Christy Clark’s government is determined to make public employees pay for the government’s ineptitude on the HST. In a panel on the economy Finance Minister Kevin Falcon told the audience:

With respect to the wage mandate for the whole public service at net zero for two years – that tough mandate is likely to continue.

Public sector wages have already fallen due to inflation and the two year wage freeze. The Finance Minister appears determined to push them down further. Meanwhile, at least for now, wages in the private sector are going up.

Ferries

At the forum on the economy an Island Trust Trustee told the panel of Ministers:

Ferry fares are killing our communities. We are losing jobs because of the ferry fares.  If government isn’t willing to put money into ferry infrastructure we are going to continue to lose jobs.

Transportation Minister Blair Lekstrum said they were cutting 400 sailings but that it would not likely affect fares. Finance Minister Falcon suggested fares really didn’t make much difference because when they cut fares temporarily during the recession, ridership didn’t go up. The Island Trustee disagreed.

Open government

I went to one of the 7:30 am “clinics” on Thursday morning on “open government.” I had hoped it might deal with the government’s poor record on access to information but instead it dealt with the governments new web sites.

It wasn’t a total loss though. The government’s data website that now contains more than 2,400 data sets looks pretty interesting. And the open information site that publishes the government’s FOI releases is certainly worth reading on a rainy Sunday afternoon. Too bad their policy of releasing the information only 72 hours after it goes to the FOI requestor will probably discourage media from using FOI.

Workshop on market housing

Thursday afternoon there was a workshop on market housing that was much more interesting than last year’s all day workshop. Last year was mainly taken up by how little the province could or would do. This year instead focused on how much was actually being done in communities like Vernon, Langford and Surrey.

 There were dozens of other policy issues addressed in the week long convention. Paul Willcocks has an interesting column on the debate about smart meters here. It is remarkable just how much information flows in a meeting like this.

Hochstein is president of the Independent Contractors and Business Association of BC – representing non union construction corporations. He is the public face of the hard right in British Columbia and has a long history attacking unions. He opposed raising the minimum wage and supports, through the HST, shifting taxes off corporations and on to working people.

While the views in his op-ed come as no surprise it is worth having a look at their validity and perhaps speculating on the makeup of the growing chorus supporting his views.

Hochstein complains that local government taxes have been rising faster than the cost of living. He is not the first to make this complaint. The Canadian Federation of Independent Business makes this complaint so regularly that last May the Union of BC Municipalities (UBCM) was finally moved to respond.

The UBCM acknowledged that local taxes had gone up faster than the Consumer Price Index. They then showed the reasons why. The fastest areas of growth were protective services, parks and recreation. These are areas where the public has demanded more services from local governments. Whether you agree with it or not, the demand from the public for more police on the streets is almost unlimited. As a percentage of total costs, general government expenditures – the cost of running local governments – has actually declined.

 Downloading of costs from the federal and provincial governments to municipalities had also raised the cost of delivering local services. New environmental mandates have been a big part of this. As well in many provinces municipalities get more in provincial grants than BC municipalities do.

One other thing is worth noting here. Based on the most recent Stats Can figures available, local taxation in BC is significantly lower than the national average.

Hochstein’s next complaint is twofold. First, public workers are paid better than private sector work, and second, municipal wages went up during the recession.

Both accusations are correct. How does this come to be? One of the most important reasons why average wages are higher in the public sector is that there is less discrimination in wages.

CLC Economist Andrew Jackson has published some excellent work on this.  He quotes one report saying:

While now somewhat dated, the best independent Canadian empirical studies show that a modest public sector pay advantage is mainly the product of higher pay for women in lower paid occupations, offset by lower pay for mainly male workers in managerial jobs.

He cites another study finding:

Based on the 2006 census data, this study shows that visible minorities and Whites receive similar pay for similar jobs in the public sector. By contrast, in the private sector visible minority men earn significantly less than observationally comparable Whites.

Discrimination against women and minorities does not appear to rank highly in Hochstein’s priorities.

And yes, because of long term contracts signed prior to the Olympics, wages for government workers did go up faster than inflation during the recession. But over the last ten years they have gone up more slowly than those for unionized private sector workers.

Now Hochstein is no fool. He is aware of all these things yet he continues to make arguments that do not stand up to scrutiny.

In this he is not alone. These are the same arguments made by the Canadian Federation of Independent Business, the Fraser Institute and the many Fraser Institute clones such as the Frontier Centre.

And these are exactly the same arguments we are hearing by the Tea Party Republicans in the United States and the billionaires who back them. Their goal is not just the reduction of taxes; it is the undermining of progressive forces that oppose their view of the world. For them attacking unions is not just about driving wages down, though that is important to them, it is about undermining one of the only forces left today pushing a progressive agenda.

Make no mistake, Philip Hochstein and the people like him look admiringly to Governor Scott Walker and his agenda for Wisconsin. Their policy agenda is low wages and high taxes for workers and a monopoly on power for corporations.

If this really happens it would be an important opportunity.  The current government has never allowed the public to have a say on these issues.  The TILMA agreement with Alberta was signed in secret.  The things BC gave away as part of the US procurement deal were equally hidden.  BC gave up more than any other province in that deal.

The worry is just how the Premier defines consultation.  If the current sales job on the HST is any indication, consultation won’t mean much.

Canada has now completed the sixth round of negotiations on CETA and the Europeans are pressing hard for trade rights on issues that fall under provincial jurisdiction.  For that reason provinces are playing a role in the discussions.

