The paper comes out at a time when all Canadian provinces face significant pressure to reduce the rate of growth of health spending while continuing to improve access and quality of care but when there is no agreement on the specific changes needed to ensure that public healthcare dollars are more efficiently utilized. As a result, individual provinces are experimenting with a variety of reforms. In BC, the two major policy options being introduced are an activity based funding (ABF) model for hospital surgical procedures; and an integrated model for caring for people with chronic conditions and complex needs in the community. Though both of these are formally priorities of the Ministry of Health, ABF is receiving the vast majority of the financial resources and technical expertise.

Our paper raises serious concerns that the current preoccupation with reforming hospital funding is simply too narrow to effectively address BC’s most pressing health care challenges, many of which have roots outside the hospitals (in our inadequately funded community care system). This is why we titled our report Beyond the Hospital Walls: Activity Based Funding Versus Integrated Health Care Reform.

The current focus on ABF is a reflection of the conventional, hospital-centric model of health care that our system was built on. While this worked well to meet the health care needs of Canadians in the 1960s, it’s outdated in the 21st century when chronic disease management — which is better handled in the community, not the hospital — is increasingly becoming a pressing concern.

But what’s worse is that ABF is not just a distraction from the real problems in our health care system: it may actually reinforce the silos and fragmentation within the health care system, hindering efforts to improve overall system integration and coherence (this stand in the way of priority #2). This is why jurisdictions where ABF has been in place for a number of years are increasingly looking to move away from it towards funding mechanisms that incentivize integration across the system (among hospitals, family doctors and community care services like long term care and home support).

The paper outlines a strategy for health care reform that is timely, practical and evidence-based, and that will address the root causes of problems in our health care system.

Our review of the international evidence on health systems reform suggests that the best performing systems are the ones that have developed mechanisms to collaborate and share accountability across services and providers. The key to their success is understanding the patient experience across the continuum of diverse health services the patient needs at any one time. High performing health systems are organized in a way that allows providers to be jointly accountable for providing cost-effective care in whichever venue is medically appropriate – the patients’ home, the family doctor’s office or the hospital. There are many examples of how this can be done, both internationally and from our own backyard (Northern Health Authority is a leader in this area). All that’s needed is for the BC government to show leadership, look at the evidence, and actually implement the initiatives that have proven successful province-wide.

We hope that Canada’s premiers, who are currently meeting to discuss health care in Victoria, find a way to avoid getting bogged down into narrow issues like hospital funding reform and engage in a broader discussion of how to improve quality, increase access and ensure the cost effectiveness of the overall health care system.

In 2010 a legislative committee undertook a review of Freedom of Information and Protection of Privacy Act (FOIPPA). In these reviews normally you would expect the government to protest any possible changes to make information more accessible. Not this time. Last year instead the Province delivered a 95 page report asking for dramatically increased rights to share and manipulate your information.

The government was pretty anxious to get the legislative committee’s approval for more power over your personal information. It was a big ticket item. A month earlier in the 2010 Throne Speech the government announced:

A new $180‑million integrated case management information technology system will deliver better front-line services and supports to women, children, income assistance recipients and those most vulnerable.

To make that new $180 million system work the government needed a lot more power to manipulate your information than it was allowed under FOIPPA.

However, the then Information and Privacy Commissioner had misgivings. He told the legislative committee:

Privacy is often, and wrongly, in our view, seen as a “barrier” by government entities to “efficient and effective” service delivery. Government agencies often suggest that the privacy protections contained in FIPPA be weakened to allow for liberal sharing of citizen personal information, within and across government entities. We are adamant that no legislative amendments to FIPPA are needed to authorize data sharing and data matching activities within government, and would strongly oppose any weakening of the existing right to privacy.

Most important, he recommended:

Government should not proceed with any more data sharing initiatives until a meaningful public consultation process has occurred, and the outcome of that process is an enforceable code of practice for data sharing programs.

The committee largely bought the provincial government arguments that it needed more power over our information, hook, line and sinker. But they did at least agree to “consider holding public hearings on data sharing initiatives.”

The calendar moved forward 18 months and these discussions played out with the introduction of Bill 3, The Freedom of Information and Protection of Privacy Amendment Act, 2011. The legislation widens the scope of personal information that can be released inside or outside Canada including personal information found on social media sites and information obtained about someone commenting on public issues. While there are protections in the legislation, health care entities are exempted from those protections regarding data linking.

Most important, the new law permits the government to link its databases to “mine” information. The databases can come from different public bodies and agencies. It creates a powerful and wide collection of personal information that is permitted broad uses.

Just how broad are the possibilities. Here are the definitions outlined in the legislation:

“data linking” means the linking or combining of personal information in one database with personal information in one or more other databases if the purpose of the linking or combining is different from

(a) the purpose for which the information in each database was originally obtained or compiled, and

(b) every purpose that is consistent with each purpose referred to in paragraph (a);

“data-linking initiative” means a new or newly revised enactment, system, project, program or activity that has, as a component, data linking between

(a) two or more public bodies, or

(b) one or more public bodies and one or more agencies;

 All this was done with none of the public consultation called for by the Information Commissioner. But we have a new Information Commissioner who it seems was not willing to press the issue. Even new Commissioner Elizabeth Denham acknowledged, however, that:

The devil is in the details. Some of these changes need more prescriptive rules. There is much work yet to be done.

