Common Sense Canadian
 

Rafe: Tuesday is BC’s Annual “Deception Day” (a.k.a. Budget Day)

Posted February 14, 2016 by Rafe Mair in Politics
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Rafe- Tuesday is BC's Annual Deception Day (a.k.a. Budget Day)

Minister of Finance Mike de Jong delivers a “balanced budget” in 2013 (Province of BC/Flickr)

This coming Tuesday will be Annual Deception Day in the BC legislature as the Minister of Finance sets forth the budget for the coming year. That it is a deception, perhaps self-deception, can’t be blamed entirely on this government, since it’s been going on, as the lawyers say, since “man’s mind runneth not to the contrary”. Back in WAC Bennett’s days, the “contingent liability” was invented and in one form or another, it is alive and well today.

Balance Schmalance

What is the fault of the current premier is perpetuating the fiction that somehow the budget reflects something of importance. Well, it doesn’t. Twice in the past few days the premier has announced that there will be a balanced budget because “the people expect it.” This tells me that the “balance” bit is not created to reflect the truth but because voters have come to accept that as “very good thing”.

A few rating agencies help perpetuate this myth by declaring that it’s important that a budget is balanced – but it’s not, they know it, they are not telling the truth, and we ought to know that.

To start with, it is merely guesswork as to what the Government will take in and spend next year and the results achieved are likely to bear very little resemblance to the predictions. We don’t have a special day in the legislature where the Minister of Finance stands up and tells us all how he really screwed up and that the result was considerably different than the crap he predicted. And the game is scarcely unique. Surely we all remember the famous “fudge-it budget” from Glen Clark and the later one from Gordon Campbell that was even more atrocious.

British Columbians pay for Hydro’s losses

What’s so deceptive about the budget process is that people believe it reflects the financial health of the province. Well, it comes nowhere near. There is not enough time in an article like this to begin to give the full picture, but let’s just consider BC Hydro.

Recent construction on north bank of Peace River (Don Hoffmann)

Early Site C construction (Don Hoffmann)

BC Hydro is a Crown Corporation and its finances are not part of the budget process. Note that well – your elected legislature has no control over and no way of knowing what Hydro does other than what the Liberal-schmoozing media tells them. Hydro does its own thing, subject only to discipline from cabinet, which never happens. Cabinets, being the premiers, would all be in jail if they were directors in the private sector, so egregious has been their neglect.

Every year, BC Hydro incurs an enormous loss, but while that’s none of our legislature’s business, it becomes part of the provincial debt and serviced by the government at huge cost. This means that, far and away, the most expensive part of government, with Site C at 9 billion bucks-plus to come, is paid for by me and thee, including the huge debt it adds annually, completely outside the budget debated and passed by the legislature.

Where the current Liberal government uniquely has a great deal to answer for is the unbelievable burden they placed on Hydro with their political giveaway made to private/Independent Power Producers (IPPs) under Campbell’s Energy Policy of 2003, whereby Hydro must buy all its new power from private companies for at least double the proper cost. Moreover, Hydro must take that power when it’s offered, whether they need it or not. Unhappily, nearly all private power is made during the run-off when Hydro reservoirs are full to overflowing.

IPPs cost British Columbians big time

It’s hard to put a hard cost on the results because all of the agreements are secret – fellow voters, we’re not allowed to know! Moreover, unless you’re an economist, you quickly get dazzled by the figures. One man I have come to respect for thorough and honest analysis, in addition to Erik Andersen, a colleague of The Common Sense Canadian, is Norman Farrell, another CSC colleague, who breaks it down like this:

In fiscal year 2015, BC Hydro purchased 13,377 GWh of electricity from independent power producers for $1,064,000,000 ($79,540 per GWh). In the same period, BC Hydro sold 14,020 GWh to large industrial users for $748,000,000 ($53,250 per GWh).

In other words, each GWh of power purchased from IPPs was resold for $26,290 less that it cost. However, the loss was not limited to $352 million, since the utility had to pay distribution, administration and other overhead costs in addition to the power acquisition price.

See no evil, hear no evil

Shell Game- Public being fooled by great BC LNG illusion

Budget Day can be fun – if you enjoy shell games

In 2014 the BC provincial debt was $60.693 billion, of which $15.559 billion for is BC Hydro. This means that 1/4 of the debt you and I owe, is totally outside the budget process and none of its anticipated income and expense will be examined by our legislators. Amongst other things, we’ll not learn why Hydro’s debt has risen about $9.4 billion since the Liberals took over, about $3 billion since Christy Clark became premier. We’ll not learn how much the secret deals with private companies (IPPs) have cost, nor a thing about the real cost of the proposed Site C Dam, to name but three areas. The obvious Liberal maxim is “best to keep the tiresome rabble in the dark”.