The Federal Government has asked provinces for a list of items they want to see left out of the deal.

During the Estimates debate last week NDP leader Adrian Dix and House Leader John Horgan pressed the Premier on issues such as the possible inclusion of drinking water in the agreement, a subject that has been exempted from previous trade deals.  Dix also asked the Premier whether she supported the request from the Union of BC Municipalities and the B.C. School Trustees Association that they be left out of the deal.  The Premier declined to answer those questions.

Dix asked the Premier if she would make public what BC was offering up in the discussions.  The Premier once again refused saying “negotiations aren’t typically conducted in public.”  She did commit however that:

There will be, I’m told, consultation on this agreement…There will be many avenues for the public’s input.

Earlier during Estimates debates in May another trade related issue surfaced.  MLAs Guy Gentner and Vicki Huntington asked what the government was thinking of when they hired a company to study possible development of Foreign Trade Zones in British Columbia.

In the United States there are many Foreign Trade Zones that frequently see materials being shipped in for processing and then re-exported without any duties or tariffs being applied.  In Canada the Federal government says existing programs already offer the benefits of Foreign Trade Zones without the need for specific geographic sites being designated.

Jobs, Tourism and Innovation Minister Pat Bell denied that the Province had any plans at all and said they were only looking for information when they hired the InterVISTAS Consulting Group on a $77,000 contract to look at how FTZ programs could be improved.

Gentner and Huntington expressed concerns about possible problems with labour rights in such zones and the possibility that such a site might be located on agricultural land in Delta.  At least one economist has suggested that FTZ’s are simply one more way to give money to corporations.

Both of these issues could be tremendously important to the people of British Columbia.  The Europeans want water as part of the trade deal because of their enormous private water corporations.  Polling has shown that Canadians everywhere do not want private corporations managing their water systems.  The Europeans also want complete access to local government procurement.  In a legal opinion prepared for the Centre for Civic Governance trade lawyer Stephen Shrybman says:

under CETA, municipalities would no longer be able to restrict tendering to Canadian companies, or stipulate that foreign companies bidding on public contracts accord some preference for local or Canadian goods, services, or workers. As a result, municipalities would lose one of the few, and perhaps the most important tool they now have for stimulating innovation, fostering community economic development, creating local employment and achieving other public policy goals, from food security to social equity.

The Premier has promised the public will be consulted on these critical issues.  She needs to go further and make those consultation meaningful.  That means consulting before the decisions are made and actually listening to what people say.

But for many people in the province, prolonged periods of hotter and drier weather are often far from welcome.

That’s because when things get hot and dry they burn. And in many regions of British Columbia that may mean potentially deadly outcomes for residents in numerous communities as wildlfires sweep through forests on their borders.

With that in mind, fire ecologist Robert Gray has stepped forward with a timely critique of the provincial government’s wholly inadequate approach to reducing the significant risks that forest fires pose to numerous communities in BC – a critique that ought to be required reading for all provincial MLAs.

In 2003, one such fire destroyed 334 homes and numerous businesses near Kelowna and forced the evacuation of 45,000 people. In 2009, in events eerily similar to those in 2003, tens of thousands of British Columbians near Lillooet and Kelowna were forced to flee their homes as out-of-control wildfires moved with frightening speed toward their communities. All told, the efforts made to fight the hundreds of blazes to burn in each of those two fire seasons would cost taxpayers nearly $800 million.

What concerns Gray is that in the years since 2003 – and with a brutal reminder yet again in 2009 of the havoc that wildfires can cause – the BC government has seemingly yet to grasp the significance of making the substantive changes to forest policy and forest management in the province that would reduce the likelihood of catastrophic, community-threatening wildfires in future years.

Gray has spent a lot of time thinking about such things. In 2003, he was one of the co-authors of Firestorm 2003, a report by a panel of fire experts working under the direction of former Manitoba premier, Gary Filmon, who had been called upon by then BC premier Gordon Campbell to assess what happened in that year’s fire season and to make recommendations on a new way forward.

In a nutshell, what Gray and others recommended was the need to be proactive in managing perimeter forests. In such forests, there should be one key objective: to reduce forest fire risk through the systematic clearing or thinning of trees and brush. Doing so, the Filmon committee concluded, would reduce fuel loads, meaning that when – not if – future fires burned, they burned far less intensely and with far less risks to people and properties than would otherwise be the case.

Doing such work is not cheap, costing between $1,000 and $20,000 a hectare, although most areas can be treated in the $6,000-per-hectare range.

In response to the work of Gray and others, the province began putting money into treatment efforts, with an initial grant to the Union of BC Municipalities of $50 million, and more recently a further grant of $25 million. But as the province’s independent Forest Practices Board noted last year, provincial funding had by the beginning of 2010 resulted in the treatment of just 35,000 hectares of perimeter forestland, while the total area of such land in need of fuel reduction treatments was 1.7 million hectares, of which 685,000 hectares was considered “high risk” and in most immediate need of treatment.

At such rates of treatment, it will take well over a century to complete initial fuel-reduction efforts in forests where high fuel loads are a clear and present danger to communities, to say nothing of the fact that treatment efforts must be ongoing to be effective.

Making matters of even greater concern is that there is a real risk that we will see more forest fires in BC in future years, not less.