So the government has a whole new amusement park of our data to play in. The public had no say about it.

These changes were rushed through. In contrast, recommendations to reduce the culture of secrecy by improving freedom of information provisions were ignored. Well, not completely ignored. Section 13 of the legislation that allows the government to refuse to release any “advice of government” actually had its scope widened.

Last July Christy Clark talked about her open government plans in a column in the Vancouver Sun. What we got instead was legislation broadening the government’s power over our personal information without public input.

Does the government need these powers? Will the creation of massive personal information banks be useful? Maybe. But what would have been far more useful would be a public consultation process that allowed us to fully understand and comment on what the government was doing.

That was what the old Information Commissioner wanted. That would have been open government.

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.

The most illustrative part for me was the announcement that there was going to be a review of BC’s tax system.  The CCPA has called for a Fair Tax Commission but the review promised by Christy Clark promises to be anything but fair.  Instead, as the government backgrounder states:

The panel of business leaders and experts will be asked to:

• Develop recommendations to help support a globally competitive, diverse economy that supports jobs and innovation with the Province’s balanced budget framework.
• Develop recommendations to simplify and streamline the sales tax system to make common-sense improvements to reduce administration for government and business
• Develop recommendations for closing tax loopholes

The point here is that, once again, our tax policy will be made by “business leaders and experts” – the same people who gave us the HST.

So that is who the government will be listening to. Who did they present their plan to? Not the legislature. Not the people we elect to represent us. On Wednesday the Premier’s speech was to the Surrey Board of Trade.  Thursday the Vancouver Board of Trade got to see the plan. Friday it was a speech to the BC Business Council.  Some people have called this the Liberal Party’s annual report to donors.

Now business plays a vital role in British Columbia. Their voice needs to be heard. But for ten years it is the only voice that has been heard. The result has been cuts in taxes for business and the wealthy, increases in fees we all pay and cuts in services for those who need them most. And for the government the result last month was a humiliating defeat of their centerpiece tax policy.

If the government had been just a little less deaf to the concerns of ordinary people we might have seen a tax change that worked for all of us.  Ontario implemented an HST after a year of consultations. As a result of those consultations the Ontario HST looked different than ours and there was much less hostility than we saw in BC.

Eric Reguly had a very good column in the Globe and Mail last month when he addressed this question in the context of Italy’s decision to kill a minimal wealth tax.  He concluded:

The point is that austerity programs will fail if they hurt, or are merely thought to hurt, the poor and middle classes more than the rich. If the average taxpayer knows that the rich are feeling no pain while he or she is, rebellions are almost certain and history shows that they can end badly for the privileged. Afflicting the rich and the unrich together is the way to go. It would also help build trust in governments at a time when they, like Italy’s, suffer a severe trust deficit.

There is no doubt in BC when it comes to government there is a trust deficit. The process by which the Jobs Plan was rolled out and a continuation of having “business leaders and experts” make tax law will make it worse.

The Minster’s presentation focused on highlighting the cost of the move back to PST/GST, providing some large numbers for the media headlines, instead of looking at the big picture.

In case you missed the media coverage, the provincial coffers are projected to suffer a loss of $2.8 billion over the next 3 years, relative to the estimates presented in February’s Budget 2011. The Ministry estimates that $2.3 billion of the loss is brought about by the HST defeat and the move back to the PST/GST system.

The Minister argued the impact of the HST defeat is manageable, but warned that:

“We’re going to be very tough on operating expenditures and people need to understand it is going to be a government that is going to be run very, very tightly from a fiscal point of view.”

However, closer look at the numbers reveal that the provincial financial situation is not nearly as dire as it may seem. And that returning to PST/GST is not all that costly, when compared with how much it would have cost to keep the “fixed” HST.

Firstly, comparing the costs of repealing the HST to the February budget estimates is misleading. Budget 2011 numbers did not include the cost of the last minute HST “fix” that Premier Clark announced this summer. Keeping the HST would have involved a significant budget loss relative to the numbers announced in February, as Seth Klein pointed out here. This is why the impact of reverting to PST/GST should be compared to the impact of keeping the “fixed” HST.

The cost of the one time rebates of $175 per child regardless of family income and for low- and modest- income seniors were estimated at $200 million. The government’s news release announced that these checks would go out before the end of the year, so they should be considered as expenses in 2011/12.

In addition, the HST was slated to be reduced to 11% in July 2012, which would have cost the government around $638 million in 2012/13 — 3/4 of the annual cost of a 1 percentage point reduction (estimated at $850 million). In 2013/14 the government would have given up $850 million. And this isn’t even considering that in July 2014, the tax was going to be reduced to 10%, giving up a total of $1.7 billion in revenues every year. At that rate, the government’s actually going to be collecting more revenue with the PST/GST than otherwise.

Some of these extra costs would have been offset by the increase in the corporate income tax to 12% (from the current 10%) in January 2012 and by postponing the small business tax cut slated for April 2012. These would have generated an additional $100 mil  in 2011/12 (1/4 of the annual revenue gain, estimated at $400 mil) and just over $400 million each in 2012/13 and 2013/14.