The budget, which Clark and de Jong tell us is so critical, bears no relation to what really happens, is made up by politicians for politicians with figures to match, and shields BC Hydro the uncontrolled, apparently uncontrollable, and biggest of all fiscal items by far, from any scrutiny.

Some people enjoy being fooled, whether by the carney at the fair, the guy with the shell and two peas or the guy who deals off the bottom of the deck. To them, “Come one! come all!” for next Tuesday is Annual Deception Day in the BC Legislature!

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About the Author

Rafe Mair

Rafe Mair, LL.B, LL.D (Hon) a B.C. MLA 1975 to 1981, was Minister of Environment from late 1978 through 1979. In 1981 he left politics for Talk Radio becoming recognized as one of B.C.'s pre-eminent journalists. An avid fly fisherman, he took a special interest in Atlantic salmon farms and private power projects as environmental calamities and became a powerful voice in opposition to them. Rafe is the co-founder of The Common Sense Canadian and writes a regular blog at rafeonline.com.

18 Comments


  1.  
    Dan G. Rawlings

    Do not forget what they did to the disabled in this province with the bus passes either. The libs are horrible and sadly we will be stuck with them as the NDP, actually i do not know what the NDP in BC really is anymore.

    We need a viable alternative in this province. Maybe in a few elections it could be the Greens? They may or should probably win another seat or two on the Island but do they have enough support on the mainland yet?

    So infuriating the state of the two larger parties in this province. I never vote BC fake liberal and I will probably switch to the Greens or someone else next year. I really had the last 6-8 years with he BC NDP. It is almost like they do not want to be in power or something. The bias media in this province does not help either…




    •  
      Hal

      Wow! Now they have the gall to be talking about a “surplus” budget. Here’s $300 Million is subsidy going to business contributors and no laws are broken?




  2.  
    Hal

    I seem to remember that the book on this kind of deception was written a long time ago. ie. http://www.timescolonist.com/opinion/letters/balanced-budgets-just-smoke-and-mirrors-1.2144240 Then it was called a BS Fund. I keep hoping the voters are smarter than they were back then but Christy proves that it will take a few more people to get burned. Those who forget history, are destined to repeat it. I could live with a few imperfections in government if it came with a with a massive dose of real honesty.




  3.  
    Jennifer Dyck

    Crusty Clark betrayed women ! The debt of BC Hydro 15 billion should have been avoided also the 9 billion debt coming for site C. These future tax obligations for BC citizens does nothing for our health services, nothing for our trade schools, nothing for our daycare, nothing for women.




  4.  
    Hal

    One wonders where the CBC is in all this? I listen to them a lot because I hate commercials and the implication that “He who pays the piper, calls the tune” makes me avoid media that relies on advertising. The CBC seems not much better than the MSM everywhere.




    •  
      Eric

      The CBC has been ripped apart by the Harper Conservatives.

      It’s now on the list of un-readables; which is sad.

      The NPR in the US was taken over, the CPC followed the lead and instilled the same methodical process to destroy it.

      The only news now, that can be trusted, are independent journalists (Tyee, Nat Observ, this, etc).




    •  
      DAVID HADAWAY

      Listening to cbc last night I started wondering if the announcer had some kind of bet going as to how often the words “balanced budget” could be stuffed into the report.




  5.  

    John – as long as you have the Vancouver Sun and Province literally allied to this government the public don’t get informed. But you are right – we’re passive and polite. We will, encouraged by Postmedia, politely debate Site C until as Christy has promised, it’s past the point of no return. I think all of us are having a hard time adjusting to the moral corruption that has newspaper chains making deals with the oil industry and with governments and industry lying through their teeth at every turn. You mention Bill Bennett, like him or hate him, can you imagine him inviting crooks like Sukanto Tanoto and Petronas to come into this province to cheat the government of taxes and destroy our environment? Are we now immune to it all? We all make mistakes – Bennett did and I as. Minister did. The difference is that Christy Clark, the Gumshoe and company make them deliberately. At least, if they don’t know that the IPP policy and the LNG policies are madness, it mignt as well be deliberate. Tomorrow, Christy & Co will establish her Prosperity Fund with money they don’t have! I rest my case.