Higher average temperatures and site-specific periods of prolonged drier weather are widely predicted outcomes of climate change. In 1993, meteorologists and climatologists with the Canadian Forest Service warned that this could result in much longer forest fire seasons. Should atmospheric carbon-dioxide concentrations double by the year 2040, the average Canadian “fire season” would increase by 30 days – a prediction subsequently revised upward to 40 days and 50 days in the case of BC.

Another fact not well appreciated by British Columbians is that while the costs of fighting wildfires is formidable – averaging $150 million per year over the past 10 years for a total expenditure of $1.5 billion – the true costs of future fires could be far, far higher. It all depends where the fires burn and the damage that they cause. A good case in point is in California, a jurisdiction that like BC appears to be more and more susceptible to catastrophic wildfires due to the effects of climate change.

In 2003, three forest fires in California known as the Old, Grand Prix and Padua wildfire complex forced the evacuation of 100,000 residents and completely destroyed 787 properties. The total estimated costs to date in dealing with those fires, is $1.2 billion. Only 5 per cent of that price tag actually applied to fire suppression. Much of it went, instead, to addressing damaged community water supplies and to flood control efforts.

When the true costs of fires are considered spending money up-front to reduce the likelihood of catastrophic outcomes makes sound public policy sense. The question is, where does the money come from to do the job?

To start, the province might finally get serious about increasing the amount of money it charges forest companies logging trees on publicly owned lands. Right now, logging companies gain access to droves of publicly owned timber for a pittance – the equivalent of 25 cents for each telephone pole’s worth of wood.

But beyond that, more substantive policy changes are needed. Somehow we must find a sustainable means of getting those communities that are most at risk of wildfires to play a more central role in reducing fuel loads in the forests surrounding them, forests that they understand better than most.

Gray believes that the central policy change required is to shift our thinking about how certain public forests are managed and to whose benefit. Right now, just about every hectare of public forestland in the province outside of parks is deemed to be there for one purpose: to grow trees for the forest industry. Yet in the forests surrounding communities, optimum tree growth may run counter to the interests of protecting the public from the very real dangers of wildfires.

“If the provincial government placed all Crown land surrounding communities under local government jurisdiction and enacted laws and policies that de-emphasized timber production and prioritized fuel hazard reduction, then local government could both protect local homes and businesses and cover most of the costs of doing so by using the wood fibre to kick-start local bio-energy industries including district and home heating systems, as well as the manufacture of exportable bio-energy products such as pellets, biochar and biodiesel” Gray said in an opinion piece published in The Vancouver Sun. “This, in turn, would make local communities less reliant on provincial subsidies.”

Quite clearly, given changing conditions on the broader forest landscape, we’ll probably also have to get a lot more serious about other things too, such as prescribed or deliberately set fires to reduce the prospect of more catastrophic and uncontrollable wildfires.

Eight years after the devastating Kelowna fires, with another forest fire season upon us and a provincial government mired in debt and clearly adrift in forest policy, Gray’s ideas are worth considering.

But when we talk taxes, less attention has been paid to the great deal that B.C. property taxpayers – particularly businesses –  are getting at the municipal level.

“Great deal?”. That certainly isn’t the message in the steady drum beat from mill owners like Catalyst Paper or  business lobbyists for the so-called “Fair Tax Coalition” in Vancouver. To hear them tell it, both municipal property tax levels and municipal spending are out of control in B.C.. But the facts tell a different story.

Two significant studies were prepared in May of 2010, which are both full of information that help explain what’s really going on.

Let’s start in Vancouver. On May 12, 2010, well known global advisory firm KPMG released their annual guide to international business costs as well as a special report on taxes. That report compared major cities around the world, each with populations of more than 2 million people. Their finding? Vancouver has the lowest business tax costs of 41 international cities! That means businesses in Vancouver have lower tax costs than businesses in New York, London, Houston, Tokyo, Los Angeles, Berlin and many more. So if business taxes in Vancouver are that low, how come the City of Vancouver is continuing  the big multi-year tax shift begun by the NPA, steadily increasing residential property taxes and cutting programs, while at the same time freezing commercial and industrial tax levels? Beats me.

The other interesting finding of the KPMG study is that Canada has the second lowest business tax costs out of ten countries they studied. Only Mexico has lower business tax costs. Countries as varied as the U.S., the U.K., Japan and Australia all have higher tax costs for business than Canada.

What about municipal spending and taxes in the rest of B.C.?

The other important study prepared last May was by Dr. Harry Kitchen of Trent University, a widely respected expert on Canadian municipal tax issues. He was asked by Metro Vancouver to study principles and best practices for financing municipal services in the Metro Vancouver region.

The report is full of important data. Amongst other things, Dr. Kitchen found:

• municipal spending per capita in British Columbia is the lowest of all provinces
• per capita municipal property taxes in B.C. are well below the tax levels in the other big provinces of Alberta, Quebec and Ontario and are lower than the Canadian average
• overall municipal revenues in B.C. are lower per capita than the other big provinces of Alberta, Quebec and Ontario
• over the decade from 1998 to 2008, municipal revenue in B.C. rose only marginally ie. by only .1% of GDP

So it isn’t only business property taxes which are low. We’re all getting a great deal at the municipal level. B.C. local governments use those comparatively low property taxes to provide many of the core services citizens expect – everything from fire and police services, to clean water, healthy sanitation, garbage and recycling collection, transit, urban planning and much more.