Thus, the real comparison of the costs of repealing the HST looks more like this:

My analysis shows that the provincial treasury would have faced a shortfall of $800 million even if the HST had survived the referendum. The real net costs of reverting to PST/GST are $1.5 billion, not $2.3 billion.

Of course, using the bigger number is more effective if one were looking to lay the blame for provincial fiscal challenges onto the referendum results.

Now, let’s turn to the total provincial fiscal position. Many analysts/commentators seem to have forgotten that the fiscal plan features unusually large contingencies and forecast allowances over the next 3 years. These total $2.5 billion over the 3 years and thus entirely cover the costs of the HST reversal.

If the HST defeat is not an unexpected event worth dipping into the contingency funds for, I don’t know what is.

As for the forecast allowance, the government has already built a lot of prudence into the budget projections by using economic growth forecasts that are considerably lower than the private sector consensus forecast (2% vs 2.8% growth for 2011 and 2.3% vs 2.8% growth in 2012).

In other words, the BC government has a real fiscal gap of only about $300 million over 3 years relative to Budget 2011, not $2.8 billion. This is a lot more manageable and hardly requires the kind of tight-fisted approach advocated by Minister Falcon.

Some of the media commentary around the fiscal update, such as Vaughn Palmer’s piece in the Sun are suggesting that the BC government is using the current fiscal challenges as an opportunity to punish British Columbians for exercising their rights in the HST referendum. This would be a great mistake. Not only would it go against our country’s respect for democracy, but it would also put a drag on the already fragile recovery (latest job numbers released today show BC is shedding jobs, full-time jobs in particular).

We have not seen clear evidence of savings and benefits in other areas of PFI projects which are sufficient to offset this significantly higher cost of finance. Evidence we studied suggests that the out-turn costs of construction and service provision are broadly similar between PFI and traditional procured projects, although in some areas PFI seems to perform more poorly. For example we heard that design innovation was worse in PFI projects and we have seen reports which found out that building quality was of a lower standard in PFI buildings. PFI is also inherently inflexible, especially for NHS (National Health Service)projects. This is in large part due to the financing structure and its costly and complex procurement procedure.

In the UK public private partnerships are called private finance initiative (PFI).

The Guardian newspaper reports that MPs found using P3s cost 1.7 times more than using public money for projects.

“The difference in finance costs means that PFI projects are significantly more expensive to fund over the life of a project. This represents a significant cost to taxpayers,” the report finds.

The Conservative chair of the Committee said:

instead of transferring risk to the private sector and cutting costs for the taxpayer, PFI had fooled the public – and Whitehall officials – into thinking they could get shiny new public services “on the never-never”.

While in the UK P3s have been under skeptical review, here in Canada, and particularly in BC, the government still refuses to make critical information public. The information is, the government says, a Cabinet Secret.

The business community in the UK continues to defend the lucrative projects with their guaranteed profits.

Here in BC we have billions  of dollars invested in P3s for 30 years or more.  Every new hospital built in the last decade is a P3.  Roads, bridges, sewage plants and now a prison have all gone the P3 route. There is no sign the government and its privatization agency, Partnerships BC, are slowing down. There is no sign they are prepared to even have a public review of the costly projects.

Charlie Smith had a good article in the Georgia Straight outlining reasons why a municipal AG would be a good idea. Some people, in some municipalities have had problems with transparency.  And while the Province does have an “Inspector of Municipalities” this position is useless when someone has an actual problem with local government actions.

But the issue is trickier than it looks.  Are we really talking about a mechanism to increase transparency and accountability in local governments? Or are we talking about a mechanism to allow the province and corporations to impose their agenda on local governments?

Under the Canadian Constitution the Province has the power to make laws that govern local governments. But the Community Charter, the provincial law that governs municipalities, has some pretty explicit language on the relationship between municipalities and the Province.

Clause 1 of the Community Charter says, “Municipalities and their councils are recognized as an order of government within their jurisdiction that…is democratically elected, autonomous, responsible and accountable”.  Clause 2 explicitly calls for consultation on local government legislation.

Christy Clark’s unilateral announcement that she would be imposing a local Auditor General was neither respectful of municipalities as an “order of government” nor did it involve any consultation.

The Union of BC Municipalities is usually pretty cautious when it comes to criticizing the provincial government. Their response to the AG plan goes further than they are usually willing to go.  The UBCM pointed out they had offered to participate in a joint Provincial/UBCM policy development process related to the MAG. but that “To date the Province has not agreed to such a joint process.”

The UBCM asked just what problem the government was trying to solve with the proposal.  They asked if it was tied into other commitments made by the Premier on municipal tax reform.

Following a meeting with the Minister, the UBCM reported:

The Ministry noted that AGs are usually precluded from a review of policy decisions of elected officials; no assurances were given that the design of a BC MAG would ensure this; the Minister indicated the MAG would initially be responsible for value for money auditing and best practices, but that further roles, including a municipal tax review, if suggested by the MAG, might be considered

The Provincial Auditor General is forbidden to comment on the policy decisions of the Province. It also reports to the legislature and gives the government copies in advance. There are no guarantees any of these protections would be offered to local governments.

