Saturday, August 16, 2014

Yes, red tape may interfere with business

Mount Polley operator was raising height of tailings dam at time of breach, Wendy Stueck, Globe & Mail, August 15 2014
"Crews were working to raise the tailings dam at the Mount Polley mine by up to four metres before the structure failed and sent a torrent of waste and debris into surrounding waterways.

"Imperial Metals Corp., the Vancouver-based company that operates the mine, had also asked the Ministry of Environment for a permit to release more treated effluent from its tailings pond. That permit was pending when the dam gave way on Aug. 4."
Mining people are complaining that, if BC had allowed changes to the tailings dam without inconvenient and costly engineering studies, the breach could have been delayed well beyond August 4. Alternatively, had millions of litres of toxic waste water and sludge been withheld, or released quietly, there would have been no public concerns about poisonous effluents and no need for taxpayers to spend hundreds of millions on cleanup.

The industry is disappointed, because it expected an absence of regulation after BC's Minister of Graft and Corruption promised to,
"conduct business more efficiently and eliminate red tape and unnecessary administration."
Miners say that had government lived up to its promises, contamination of soils and water could have continued without public notice or interruption.

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Friday, August 15, 2014

Extractivism - B.C. as third world economy

Examining British Columbia's natural resource sector, I was surprised that public returns had declined although produced quantities increased and values rose exponentially. Not long ago, British Columbia thrived on resource based industries. Today, involved individuals do well but the public — putative owner of natural resources — gains little for its assets, except incidentally, through personal income and sales taxes paid by individuals employed.

In fiscal year 2001, the BC government earned $4 billion from natural resources, which is more than $5 billion in today's dollars, double the revenues in each of the last two years. Non-government resource revenues recently are a multiple of values private companies enjoyed at the turn of the century.

Resource returns in BC have similarities to those of third world nations. We are like Bolivians, except that South American country is governed by people not in the pockets of industrialists so it is trying to improve values realized from national assets. In Canada's westernmost province, the opposite objective is in place.

After spending time in Bolivia a few years ago, I've followed that country's political situation and the David and Goliath situation that it is. One writer that I follow is Fedrico Fuentes, author of the blog Bolivia Rising. Following are excerpts from a recent work. There are points that British Columbians should ponder:

Bolivia: Beyond (neo)extractivism?, Federico Fuentes, Telesur, August 2014
Extractivism generally refers to an economic model centred on the large-scale removal (or “extraction”) of natural resources for the purposes of exporting raw materials. The term usually covers industrial-scale agriculture, forestry and even fishing, along with more traditional extractive industries such as mining and hydrocarbons.

…extractivism is not a new phenomenon. It emerged as “a mode of accumulation” with the colonization of the global South (Africa, Asia and Latin America) and “has been determined ever since by the demands of the metropolitan centres of nascent capitalism.”

…“extractivism has been a mechanism of colonial and neocolonial plunder and appropriation.”

…In the global South, a dependency on exporting raw materials that are then imported back into the country as expensive processed goods has become the norm. For example, many oil-producing nations still find themselves having to import petrol.

Extractivism also has the effect of fragmenting local economies into highly specialized extractive industries geared towards the global market (and therefore vulnerable to its vicissitudes), alongside backward, low-tech domestic industries and a bloated informal sector.

The capital-intensive nature of extractive industries means they provide little in terms of jobs, and are highly dependent on transnationals…

This ensures that along with the country’s resources, most of the wealth generated by these industries is also extracted out of the country.

…the end result of extractivism is “high levels of underemployment, unemployment and poverty, while the distribution of income and wealth [becomes] even more unequal.” This also leads to a shrunken domestic market, thereby entrenching the economy’s dependency on export markets.

…The reality is that almost no one proposes closing down all extractive industries. Even a keen critic of extractivism such as Uruguayan ecologist Eduardo Gudynas acknowledges the need for what he terms “sensible” and “indispensable” extractivism.

…Certainly, moves by the Evo Morales government [of Bolivia] have led to increased state control over the gas and mining sector. This has involved the nationalization of gas and mineral deposits and re-negotiation of new contracts that mean the state now takes the lion’s share of profits generated in these sectors.