But year after year,  B.C. municipalities are under unrelenting pressure to reduce property taxes. The most egregious example is the industrial property tax revolt led by Catalyst Paper. This year, Catalyst has decided to pick on the small District of North Cowichan. Once again, the company has decided to pay only about one third of the legally assessed taxes it owes. Catalyst is dragging small North Cowichan before the Supreme Court of Canada to defend its tax rates, even though Catalyst lost its earlier court actions at the B.C. Supreme Court and the B.C. Court of Appeal. In Powell River, the town is facing community opposition to a deal with Catalyst in which property taxes will be capped in exchange for an annual fee to pay for privatized treatment of the town’s sewage and wastewater . In Campbell River, the Elk Falls mill was permanently closed, even though the municipality has been steadily reducing the portion of municipal taxes paid by Catalyst, reducing it from 35% of municipal revenue to 25% last year. In Port Alberni, pressure from Catalyst prompted the town to increase residential property tax rates by 23% in 2009.

None of this is necessary or justified. As noted at this year’s UBCM Convention in Whistler, there has been no independent study that shows property taxes are actually damaging business. That’s probably because they’re amongst the lowest in Canada and internationally.

British Columbians need to recognise the great deal we’re getting for the property taxes we pay. And we need to look at what other provinces are doing to diversify municipal revenue so communities are not so dependent on property taxes. In Saskatchewan, municipalities receive one percentage point of the provincial sales tax. In Ontario, municipalities have options like a personal vehicle levy, municipal land transfer taxes and the authority to charge sales tax on alcohol.

But first, we need to look at the facts and then put a stop to this big municipal tax shift.

Last Friday the Globe and Mail published an article in their business section outlining how Los Angeles area apartment owners in the mid 1970s financed a campaign against municipal taxes.  That was the infamous Proposition 13 which rolled back and capped residential and commercial property taxes.  It required local voters to approve all municipal tax increases. 

Since that time the State of California took over the funding of schools from property taxation.  Like many other states California is also barred by legislation from running an operating deficit.

The net result?  California is looking at a $19 billion funding shortfall this year and a $37 billion shortfall next year.  California’s schools were once considered the best in the country but are now dead last in student/teacher ratios.  The State may have to seek a bail out from the federal government.

You can read the article here.

http://www.theglobeandmail.com/report-on-business/economy/california-on-verge-of-system-failure/article1609891/

California was once a dynamic leader in the United States famous for its education system.  Now it has become the Greece of the American states.  Maybe those Los Angeles Landlords, and Maureen Bader, should be careful what they wish for.

Regular readers of Policy Note are probably familiar with some of the political and environmental issues plaguing North Delta, like the South Fraser Perimeter Road and the degradation of Burns Bog. But otherwise, most of us don’t know much about North Delta, which, like many (most?) suburbs, seems to have little to recommend it. Or, as the teenaged Bach and her friends would say,

North Delta is the kind of place that has a lot of potential for those who belong. For people who liked having yards and cars and patio furniture and plastic basketball hoops in their driveways and affordable mortgages and access to amenities, it was a perfectly legitimate community. For us, it was hell.

Bach shares stories of her Danish immigrant family struggling to assimilate into North Delta culture — her mother tries to find happiness and fulfillment in her new life as a housewife with a two-door garage and a wrap-around yard; Bach and her father escape invitations to play weird team sports like softball with the neighbourhood kids by going fishing on Deas Island. She tells us about her friend Elaine’s family, who ran Henry’s Canadian and Chinese Restaurant for decades until the land was bought up by developers and the restaurant demolished. We also learn more about the history of North Delta, which, it turns out, is fascinating — farming, canneries, black bears in the street — and who knew that at one point Disney was planning to buy and develop Burns Bog?

There are lots more juicy tidbits like this in Bach’s book, framed by her compelling argument that as time goes on and development continues, more and more specificity is erased from North Delta and suburbs like it. Behind the blandness that drove Bach and her teenage friends crazy, North Delta has a unique history and flavour, which, like Burns Bog, is threatened by new roads and environmental destruction.

Definitely a fitting book for the Policy Note Summer Reading series!

The province has ordered the CRD to end its controversial practice of pumping raw sewage into the ocean.  But it has also ordered the CRD to consider using a public private partnership (P3) for the project.

Regardless of what decision the CRD finally makes, they have done a couple of things right.  First, they insisted that much more information be made public than we have ever seen at this point in a P3.  Second, they made a serious effort to engage the public.

The CRD made the Business Case for the project public.  The Business Case looks at the value of the project itself but it also compares the cost of a P3 with traditional public procurement.  Normally, the provincial government and its agencies have declared this information to be a Cabinet Secret.  That is what happened in the case of the Vancouver Island Health Authority and the Royal Jubilee Hospital P3.

It is not hard to figure out why the province, with its enthusiasm for P3s, would have liked to have seen this business case kept secret too.  First of all the Business Case reported that even using Partnerships BC’s skewed methodology for looking at these things it would be cheaper to do this project publicly than to use a P3. 

But the Business Case went much further than that and actually released the raw numbers used.  These raw numbers compare the total payments over the 30 years of the contract for both the P3 and traditional procurement.  They showed with a public project taxpayers would pay roughly $1.65 billion.  Using a P3 would cost $2.36 billion – an additional $700 million.  A hybrid project, using a P3 for some of the work would cost about $2.03 billion – still $350 million more than public procurement. 

Public consultations have gone much further than other P3s.  Hundreds of people have been involved and, as the Victoria Times Colonist reports, they overwhelmingly support the public option.  Most interesting has been the response from local businesses who say P3s have the potential to ruin them.  Don Cameron, president of the Island Equipment Owners Association, said a P3 model “could very well mean the end of this local industry as we know it.”