It is not surprising that the Minister’s response makes local governments twitchy.  They have seen what happens when the province imposes an outside auditor who has the power to second guess their policy decisions. That is what happened to the Vancouver Board of Education when the Province sent in its Comptroller to review the Board’s budget. The Board had been critical of the Province and the Comptroller’s report was a hatchet job.

Municipalities are worried they could face the same thing especially since the Province has said this might include a municipal tax review. Christy Clark promised a municipal auditor general when she was running for Liberal leader. It was an odd promise and not one likely to resonate with the average voter. Who then was the audience she was addressing with the promise? 

The Canadian Federation of Independent Business and other business organizations have been pushing for a cut in local business taxes and all of this looks like part of the same agenda.

It is enough to make municipalities, justifiably, very, very nervous.

Yet in the intervening months – months in which local residents watched as an unprecedented rush on water resources got underway – there was virtually no word from the provincial government about what its intentions were with regards to Talisman or a number of other energy companies with similar plans to divert large quantities of water from the region’s rivers, lakes and streams.

Late last week Hudson’s Hope’s residents got their answer. The provincial government had granted Talisman the rights to pull up to 10,000 cubic metres of water per day from the reservoir, each and every day for the next 20 years. It is widely expected that in days or weeks the province will issue a similar approval to a second Calgary-based company, Canbriam Energy Inc., effectively doubling the water to be piped below farmer’s fields at a rate of eight Olympic swimming pools per day.

All of which was approved in the absence of any meaningful public consultation – something that local residents and the general public alike were promised two months ago when Energy and Mines Minister, Rich Coleman, rose during Question Period to say that there would be “an extensive process of public consultation, discussion and negotiations with First Nations before anything would go ahead.”

This does not bode well as far as responsible management of public water resources in the public’s interest is concerned. Especially when the government knows just how great and growing the demand for water is in the province’s booming unconventional gas industry. Currently, half or more of all gas wells drilled in British Columbia are hydraulically fractured or fracked, a process in which water is pressure-pumped deep underground (along with undisclosed chemicals and copious quantities of sand) to crack tightly-bound shale rock, which allows the gas trapped in the rock to be released.

At some well pads in northern BC, as much as 600 Olympic swimming pool’s worth of water is used in fracking operations. As of now, there are 17 long-term water licence applications submitted by natural gas companies to the provincial government in just the Horn River Basin alone, the northernmost of BC’s two shale gas zones currently in development. The applications, within the traditional territory of the Fort Nelson First Nation, would result in gas companies gaining access to nearly 20 million cubic metres of freshwater per year in a region of the province where knowledge of water resources is limited and where industry and government are scrambling to get baseline information in place.

Coleman’s promise, in response to a question from Independent MLA Bob Simpson, seemed to indicate that the government understood that how water licences were reviewed and issued was an important public policy issue. But the government’s subsequent actions suggest otherwise.

Simpson, representing Cariboo North, and fellow Independent Vicki Huntington representing Delta South, had days earlier called on the government to appoint a special committee of the legislature to examine all aspects of BC’s emerging unconventional gas industry, in large measure because of the industry’s escalating water demands.

During the same Question Period in which Coleman promised fulsome consultation, Simpson called Talisman’s and Canbriam’s proposed water withdrawals at Williston Reservoir “the worst-kept secret” in BC’s South Peace region. “The question from that region is: what is the public consultation process for a water withdrawal of that magnitude? Both First Nations and the general public would like to know, from whatever minister that’s appropriate for this: what is the process that the public can be engaged in, in the diversion and pipeline withdrawal of 7.3 billion litres per annum from the Williston reservoir behind the W.A.C. Bennett dam?”

Despite Coleman’s subsequent promise that the public would be provided ample opportunity to scrutinize and comment on the proposed water withdrawals, nothing in the intervening eight weeks suggests anything close to that happened; in fact, quite the opposite. The government kept a tight lid on its review of the Talisman application and did its best to avoid exposing public servants involved in the licensing decision itself or the politicians to whom they reported to media scrutiny.

In response to questions about Talisman’s application, communications staff with the Ministry of Forests, Lands and Natural Resource Operations (FLNRO), told CBC Radio reporter Betsy Trumpener two weeks ago that a decision on the licence would be made by the end of July.

A few days later, on Monday July 25, the decision to grant the licence was apparently made by Robert Piccini, section head of water authorizations for FLNRO in Prince George. However, subsequent calls to Piccini’s office indicate that he was out of the office that week. No statement announcing the licensing decision was released.

On Wednesday The Province newspaper published an op-ed I wrote noting that the decision was imminent and questioning what had become of Coleman’s promise for a robust consultative process. Later that day, I checked a “water licence query” database maintained by FLNRO that indicated that Talisman’s licence had indeed been granted two days earlier. (The database lists only rudimentary information such as licence numbers, licence holders and issuance dates, but no concrete details on the licences themselves.) Subsequent calls to water stewardship officials in the Prince George office were not returned.

The following day a water stewardship official at Victoria headquarters provided me an electronic copy of the full, conditional Talisman water licence. the ministry has yet to post the document on line at a registry where members of the public can view the actual licence documents.