This has facilitated a seven-fold increase in social and productive spending by the government since 2005, which in turn has allowed the government to make some headway in overcoming the social debt it inherited.

…However, it is important to note that unlike under extractivism, poverty reduction has gone hand in hand with decreased income inequality. For example, the disparity in income between the richest 10 percent and the poorest 10 percent has closed from a ratio of 128 to 1 in 2005, to 60 to 1 in 2012.

Decreased inequality is also evidenced by the improvements in Bolivia’s Gini Coefficient and Human Development Index, which take into account the expanded access to education and healthcare made available under the Morales government.

…Firstly, increased state revenue has facilitated a sharp drop in public debt, making the state less dependent on foreign loans. It has also allowed the government to expand its nationalization program into such other areas as telecommunications, electricity and water and ensure that more Bolivians have access to these basic services.

Secondly, wealth redistribution has helped boost the domestic market, with the economy expanding three-fold within seven years. Higher incomes for most of Bolivia’s population resulted in greater domestic demand, which averaged 5.2% per year between 2006 and 2012, and became the main driving force for economic growth…

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Wednesday, August 13, 2014

When you buy yourself a government, you expect results

From RossK, The Gazetteer, Mines Are Sparkle Ponies Too?....Who Knew?
But here's something that even we, the purveyors of all that is neither established nor credible, missed from Ms. Clark's October 2012 'Calgary Speech':
..."Mining is an area where we have set some pretty ambitious targets. We're planning to build 17 new and expanded mines by 2015. Mining revenues have grown by 20 per cent to $8.6 billion since we introduced our Jobs Plan last year, and we've done it with the highest standard of sustainable mining in the world.

"So I'll give you one example. Murray Edwards, who is a great Calgarian, owns 45 per cent of the Red Chris mine. It's in the northwest of British Columbia. It's one of the top mining deposits anywhere in the world. When I became Premier, I said I wanted people all around the world to know that you can do business successfully in British Columbia. You can work your way through the public policy issues, the First Nations issues and that you can make a profit if you come to our province"...
And, as far as 'issues' with things like rules and regulations?
Calgary billionaire Murray Edwards, you will recall, is the major shareholder of Imperial Metals Corporation, the underinsured and careless operator of Mount Polley. His company thoroughly enjoyed Christy Clark's invitation to come "make a profit" on the unregulated frontier.

Mining revenues may have grown substantially, but British Columbia's government revenues from mining have not. From Ministry of Finance documents:

Revenues reported by Ministry of Finance, in $2014

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Monday, August 11, 2014

August 11 with Ian Jessop

More responsibilities but lower budget.


Practice for photo-op with Polish shipyard workers
Abbotsford company that beat the Mars bomber out of a provincial firefighting contract...

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Investment decisions: industry or education?

Education and Economic Growth, by Philip Stevens and Martin Weale, Education and Economic Growth, Philip Stevens and Martin Weale, National Institute of Economic and Social Research, London, England.
“There are two very basic reasons for expecting to find some link between education and economic growth. First of all at the most general level it is intuitively plausible that living standards have risen so much over the last millennium and in particular since 1800 because of education.

“Progress of the sort enjoyed in Europe was not observed in the illiterate societies that have gradually merged into the world economy over the last two hundred years. To the most casual observer it must seem that there is a link between scientific advance and the way in which education has facilitated the development of knowledge.

“Of course the [Marie] and the [Isaac] Newtons of this world are few and far between. But people with only very limited education often find it difficult to function at all in advanced societies. Education is needed for people to benefit from scientific advance as well as to contribute to it.

“Secondly, at a more specific level, a wide range of econometric studies indicates that the incomes individuals can command depend on their level of education. If people with education earn more than those without, shouldn’t the same be true of countries? If not the rate of change of output per hour worked, at least the level of output per hour worked in a country, ought to depend on the educational attainment of the population.

“If spending on education delivers returns of some sort, in much the same way as spending on fixed capital, then it is sensible to talk of investing in human capital, as the counterpart to investing in fixed capital. The process of education can be analysed as an investment decision…”
The BC Government under Christy Clark has demonstrated an urgent desire to facilitate investments in tangible assets: open pit mines, tailings ponds, highways, bridges, German and Polish ferries, port facilities in the Fraser estuary, container storage yards on farmlands, $600 million public power lines to serve private mining companies in the northwest, LNG plants to ensure the billions we pay in carbon tax have no affect on climate change, etc.