Despite all this the CRD Directors are still facing pressure from the province to use a P3.  P3 promoters have found a fallback position.  If it is just too expensive to have the project financed with a P3, why not just give a private company a contract to manage the operation for 35 years without requiring any investment?  This isn’t selling the family silver, it is giving it away.

In the last year three provincial auditors have raised serious concerns about P3s.  Hopefully, armed with some real numbers and understanding what the public wants, the CRD Directors will make the right decision.  The CRD made two great decisions for transparency and public involvement.  They can make it a hat trick if they decide to keep their sewage project public.

The fashionable electoral reform idea this year is to give corporations a real say. It’s time for individual citizens to share their electoral democracy with corporations to give meaning to those old legal rulings that said corporations are people too.

Of course, many were shocked at the Jan. 21st decision by the U.S. Supreme Court which said corporate entities have full First Amendment free speech rights, thereby trashing decades of U.S. legislation to limit election advertising spending by corporation and unions. There are now no limits on the amounts corporations can spend on political advertising in the U.S.

But did you know Gordon Campbell and the B.C. government are looking at the option of one-upping the Supremes  by giving corporations the right to vote?

It’s true.

Last October, the Premier announced the creation of a joint task force with the Union of B.C. Municipalities to review the rules for local government elections. The terms of reference for the task force direct them to examine giving corporations the right to vote in B.C. municipal elections. The committee is to report out in May and changes to legislation are expected not long after.

It seems corporations in B.C. feel they have inadequate influence on government decision-making, particularly about taxes. All that tax cutting and tax shifting of the last twenty years is apparently not enough.

Industrial ratepayers  in forest communities and commercial ratepayers in Vancouver have recently been pushing hard for homeowners to pay a greater percentage of municipal taxes. Starting in July, forest companies operating in six B.C. communities simply refused to pay their full tax bills and arbitrarily sent in cheques for only a quarter of what they had been legally assessed. The B.C. Supreme Court has ordered Catalyst Paper to pay in full, but the company is appealing and communities with Catalyst mills are feeling the crunch. Port Alberni is now planning to increase taxes for homeowners by 23.6%, while also reducing and contracting out services.

Corporations once had the right to vote in B.C. local elections, but that was eliminated by the Barrett government in 1973, restored by the Bennett government in 1976 and eliminated altogether again by the Harcourt government in 1993.

Today, there is no corporate voting in any other province and indeed – according to the task force discussion paper – the only place in the world which has it now is “The City”, that small portion of greater London which is home to much of the British financial sector.

The discussion paper also raises the amazing prospect that if B.C. does give corporations the right to vote, non-discrimination clauses in trade agreements like NAFTA and TILMA may make it impossible to restrict that right to B.C. corporations only. There’s every chance the trade agreements will force us to open up voting to foreign corporations doing business in B.C., as well.

Old fashioned ideas like “one human being, one vote” may soon be behind us. If this goes ahead, we can look forward to corporations finally having effective input and full equality with human beings.

It’s time for a refresher on all this. I think I’ll take another look at Joel Bakan’s outstanding video “The Corporation“.

This is not the first time Vancouver’s business elite has gotten organized around the issue of transit.  In 2004 the then elected TransLink Board of directors voted down the proposed Canada Line public private partnership because of the cost of the project.  Business organized a 34 member coalition, including the Board of Trade, to put pressure on TransLink to reconsider and to build the line as a P3.

The project was rescued and the Canada Line was built.  Now, the BC government’s Comptroller General says the cost of operating the Canada Line:

is expected to exceed the additional system revenue it generates until 2025, with costs exceeding incremental revenues by $14 million to $21 million for most years until then.

This ongoing deficit is one of the reasons for TansLink’s financial problems and one of the reasons why TransLink is raising both transit fares and property taxes and also imposing the parking tax. 

The business coalition’s complains that too much of the cost of paying for that financial problem is being loaded onto parking taxes and not enough onto property taxes and transit fares.  Property taxpayers are already feeling pressured by tax increases, especially in Vancouver where Council is shifting part of the burden of business property taxes onto homeowners.

Transit fares in Vancouver are also already among Canada’s highest and they are going up.  How does that compare with parking fees?  Colliers International publishes an annual parking rate survey.  In June 2009 they found the daily median rate for parking in Vancouver was $17.00.  That’s more than they pay in Saskatoon and Edmonton, but less than Calgary ($22.00), Toronto ($22.50) and Winnipeg ($18.00).  The new tax pushes parking costs up to a point that is not out of line for a major Canadian city.

The real problem is that property taxes, transit fares and parking taxes don’t produce enough revenue for the transit system we have, let alone the transit system we need that would include the Evergreen Line.  Increasing ridership and decreasing carbon from cars will require a greater financial involvement by the provincial government than they are willing to make.

And for the business elite, perhaps the lesson they might learn is that you should be careful what you demand because someone might ask you to pay for it.

This isn’t the kind of balanced budget law that we had at the provincial level – the kind that can be amended at the government’s convenience. Oh, no. We’re looking at a real binding law here.

(Well, almost always binding – the Vancouver Charter was amended a year ago to allow the city to borrow $458 million to fund the Olympic Village without having to go to the people first. But I digress.)

To cut services or increase taxes and user fees: that is the question.