Meanwhile, throughout the last week of July Trumpener and the CBC tried repeatedly to reach Coleman or Steve Thomson, Minister of Forests, Lands and Natural Resource Operations. Emails sent simultaneously to both Trumpener and Coleman’s office by communications staff with FLNRO indicated that Thomson’s office would be the one to respond to media questions. In other words, the minister who had promised public consultation would not be available, but the minister in charge of water licensing decisions apparently would be.

Except even that proved not to be the case. Late on the afternoon of July 28, Trumpener received an email from Lisa Barrett, communications officer in Thomson’s ministry. The email’s first sentence was not encouraging. “Minister Thomson is unavailable for comment.”

The email – also sent to The Tyee, but not issued as a news release – went on to say that in Thomson’s absence the following could be “attributed” to Thomson’s ministry. The email noted that Talisman had been granted a licence allowing it to draw “a maximum of 10,000 cubic metres of water per day, to a maximum of 3,650,000 cubic metres of water per year until December 31, 2031.”

Because Talisman’s application fell below 10 million cubic metres per year, its application had not been subject to a formal environmental assessment, the statement further said. One reading of this particular detail was that in the view of Thomson’s ministry public consultation is really only required for those projects reviewed under a formal environmental assessment process, which of course is not true, the government’s extensive public meetings to assess public input on the proposed modernization of BC’s Water Act being being but one example.

Another point raised in Barrett’s email was that prior to Talisman’s licence being approved “a technical assessment of water availability was done, as well as several meetings with First Nations in March and April and correspondence with stakeholders and local and federal governments.”

In the absence of any mention in the email of Coleman’s promise, the inference is that in the opinion of Thomson’s ministry “correspondence with stakeholders” – whatever form such correspondence took – is adequate to fulfill the government’s commitment to extensive public consultation.

All of which does not sit well with Simpson, who remains concerned that nobody is taking responsibility for the bigger picture issues. By any measure the water coming into play in BC’s unconventional gas industry is considerable and will only climb as natural gas prices recover. Prices are currently low due to a glut of available gas in North America and no outlet, at present, for domestic producers to ship to overseas markets where prices are higher (ergo the push by BC natural gas producers to build a liquid natural gas processing facility and terminal near Kitimat, which would allow them to ship gas which has been super-cooled to liquid form on tankers bound for China and elsewhere).

“This water is a public resource that has economic, social and ecological values beyond using it for the controversial ‘fracking’ process,” Simpson said in a statement late last week after word of the government’s approval of Talisman’s water licence application came to light. “The government had an obligation to fulfill the Minister’s promise to conduct “extensive” consultation before allowing this significant amount of water to be mixed with unknown toxins and then permanently removed from the Earth’s water cycle.”

Simpson went on to say that the Minister of Environment should halt the issuance of new water permits and licenses in much of northeastern BC where fracking operations are concentrated until baseline data is collected and the public and First Nations are extensively consulted.  Simpson also suggested it is time for BC to consider putting a price on water for use in fracking operations in order to motivate the industry to reduce its demand on BC’s fresh water ecosystems.

But Simpson and Huntington, who have both elicited strong support for their calls for reforms from numerous enironmental organizations, First Nations and landowner groups, appear to be facing an uphill battle. When it comes to managing public water resources in the public interest, the government’s actions to date deal the public out, not in.

Marcelle is the young Senate page who during the Speech from the Throne held up sign saying “Stop Harper.”  She said:

“Harper’s agenda is disastrous for this country and for my generation,”… “We have to stop him from wasting billions on fighter jets, military bases, and corporate tax cuts while cutting social programs and destroying the climate. Most people in this country know what we need are green jobs, better medicare, and a healthy environment for future generations.”

I agree with each and every one of these points but I wonder what Stanley Knowles would have had to say.  I had the privilege of working on Parliament Hill in the 1970s and 1980s when Stanley was House Leader for the NDP.

He was without question one of the wiliest and most effective party House Leaders of the 20^th century.  He was first elected in 1942 and after losing only one election, retired from politics in 1984.  It is too long to go into the details here, but during the 1956 “pipeline debate,” Stanley’s knowledge of parliamentary procedure helped undermine the Liberal government of Louis St Laurent.  In 1957 John Diefenbaker defeated St. Laurent.  Diefenbaker had been so impressed with Knowles that the Prime Minister offered the CCFer the speaker’s chair – an honour that Knowles declined.

Knowles was a committed social democrat and played a large role in the introduction of the Canada Pension Plan.  But he was also a man of Parliament.  While no one could use the Parliamentary rules more effectively he also deeply believed in the institution and would not tolerate tactics that undermined it.

I believe Stanley would have admired Brigette Marcelle’s courage and been deeply offended at her tactics.

Respect for Parliament and its traditions may seem like an antique notion, but the democratic traditions that Parliament is elected to protect are steeped in antiquity.  The struggle for a sovereign parliament is 1,000 years old and it is a struggle that continues to this day.

If we applaud Ms. Marcelle’s actions, how can we oppose the Harper government’s trampling of Parliamentary traditions?  In the election the Prime Minister excused his Cabinet Ministers lying to Parliament as a mere procedural squabble – a mere peccadillo.  He issued his committee chairs with instructions on how to disrupt the work of Parliamentary Committees.  It is also a struggle going on in British Columbia but that issue is for another day.