    •  
      John's Aghast

      Aha! Rafe, you call yourself a fisherman! I threw in Flying Phil just to goad you and you never rose to the bait. Well, I guess that doesn’t prove you’re a bad fisherman – just a wily fish.
      I know the press and the population are the problem. You nailed it with the press. And the population is just too busy with their mortgages, second jobs, hockey practice all the things involved with earning a living and being a good citizen to have the time to ferret out the REAL news.
      You and I are fortunate – we don’t have to put up with this blather much longer. Its my kids and grandchildren I’m concerned about. After that, not so much. There probably won’t be much left to worry about by then.




  6.  
    John's Aghast

    Kinda sad isn’t it! Kinda sad that we let them get away with it. But as you say Rafe, you and others have been on this case since 2008 – eight years now. And what have you accomplished? Isn’t it time someone, anyone, do something beside bitch and whine?
    I know, I’ve done my share of bitching too, but I wasn’t trained to handle this egregious behavior. When I was growing up politicians like you and Bill Bennett were honourable. And Phil Gagliardi.




  7.  
    Eric

    This is an amazing analysis.

    I need to read more and more about our provincial politics.

    What a clown fiesta.




  8.  

    You have to wonder why senior business executives and wives fight for tickets and dress to the nines to lend the business community’s support for this childish idiocy. Stupidity? Fear?

    The destruction of BC Hydro by the Campbell/Clark government’s IPP heist has been exposed in the Common Sense Canadian and the Tyee by people like Erik Andersen, Bill Tielmann and me since 2008 but thanks to the utter lack of coverage by the mainstream media, is only just reaching the consciousness of the public. I have never in a long life seen a such an egregiously evil payoff to corporate supporters by a government, every penny paid by the public, as wicked as this.

    Yet Christy might win in 2017. What in hell is wrong with us?




  9.  
    Hal

    I would be curious to know what has happened to the $170 Billion total debt figure Erik Andersen exposed back in 2013. Where is BC now with provincial debt and the future contractual obligations of all Crown Corporations under its control? Also are they just setting BC Hydro up for a privatization move like BC Rail?




  10.  
    erik andersen

    Rafe, you are so correct. Just like in BC the Federal Government (probably all the other Provinces as well) have conducted the bulk of their financial affairs behind the Cabinet closed door.
    Should someone wish to review these following values please go to the “Government of Canada, Annual Financial Reports”. Once there go to the section produced by the Auditor General to ensure you get an independent accounting. Once in that section look at the “Notes to financial statements, Numbers 5 and 6 for the fiscal year 2015. The Notes are numbered different in earlier years but they are still all there.
    What our Governments have been doing for more than a decade is to escape legislative accountability as much as possible by moving most of the Governments’ financial activities away from the annual income and expense statement and away from having to account for a lot of new debt. You may rightly ask, how can this be possible?
    Governments write guarantee for private contracts (known as P3s and IPPs) that only get recorded in the “notes” to the Auditor’s report. The category is captured by the title “Contractual Obligations and Financial Contingencies”.
    For the 2015 Fiscal Year, the Federal Government reported a total of Cummlative Deficit plus the “CO &FC” of $2,738.8 billion . Of this total the part you never hear about was nearly 78% of the total. Since 2004 the amount of the “CO & FC” grew from about $850 billion to about $2,108.3 billion, or 160%.
    These are the financial obligations the Auditor General thinks are appropriate to mention and almost exclusively they have come about from Cabinet executive orders.
    Here in BC the is little different. Reported liabilities for BC about one year ago were about $70 billion but when one goes further into the AG’s report the amount for “CO & FC” was over $102 billion.
    These are not fictitious obligations but ones the MLAs and MPs choose not to talk about even when asked directly. The Credit Rating agencies are not so cute, they know.
    Forget the budgets coming soon because they are not about full disclosure but all about a cosmetic version of the financial affairs of your Province or Federal Government




  11.  
    Ron Wilton

    The current preemy and her ‘lickspittles’ seem hellbent on unravelling the very fabric of our province with a speed that in itself should be a great cause of concern or alarm but for more of our monies spent to accommodate the fire sale than anything we could ever hope to realize in return.

    It took most Canadians the better part of ten years to wake up to the same harm that harper and company were doing to us that clark and company are doing in spades.

    Thank our lucky stars that we flushed harper and his ‘lickspittles’ down the urinal just in the nick of time but we need a lot of help from the rest of Canada to expose clark for the vile traitor she is and send her down the same drain.





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