On December 1, City Council announced their plans for balancing the books: a combination of both cuts and tax increases. It’s not looking good, as Frances Bula summarizes in her Globe article:

Vancouver will see the loss of 177 jobs at city hall, the closing of a landmark conservatory and a children’s petting zoo, dramatic hikes in parking charges, the elimination of the city’s high-profile summer street banners and reductions in everything from library hours to after-school childcare.

City Council’s decisions have left many wondering whether the city’s fiscal health will be achieved at the expense of the overall health of the city. Despite recent activity in Vancouver’s real estate market, we’re far from a robust recovery. Cutting municipal spending and jobs at this time would act as an additional drag to the economy exactly when we need to think about boosting future growth.

The worst part is that cutting services and closing attractions (as if Vancouver has that many to begin with) is only necessary in order to fund a tax break for commercial property owners in the City. This is effectively the result of a decision made by the previous city council (and supported by Mayor Robertson) to shift a portion of business property taxes onto residential property owners over a period of five years.

Think City is among the most vocal critics of Vancouver’s proposed budget. Their key points are outline in a recent Georgia Straight article Vision Vancouver looks after business with tax shift. Think City’s proposal is to defer the tax shift for a year and instead implement a 4% property tax increase on both residential and non-residential owners (instead of the currently proposed increases of 4.3% for residential and 0.3% for non-residential properties). This is estimated to cover almost the entire current shortfall of the city, making service cuts unnecessary.

While reducing the share of taxes paid by businesses can stimulate the economy, paying for this tax reduction through cutting municipal services is not the best bang for the buck. From a macroeconomic perspective, modest tax increases are better that service cuts for meeting the city’s shortfall. This is because macroeconomic models that estimate the multiplier effects of fiscal changes to the economy consistently show that tax increases have somewhat smaller drag at the local economy than spending cuts.

It makes sense: businesses can deduct the property taxes they pay from their provincial and federal taxes, so the income reduction that comes from a business tax increase is not as big as the income reduction from a lost job.

It’s no different at the municipal level than it is provincially or federally – tax cuts are a leaky economic stimulus, while spending on service provision ensures that the money spent benefits the local economy.

Additionally, many of this year’s Vancouver budget woes stem from Olympics-related costs (for example, the City is said to be losing $1.8 million in parking fees because of Olympics-related street closures next year). Guess who’s going to benefit from the Olympics related tourism? That’s right, it’s not the home owners, it’s Vancouver’s service and tourism industry. They should pay their share of the costs, too.

But the issue in BC came into sharper definition in July when Catalyst Paper hand-delivered cheques to four municipalities that only covered 25% of their property tax bill.  Timberwest, Celgar and West Fraser Timber joined Catalyst and all four took their respective communities to court saying they were paying too much.  The companies argued they should only have to pay for the cost of the services they received.

The communities were hit hard by the unexpected refusal of the companies to pay their taxes.  Castlegar Mayor Lawrence Chernoff told the Union of BC Municipalities convention in September that the company gave them no notice of their intentions leaving Castlegar in a very difficult situation.  The city was required to pay money that had been levied for the regional district.  The City was forced to cut $700,000 in external requisitions.

In BC property taxes are based on several classes of property.  The base rate is for Class 1 – residential properties.  Class 4 is Major Industrial and companies like Catalyst do pay much more than residential owners based on the value of their property.

On October 16^th Supreme Court Justice Peter Voith ruled on the issue.  The Judge rejected the companies’ argument saying, among other things,

The weight or significance given to such consumption data is a matter for Council alone. It is up to Council to fit and weigh such information, together with other categories of relevant information, into its decision-making matrix in the way that it considers appropriate.

What other categories of information might we look at in assessing property taxes?

Paul Willcocks in his usually thoughtful way identified an historical reason.  He points out that resource companies in the past were all highly profitable and operated in one industry towns.

They needed a stable workforce. Rather than building an old-style company town, they opted to pay high taxes to fund the services and infrastructure that allowed them to attract workers and their families.

Things have changed now, of course, but the Director of Finance for North Cowichan offered another reason before the court:

In adopting the annual tax rates bylaw, and establishing the tax rates to be imposed by North Cowichan in respect of each of the classes of property located within its boundaries for that year, the North Cowichan Council considers, among other things, the relative ability of each of the classes of property to meet the overall property tax burden.

This ability to pay question has not been examined too closely.  One of the few people to look at the issue is Kitimat Municipal Manager Trafford Hall.  Examining Kitimat’s aluminum industry he concluded that Kitimat’s property taxes came to about 1.6% of their operating costs.  Hall points out that property taxes are fully deductible from other levels of taxes reducing the actual cost to about one percent of operating costs.  Cutting their property taxes by 20% then would save one fifth of one percent.

What about Catalyst Paper?  In 2008 Catalyst reported operating expenses of $2,006.8 million.  In its 2009 Management’s Discussion and Analysis Catalyst said they had five mills, four in BC and one in Snowflake AZ.  They continued,

Major industry property taxes in the Company’s four mill operating communities in B.C. are well above other North American jurisdictions.  Property tax payments in 2008 in these four municipalities were approximately $23 million.  The Company has identified municipal property tax reduction as a priority in 2009. 

All told, that $23 million comes to about 1.15% of their operating costs.  And as Hall points out, property taxes are deductible bringing the real cost over good times and bad well under 1.0%.