I believe the problem we have is not too much respect for Parliamentary traditions, as Ms. Marcelle’s actions would suggest, but far too little respect.

Are there circumstances that would call for actions to disrupt Parliament?  I can think of some.  In the past suffragettes chained themselves to railings to disrupt Parliament in their struggle for the vote.  In 1970 Canadian women shut down Parliament for 30 minutes in their fight for abortion rights.

But these examples are very different from a young women coming to the end of her contract with the Senate as a Page holding up a sign reading, “Stop Harper.”  Which brings me to one other point?  Ms. Marcelle had a contract with the Senate.  It is my understanding that the contract specifically prohibits the sort of activity Ms. Marcelle undertook last week.  As someone who works for a trade union, to me contracts are important.

Ms. Marcelle could have done many things in defense of her beliefs, particularly when her Senate contract was complete in a few weeks.  Just because something is courageous does not make it right.

Under P3s, or private finance initiative (PFI) as they are known in the UK, private corporations put up some of the money for local infrastructure or services in return for a guaranteed contract to deliver services for 30 years or more.  Now government and auditors in the UK are saying these projects are far too expensive and that they want some of the money back. 

This is important for British Columbia because much of our own model for P3s was directly borrowed from the UK which had much more early experience with the projects.  Here in BC we have had approximately 35 “partnership projects” with an estimate value of more than $12 billion.  We no longer build hospitals here without private financing and handing some services over to the private sector in multi-decade contracts.

The latest development in the UK was a report in late April tilted Lessons from PFI and other projects from the National Audit Office (equivalent to our Auditor General). 

Here are some of the findings of the National Audit Office report:

• There is no clear data to conclude whether the use of PFI has led to demonstrably better or worse value for money than other forms of procurement.
• There is insufficient data on the returns made by equity investors for the risks they are bearing.
• There is still limited data on investors’ returns.  In particular, when investors sell their shares in project companies to other investors, there is little transparency of the price at which these shareholdings are bought or sold or the impact of these transactions on investors’ returns.
• There is a need for greater challenge of both the decision to use private finance and the scope of the deal…It is therefore essential that there is a robust, impartial scrutiny of the business case, decisions on the form of procurement and project scope….The case for the use of private finance therefore needs to be challenged, given our analysis which showed that the costs of debt finance increased by 20-33 per cent since the credit crisis.

Knowledge of how much the investors are getting in return for whatever risk they take?  Challenges of decisions to go with a P3?  Impartial scrutiny?  None of that happens in British Columbia. 

In the UK both Cabinet and Treasury officials are now looking for ways to claw back some of the profits made by P3 companies.  In fact, the Treasury Branch has launched a pilot project to look at P3 savings.  A cross-party group of MPs (including government members) has even set up a PFI Rebate campaign to ask for some of the money back.

Meanwhile, both local governments and hospitals in the UK have started buying out their P3 partners.  The cost of buying them out is high, but not as high as paying for the contract another 20-30 years. 

Here in BC the government’s privatization agency, Partnerships BC, merrily rolls along looking for new projects that it can tie into 35 year contracts.  When it is not pushing P3s on government agencies and ministries it is pushing them on local governments like the Capital Regional District, Powell River, Abbotsford and Mission. 

Why is the UK so far ahead of us in questioning P3s?  They have been in the game a lot longer than we have and they are seeing the real impacts and costs. 

How much longer will we have to wait before the burden of these projects becomes obvious to everyone here?  How long until some government members begin to question the P3 orthodoxy?

Until then we can only conclude they have forgotten the First Law of Holes: When you find yourself in a hole, stop digging.

The Auditor General’s report on a Vancouver Coastal Health Authority (VCHA) project adds to earlier criticisms by his counterparts about failings in P3 hospital projects in Quebec and Ontario.  The BC report, released on May 16^th, examines the Vancouver General Hospital Academic Ambulatory Care Centre (AACC), known as the Gordon and Leslie Diamond Health Centre.

Opened in 2006, the Centre was the BC Liberal government’s first major health facility to be completed as a P3s.  In the project private corporations invested in the construction in return for guaranteed rent and other payments from the Health Authority for the next 30 years.

The Auditor’s report questions claims that P3s are “on time and on budget.”  It raises questions about risk transfer and identifies the high cost of using private investment rather than public borrowing to build public projects.

In his report the AG says:

Overall, we found that not all of the key value-for-money goals were met.  While the facility was completed on time, the final capitalized value was $123 million – 29% greater than the $95 million capital cost in the project report.

While saying the project was “on time,” the AG clarifies that phase two of the project, involving administrative offices on the top two floors, was completed six weeks later than planned.

One of the claims for P3 projects is that they can guarantee service quality because the private partner can be penalized for poor performance.  Although the AG found there were mechanisms in place for the Hospital to monitor the performance of the private company:

payments under the agreement are not subject to reduction for non-performance as asserted in the project report.

The AG questions how the cost of the project was reported.  The project agreement did not actually set a total price the Health Authority would pay.  Instead it created three payment streams that in total allowed the private consortium to cover its design, construction and financing costs over the term of the agreement.