However, Liberals are reluctant to invest in the most valuable resource available in British Columbia: human capital.

John Green is author of The Fault In Our Stars

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Sunday, August 10, 2014

Racism taints Kwikwetlem reporting

My initial reaction to reports of compensation paid Kwikwetlem First Nations Chief Ron Giesbrecht was wrong. Until details were gained, I assumed he had abused public funds. That reaction was encouraged by cursory media reports that were shaped by common prejudices, reinforced by what lawyer Joseph Fearon calls an "example of the 'corrupt chief' narrative."

In Fearon's excellent article, he explains the reality of income tax exemptions, which are tied to other issues and restrictions,
"For the most part, the tax exemptions in the Indian Act are also not a result of (fair or otherwise) bargaining between Canada and First Nations. In fact, the Indian Act is a piece of legislation that was imposed on First Nations people by the Canadian government."
In late July, federal Conservatives began posting audited financial statements of Canada's First Nations. Within hours, news organizations were churning out revelations that were short on detail but loaded with indignation. National Post immediately had writers Paula Simons, Sammy Hude and John Ivison on the subject. Every Canadian media organization was involved; a Google search [Kwikwetlem "Ron Giesbrecht" pay] showed 34,000 results.

The Kwikwetlem pay story was especially important news at Postmedia, with additional reports and commentaries by Peter O'Neil, Rob Shaw, Jennifer Hough, Jeremy Deutsch, Tamsyn Burgmann, Mark Milke, Kelly Sinoski, Chad Skelton, Chris Selley, Tristin Hopper, Jordan Bateman, Derek Fildebrand and others. Thousands of reader comments gave emphasis to the outrage, including many rants coloured by racism and ignorance.

I found that strange because while preparing a recent article about Postmedia, I discovered the failing company's CEO, Paul Godfrey, scored a 50% raise in 2013, bringing his compensation to $1.7 million. He got rewarded lavishly - a term Postmedia used in stories described above - even though his company has suffered losses in every year of its existence, has failed regularly to meet financial objectives promised investors and is sustained only by selling its assets, the supply of which will soon be exhausted. It is the corporate equivalent of an arthritis sufferer amputating limbs to lessen pain.

So, did Paul Godfrey's $600,000 raise draw attention from a platoon of Postmedia writers? Well, not quite. The only report about the boss's compensation was an inaccurate one that disclosed nothing of a massive raise and just part of his pay package. The equivalent would have been to report that Ron Giesbrecht earned $84,800 as Chief and Development Officer. In the Financial Post, Christine Dobby wrote,
"Postmedia said Friday it extended Mr. Godfrey’s contract, which includes a base salary of $950,000, until the end of 2016."
Ron Giesbrecht was rewarded by a percentage of gross profits on development projects that allowed the band to increase its revenues by $10 million or 455% in a single year. The money gained is controlled by the Kwikwetlem Council and is available for whatever purposes the band members decide.

Despite what has been reported by media, the Chief did not, by himself, make a deal for himself. The vast majority of his compensation was not from funds provided by governments for capital projects, education, social or other programs. It came from commercial arrangements, negotiated with outside parties who found the agreements satisfactory for their purposes. Were it not for bigotry, the business press (and the CTF) would be applauding Kwikwetlem FN profitability and movement toward self-sufficiency.

Undoubtedly, many organizations make arrangements to share profits earned by their enterprises. As noted above, some provide rewards even in the absence of profits. Arrangements may be lavish; they may be austere, but in nearly every case not involving indigenous people, those are the affairs of organization managers and stakeholders. If the deal between the Kwikwetlem band members and their Chief was properly authorized and documented, there should be little more to say. According to the audit report prepared by independent professional accountants, there were no problems:
"The Kwikwetlem First Nation maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and the Kwikwetlem First Nation's assets are appropriately accounted for and adequately safeguarded.

"The Kwikwetlem First Nation Council is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements.