How does that compare with residential property taxes?  Hall quotes Ontario’s 1990 Fair Tax Commission as saying property taxes comprised from 3 to 5.7% of residential household income.  And residential property taxes are not deductible from other taxes.

What can we conclude?  Times are tough for paper companies, but property taxes are a negligible part of the problem.  A significant cut in industrial taxes will make a very small reduction in their expenses but will lead to a dramatic increase in taxes for residential taxpayers. 

We hear a lot of talk about the need for big changes in revenue sources for municipalities and that talk is justified.  But until real changes are made and new revenue sources added, big cuts in industrial taxes will just lead to more tax unfairness.

Some 1,500 jobs, by mayor Stephanie Killam’s estimate, have been lost in the community as sawmills, planer mills and pulp and paper mills closed. With hundreds of good paying mill jobs gone, jobs in related service industries have disappeared at an alarming rate too, leaving the town’s citizenry reeling.

Killam hasn’t seen anything like it, and she’s lived in Mackenzie since 1972.

During the current election campaign, the plight of forest industry towns was in the news. But the mud really started to fly in the past few weeks in response to an NDP proposal to revise the province’s forest tenure system (a proposal, by the way, that has been made off and on for decades by self-described free enterprisers and socialists alike).

At present, the bulk of the trees logged in B.C. are controlled by a relatively small number of large companies who hold long-term, renewable licences or tenures awarded by the provincial government. The licences grant exclusive access to trees on a non-competitive basis. The NDP propose to change all of that by moving to a system where half or more of all timber logged in the province is subject to competitive auctions rather than being the exclusive domain of any one company.

The presidents of three of the larger companies holding the big licences – Canfor’s Jim Shepard, Interfor’s Duncan Davies and West Fraser’s Hank Ketcham – have taken the unusual step of publicly and vocally entering the electoral fray to champion the ruling Liberals. They warn of black days ahead should the NDP form the next government. Changing the tenure system, they argue, would “jeopardize business investment” in the province. Additionally, Ketcham has personally visited Quesnel, home to NDP forest critic Bob Simpson, a former forest company executive himself, to denounce the NDP’s proposals.

On one level, Killam agrees that redrawing the forest tenure map could, if mishandled, have negative consequences for the provincial economy. She cites as an example events last December in Newfoundland. Danny Williams, populist Conservative premier, “expropriated” global newsprint giant AbitibiBowater’s Crown timber and hydro assets after the company announced plans to close its Grand Falls pulp and paper facility, which had operated in the same location for more than a century.

Williams justified his action on grounds that the company and its predecessors had gained access to Crown resources on the condition that they operate a mill. With the mill closed, the company had broken its end of the bargain. Williams was simply doing the same. Killam, while understanding Williams’ response, says she worries about the signal it may send: “We’re not open for business and therefore investment drops off.”

Music though this may be to the heads of the province’s major forest companies, it would be wrong to assume that Killam is unquestioningly behind them. In fact, some of the other songs in her repertoire would likely strike a more discordant note.

To understand how Killam’s thinking is shaped, it helps to know a bit about how her town’s economy really began to hum. In the late 1960s, the grand vision of former B.C. Premier W.A.C. Bennett came to fruition when the turbines below a massive earth-filled hydroelectric dam, which now bears his name, began spinning. The water impounded by the dam near the community of Hudson Hope created Williston Lake – then the largest reservoir in the world, and today BC’s biggest freshwater body.

The more than 2.4 million kilowatts of power generated at the dam, along with a million plus more kilowatts generated at another dam downstream, would go on to light many a Vancouver home, but also foster the development of the modern day forest industry in central B.C.

That included Mackenzie, north of Prince George, where before long two forest companies – BC Forest Products and Finlay Forest Industries – built pulp, paper and sawmills. They were helped by the Bennett government, which offered up vast tracts of timber on public forestlands in exchange for the companies building and operating mills in specific communities. This quid pro quo policy became known as appurtenancy and it would remain a central facet of forest tenure agreements long after W.A.C. Bennett exited the political stage, indeed pretty much up to the time his son, Bill, stepped aside as B.C.’s premier in 1986.

But by then, the face of B.C.’s forest industry was beginning to change and rapidly so. In 1987, New Zealand-headquartered multinational, Fletcher Challenge, bought out the assets of BC Forest Products, marking the beginning of several ownership changes at mills in Mackenzie and elsewhere. Fletcher’s foray would be mirrored by others, culminating with the disappearance of MacMillan Bloedel, a name synonymous not only with B.C.’s forest industry but its entire resource-driven economy, when US-based forestry giant, Weyerhaeuser Company, purchased it in 1999.

With a few companies holding a monopolistic position, mill closures were certain. Rather than putting dollars into mills in each community, companies made investments in a select few. Older, less efficient mills closed as newer mills with their larger, more efficient outputs, survived for another day.

The idea of appurtenancy was dealt a second blow by the interminable lumber wars between Canada and the United States. During Premier Gordon Campbell’s first mandate (2001-2005), the provincial Liberals formally scrapped appurtenancy on grounds that it was considered a form of subsidy by the powerful US lumber lobby. The truth be told, however, appurtenancy was already dying a slow death in the years of Social Credit and later NDP rule that preceded the Liberal administrations of much of the past decade.

For Killam and other mayors struggling with big job losses in their communities, the question arises: What will replace appurtenancy? If the historic quid pro quo no longer exists between large corporations, the province and resource communities, must communities simply accept that companies get unfettered access to Crown resources to do with what they wish?

Killam thinks not.