These three payment streams were monthly rent from the health authority for space it used, annual rent for the parking area and the private corporation’s right to collect other rents from commercial operations and clinical teaching space.  If the Health Authority had built the facility itself it would have collected those rents itself.  However, the money lost from that rent was not included in the capital cost reported for the VCHA. 

Including the value of these payments would have added $38 million to the cost of the project.

The AG reports that external stakeholders (government agencies and taxpayers) did not have adequate mechanisms to assess the ongoing results of the project.  Since the original project report no other projects assessments have been completed and none are planned.

Finally, the Auditor looked at the additional cost of using private sector investment rather than government borrowing, at least for one aspect of the project. 

In February, 2007, the rent the Health Authority paid for space in the project was raised by 8.34% in return for a payment from the company to VCHA of $4 million.  The AG reports that this was in effect a loan from the private corporation to the Health Authority.  He continues:

we calculate the cost of borrowing for this transaction at 8.75% for the 30 year term.  Considering that the government’s cost of borrowing for 30 year debt was approximately 4.7% in late 2006, this loan was at a significant premium.  It would have been cost beneficial to access the additional funding through government debt.

Over 30 years additional payments because of the higher cost of borrowing for this “loan” would come to nearly $7 million.

While the Auditor General in the past has “reviewed” claims for these projects by the government’s privatization agency, Partnerships BC, this is his first independent look at P3 projects.  For BC taxpayers, the first look is not encouraging.

The Auditor General’s report has not been covered in the media.

It is a rare opportunity for Opposition critics to grill their assigned Cabinet Ministers at length.  Sometimes the oddest things come out. 

On Wednesday the NDP Critic Doug Routley was questioning the Minister for Citizen Services and Open Government Stephanie Cadieux.  It turns out that following up on Christy Clark’s campaign commitments when she was running for Liberal Leader, the government has created a Cabinet committee to examine open government.  However, the work of the Cabinet Committee (on open government) is secret and exempt from the Freedom of Information Act because it is a Cabinet committee.

Routley said:

I think its odd that a committee to examine public scrutiny is sheltered from public scrutiny

Cadieux, apparently immune to irony, responded that:

The very fact that there is a cabinet committee on open government is a signal of the importance of open government to the Premier and to this government.

Honestly, you couldn’t make this stuff up.

Layton and Ignatieff more or less abandoned the issue and did not press Harper about the inefficiency of these cuts. The week before the debate both the Globe and Mail and the Canadian Centre for Policy Alternatives studies showed that corporations mostly hoard the money they save from the tax cuts and don’t use it to reinvest in the economy or create new jobs, the supposed reason for the cuts.

Munir Sheikh, former head of Statistics Canada and of tax policy at Finance Canada, showed this week that the real winner of the Canadian corporate tax cuts is the U.S. Tax cuts here give corporations bigger profits and because the US corporate tax rate is about twice as high as ours, US corporations in Canada then just pay more American tax on their Canadian profits. This transfer from the Canadian to the US treasuries amounts to between $4 and $6 billion a year.

Harper talks economic conservatism, but the record doesn’t show it, either in deficit reduction or spending actions. When the Conservatives took office they inherited a $13 billion surplus. Cutting the GST by two points turned this into an almost $6 billion deficit by 2008. Now the deficit is over $55 billion.

A deficit isn’t always a bad thing, particularly when a country goes through an economic downturn as we did. But cutting government income during a recession is asking for trouble and that is what we have. Both the IMF and the Parliamentary Budget Office have warned that Canada now has a structural deficit. This means that without big revenue increases the deficit becomes permanent. Since Harper is promising a balanced budget by 2014 cutting programs is about the only solution for him.

Harper is also a big spender and is committed to some expensive projects in the future, including something on the order of $35 billion for new fighter jets and $9 billion for prisons. It’s the kind of economic conservatism typical of the Bush presidency, one that cut taxes at the same time it spent lavishly on the military. But at least with Bush the money was spent in the country, with the F-35 spending the money will mostly go to the U.S. That’s economic stimulus, but not for Canada.

This post was published in The Province today.

Yes, it is technically true that in straight up current dollars debt hit a historic high in this budget. But I have news for you, so did BC’s nominal GDP at the projected growth rates. And you know what, our population is also at a historic high. Care to take a guess about the consumer price level as measured by CPI? Yup, another historic high right there.

Perhaps you’re starting to get the picture: we cannot make meaningful comparisons of monetary amounts like debt, government spending or revenues over time in current dollars alone.

I was happy to see that Mr Palmer chose to dispense with the sensationalism in his print edition column’s title, where the debt reference in the subtitle is a lot less alarmist: Finance Minister Hansen’s 2011 budget not as comfortable as he’d like us to think: ‘Levels of prudence’ can’t hide the fact that the debt situation is heading in the wrong direction.

I came across Mr Palmer’s commentary first, but he only one of the majority of media commentators who compare straight up dollar figures for our debt level today with dollar amounts under the NDP (over a decade ago) without accounting for the fact that the size of the population we have to support has also grown as has our ability to support debt (our provincial economy). What this does is make the increases in debt appear larger than they really are.

It’s a very common mistake, and it often goes uncorrected because it happens to serve the interests of those who oppose government spending, and therefore debt, on ideological grounds.