"The Council meets periodically with management, as well as the external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy themselves that each party is properly discharging their responsibilities, and to review the financial statements and the external auditors report."
Plutocrats and their media supplicants may be uncomfortable with shifting away from paternalistic treatment of First Nations and making fair resolutions for the harms caused. However, those are realities of 2014. The constitution and the Supreme Court of Canada dictate changed attitudes and a new style of cooperation.

Guess which person drew media outrage?

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Thursday, August 7, 2014

Redefinition of news - Updated

It is no secret that Postmedia, owner of daily newspapers from Montreal to Vancouver, accumulates losses at rates it cannot sustain. Raising prices and reducing expenses is not a solution. Despite higher fees, circulation revenues declined 11% in the past three years. More seriously, print advertising dropped 30% in that time frame.

The deadly spiral troubles old media. Lower cost inputs result in lower quality outputs. Content degradation means fewer readers, which means less advertising revenue, which demands further cost cutting. For large media empires, the future is not bright.

In its 2011 Annual Report, Postmedia stated,
"We continued to experience growth in digital revenue, primarily in online advertising, and expect to see continued growth in fiscal 2012. We believe digital revenue represents a future growth opportunity for the Company and we continue to focus on many new initiatives in this area."
Trouble is, those "forward-looking statements" were wrong. Measured in constant dollars, 2014's monthly digital revenues are lower than in 2011. The company is not giving up the search for Internet dollars; it is accelerated. However, risks abound for a company that already suffers in credibility ratings.

According to Forbes Magazine, Sponsored content is the holy grail of digital publishing. However, it has consequences:
"People feel deceived when they realize an article or video is sponsored by a brand, and believe it hurts the digital publisher’s credibility, according to a study.

"In recent years, a debate has raged on among publishing and advertising industry insiders over 'sponsored content' — more recently called 'native advertising' and once known as 'advertorial' — the sort of advertising that looks very much like editorial content but is, in fact, directly paid for by an advertiser..."
How should readers react when business pages are presented by an industry lobby like the Canadian Association of Petroleum Producers? I don't care to pay a newspaper that presents promotional pieces of advertisers as news nor do I wish to pay a newspaper that hesitates to publish stories that affect reputations of its sponsors.

If the Vancouver Sun's business pages are presented by the fossil fuel industry, readers are not likely to read that shale gas is "The dotcom bubble of our times." Nor are they likely to read that British Columbia has earned almost nothing from natural gas royalties in recent years.

I've complained about media reporters and commentators pocketing cash from organizations affected by their coverage of issues. If that is now a prime corporate strategy of their employers, we must conclude that rules have changed. News should now be defined as:
"Information about events and situations that advertisers and editors believe to be noteworthy and helpful, not harmful, to their private economic interests."

UPDATE (The above was first published May 5, 2014)

Long time journalist Paul Willcocks writes about these issues. He knows whereof he speaks, having benefit of experience as reporter, opinion columnist and editor. If you don't regularly read Paul's blog or his Tweets, you should be doing so.

The Center for Journalism Ethics, University of Wisconsin, is another voice for integrity. Breaking Down the Wall discusses the lines separating news and commerce in the pro-media. It makes clear that the good old days are not necessarily good old days. Ethical journalism has been dragged along a parabolic curve and today's downward slope returns us to what existed in major news sources during the 19th and early 20th centuries.

The evidence of difficulty is clear, even if pompous practitioners of the art think they can pretend that green is red and up is down. It is the greedy hypocrisy that I find most disturbing.


In comments on this article, there is a discussion about the partisan status of Canadian Taxpayers Federation BC Director Jordan Bateman. After a reader stated that Bateman was president of the Langley BC Liberal riding association, I searched online for confirmation or contradiction and was surprised to find at

Bateman said in a Twitter message that the page on his personal website was outdated, adding, "I haven't been a Liberal for 3 yrs, or prez for 4."

Apparently, the subject webpage is now removed. I understand Jordan's wish to not be identified as a Liberal. I was one too, a few decades ago, and I wouldn't want anyone associating my name with them either.

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We share responsibility

"...we actually share some responsibility for those deaths because, for us, it is no priority whatever, to stop it. Our United Nations, our Government, our World is not that interested..."

Jon Snow is a British journalist and long time presenter of Channel 4 News.

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