Fittingly, AbitibiBowater, the same company that raised Danny Williams’ ire, also controls a large forest tenure in Mackenzie. The global newsprint giant arrived on the scene in northern B.C. only a few years ago. Nevertheless, it closed its sawmills and paper mill shortly thereafter, and has recently filed for bankruptcy protection as it struggles to deal with a nearly US$9 billion debt load. Should a bankrupt company that has neither the ability or, seemingly, the intention, of continuing to operate in the Mackenzie area now be free to simply sell “its” forest assets to someone else? Or, should the province intervene in some way, perhaps signaling that it intends to place some conditions on the transfer of what remains a publicly owned asset to another party?

Killam’s biggest fear is that the company may try to sell its Crown-granted timber holdings to a competitor, perhaps one of the larger forest companies in the province, and that a new buyer would simply treat the forests around Mackenzie as a “fibre basket” to be emptied to feed mills in some distant community.

In response, she has embarked on a series of intitiatives to help her community thrive once again. A new, community-held forest tenure is in the final stages of being negotiated with the provincial Forests Ministry, which would give Mackenzie and a local First Nation approximately 30,000 cubic metres of timber per year. Compared to the close to one million cubic metres per year controlled by AbitibiBowater, the new licence would be small, Killam admits. But it would represent the start of a much-needed transition, she says.

The embattled mayor has also told the provincial government and local MLA and Forests Minister Pat Bell that she wants the province to consider transferring AbitibiBowater’s tenure, in its entirety, to her community and local First Nations. In partnership, the communities could then directly manage local forests and, hopefully, use some of those resources to create new arrangements with companies interested in doing business in Mackenzie and area.

And she has told the government that she thinks changes must be made to a program administered by the province whereby limited amounts of timber are auctioned, rather than turned over to the exclusive control of individual companies.

The objective of a revised auction system should be to promote the interests of small, community-based businesses, Killam says, not as an additional source of wood fibre for the large companies that dominate the province’s forest industry.

Killam and her fellow council members are also doing what they can to work with the larger companies to get something – anything – going in town, and have agreed to tax breaks to encourage one of them – Canfor – to reopen a local mill on a one-shift basis later this year.

But all in all, the objective is to strive for something new: a revised forest tenure system that does not exclude large companies but that allows for substantial community participation. Such a system, Killam says, would mark a new beginning. It would give communities something tangible to build on and, hopefully, encourage new entrants into the industry.

After nearly 40 years residency in a town dominated by big companies who came to be there because of a grand industrial vision, Killam says the time has come to try something new. Getting there means change, and change is something the big companies that have pulled up stakes in Mackenzie and elsewhere have resisted with ferocity this election campaign.

It awaits a new government to determine which perspective will prevail: that of an industry that has closed mills across the province and displaced thousands of workers or that of the shell-shocked communities that are being forced to deal with the fallout.

Its implications are far reaching. In a report released by the Council of Canadians one of Canada’s foremost trade lawyers, Steven Shrybman, outlines the origins and probable outcomes of the deal.

Shrybman says that both TILMA and amendments to the Canada-wide Agreement on Internal Trade (AIT) go a long way towards expanding the scope of Canada’s free trade agreements (the FTA , NAFTA and potentially a new deal with Europe) to limit the power of provinces.

The key point in TILMA, Shrybman argues, is Article 3 which says, “Each Party will ensure its measurs do not operate to restrict or impair trade between or through the territory of the Parties, or investment or labour mobility between the Parties. (Empahsis added). Shrybman coontinues:

The implications of this broad prohibtion are extrememly problematic for two reasons. First, virtually any government action can be seen as offending this prohibition. Everything a government does is likely to affect the market, ie. investment, in some manner, or there would be no reason for government to act in the first place.

More, he says:

Because TILMA provides unprecedented grounds for asserting the interests of private service providers, and a sympathetic forum for doing so, it is likely to become the preferred venue for those seeking to privatize public services.

The most important feature of TILMA, Shrybman says, are the dispute procedures “borowed from Chapter 11 of NAFTA, which entitles private investors and companies to claim monetary damages caused bythe failure of a government to comply with the treaty.”

Shrybman offers examples of current NAFTA challenges that highlight what we can now expect from TILMA. One company is demanding $160 million because it was prevented from establishing private health clinics in Canada. Another is claiming $24 million because it was forced to sell raw logs to the Canadian market before exporting to the US.

All of these internal trade agreements have been negotiated in secret. BC and Alberta had signed TILMA in 2006 months before the deal became public. At least two amendments have been made to the AIT. The agreement on labour mobility was made public only after it was signed. The deal implementing financial penalties for infractions is still secret. In Saskatchewan, public hearings on TILMA stopped the deal spreading to that province and provincial ministers are not prepared to let that happen again.

In BC both school boards and municipalites asked to be exempted from TILMA. They were refused.

Perhaps the most important point Shrybman makes is that at this time of economic crisis:

Trade officials describe their initiatives as “trade liberalization” – an agenda that would limit the role of government by promoting policies of de-regulation and privatization. This is of course precisely the policy approach that has been ruinous for domestic and global economies, and played a key role in forestalling meaningful efforts to redress climate change and other pressing ecological challenges.

At a time when we see the worst failure of markets in generations, TILMA and the AIT amendments dramatically increase the power of corporations and the market place. At a time when the world is calling out for governments to act, TILMA and its cousins undermine the power of governments to act to defend their citizens.