The provincial debt is projected to hit $60 billion by 2014, most media commentators report. The exact billion dollar figures are there for their shock value — these are some truly large numbers — but raising alarm over them is a bit like raising alarm over a family’s $500,000 mortgage.

Sure, the number sounds big, but we can’t actually tell if it’s a affordable or not without information on that family’s income.

And let’s be clear, our province is the equivalent of a rather wealthy family with a total income (measured by the size of the economy, or GDP) of about $200 billion.

When expressed as a share of our provincial GDP, our current debt level seems very affordable indeed. Our current debt level is 16.5% of GDP, which is projected to rise to $17.8% of GDP by 2012/13 and then decline slightly (figures from the 2011 BC Budget).

Yes, it’s higher than the 13.4% we reached in 2008, but this shouldn’t come as a surprise to anyone. We just went through the deepest recession we’ve had in 30 years. Of course debt would be higher than what it was during the boom — that’s what should happen.

The vast majority of government borrowing was used to finance capital spending. It spurred economic activity and created jobs at a time when the private sector was shrinking, providing a much needed stimulus to the economy.

There was no big boost in program spending, no real fiscal stimulus on this end. The small operating deficits we saw were caused by temporary, recession-driven reductions in revenue. Maintaining spending in the face of falling revenue was the right thing to do in order to support BC families through the recession and avoid putting an additional drag on the economy.

In the end, the BC economy grew faster than expected in 2010, but that had more to do with developments in the global commodity markets and the US economy than with made-in-BC policies. It could have easily gone the other way. Without the stimulus spending, BC would have experienced a deeper and longer-lasting economic downturn.

In short, increased government borrowing of that size was justified and our provincial debt levels remain affordable.

When measured properly, which is to say as a share of GDP, BC’s debt is nowhere near “historic highs”. It’s also among the lowest in Canada.

So enough of the debt hysteria already and let’s talk about some of the real issues that the next BC Premier will have to address.

With our minimum wage frozen at $8 per hour for nine years and three months now, it was about time!

The real questions in play now are how much to raise the minimum wage and over what timeframe. Different numbers have been thrown around in the media — anywhere from $9 per hour to $10 per hour immediately, with future increases up to $11 or even $12 proposed by some of the leadership candidates. Nice round numbers certainly make the math easier, but should we really be picking a number out of thin air?

In a recent piece published by the CCPA, we propose that the BC government develop a clear rationale for setting the minimum wage and stick to it. This requires making a decision about what it is that we want to achieve with the minimum wage and then setting it appropriately so that it meets the stated goals. We also recommend that the rationale be poverty reduction:

We propose that a single person working full-time year-round should earn (at least) enough to live above the poverty line. The idea that someone working full-time, full-year should be able to get out of poverty is a clear, transparent policy decision that should determine the minimum wage in BC and in other provinces.

This should be a pretty easy rationale to get behind — few people will argue in favour of maintaining a group of working poor.

Equally important is to legislate regularly scheduled increases tied to inflation, to ensure low-wage workers do not face what amounts to a pay cut as a result of rising prices.

Since poverty reduction is the goal, the minimum wage should be indexed to the consumer price index in order to maintain the purchasing power of workers.

The next question to settle would be what the appropriate poverty line measure is, and this is a legitimate question that I’d like to debated. Because I want working poverty to become a thing of the past in my province, I support picking the broadest measure of the poverty line so that no worker in any community would be left behind.

The most appropriate measure of the poverty line in this case is Statistics Canada’s before-tax low-income cutoff (LICO) for a single individual with no dependents living in a large city—which was $22,229 in 2009, the latest published LICO calculation. This is equivalent to a minimum wage of $11.11 per hour (at 40 hours per week, 50 weeks per year).

Recognizing that going from $8 to $11.11 is a big jump, I would recommend staged increases to get the minimum wage to that level.

How much can business afford? Considering that they’ve been getting reductions in the minimum wage (in real or inflation-adjusted terms) over nine years now, they should be able to manage an increase that — at a minimum — brings us back to the real value of the minimum wage when it was set. I calculate that if we had annual April 1st increases to the minimum wage based on last year’s inflation in BC starting in 2002, this April we’d be setting the minimum wage at $9.48 per hour. So moving to $10 immediately would reflect a very small increase in the real value of the minimum wage compared to its 2001 level.

A government that’s serious about reducing poverty in this province, would raise the minimum wage to $10 immediately and then commit to 50 cent increases every six months until we reach the appropriate level to cover the LICO income (note that it’s a moving target). At that point, inflation-based annual increases would be all that’s required to maintain the value of the minimum wage. Such a policy will benefit employers by providing certainty and allowing them to plan ahead for labour costs.

Setting a poverty-based rationale for the minimum wage is not the only possibility. The minimum wage can also be set with inequality considerations in mind, for example by setting it at a certain percentage of the average (or median) industrial wage in the province, and then annually index it to keep up with increases in the industrial wage. Such a policy would embody the notion that we, as a society, would not allow any workers to get too far behind the rest of us in terms of earnings.

Arguments can be made for a number of other policy rationales as well, and while I personally favour poverty reduction as a rationale I’d welcome a broad public debate on these issues. I’m curious what the leadership contenders think.