Wednesday, January 28, 2015

Public service: a rewarding career

This is a small piece of information learned in my recent examination of business in Norway.

In the article Two Oil Economies, I mentioned Norway's Government Pension Fund Global, the sovereign wealth fund that collects the nation's oil and gas revenues. Based on last year's average exchange rate, the fund is worth $1.2 trillion CAN.

As CEO, Yngve Slyngstad was paid the Canadian equivalent of $1 million in 2013. That was after a significant raise following two years of excellent returns. His remuneration over four years was less than $3 million.

Doug Pearce, until recently the CEO of British Columbia Investment Management Corporation, earned $1.8 million in the 12 months ended March 2014. His four year take was $5.7 million. Many of Pearce's 13 Vice-Presidents earned more than Slyngstad.

One minor thing: Yngve Slyngstad manages funds ten times greater than the amount managed by bcIMC.

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Tuesday, January 27, 2015

Eventually, the piper must be paid

L.F. Copeland (1888):
Mathematics is an exact fact; figures don’t lie, but liars sometimes figure.
Financial statements of governments and crown corporations should be simple and understandable. They should be; but seldom are when the issuers would rather obscure than reveal.

I've been examining 25 years of BC Hydro Annual Reports, trying to gain an accurate understanding of the utility's financial position. I will post a number of small pieces with information that, when taken together, should provide a view of Hydro's financial performance over time and the challenges that lie ahead.

For knowledgeable people, major concerns are many but cost deferral is one subject that would be on everyone's list. BC Hydro has spent about five billion dollars and recorded the expenditures as "regulatory assets." Whether or not these items have tangible worth equivalent to the carried value is uncertain. The view of some, including me, is that massive deferrals have been an irregular accounting device to distort BC Hydro results. One purpose is to allow payment of "dividends" to government of "surplus equity." To make the payments, as we've demonstrated previously, the utility had to borrow the money.

I will write more of this subject in the future but one thing is indisputable: accounting policies of the last few years are materially different than in BC Hydro's first five decades.


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Monday, January 26, 2015

Performance short of promise

During the 2013 BC election, Liberals talked frequently of "Debt-Free B.C." The party platform included this:


No conscious person will be surprised when I state the performance has fallen short of the promise. It's a liberal shortage. Consider the actual numbers versus the promise displayed above:




Liberals and their allies from the world of crony-capitalism claim the government party provides superior financial management. That may well be true for those in the business of extracting metals, minerals and fossil fuels, selling electricity to the province at multiples of its market value or running consulting and public relations operations. It is not true for ordinary citizens who struggle to survive in a decade of reducing incomes. A couple of examples:

Rates for 2015-2017 are for increases implemented and announced.




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Saturday, January 24, 2015

Two oil economies: Norway and Alberta

NORGES BANK

Using the Bank of Canada's average rate of exchange for 2014, a Norwegian krone has been worth $0.1757 CAN. That results in a fund value of $1,165,769,500,000 Canadian, or almost $1.2 trillion. All Norway's oil and gas revenues go into the sovereign wealth fund, only part of earnings from the fund are spent. The country has a progressive tax system with levels higher than in Canada. However, Norway provides one year of paid parental leave after birth of a child, very low cost kindergartens for children older than one year, after-school clubs and free education, including colleges and universities. The system enables low unemployment and high participation rates and Norway has among the highest percentages of intact families anywhere.

Norwegian Prime Minister Jens Stoltenberg noted,
"The problem in Europe, with deficits and the debt crisis, is that many European countries spend money they don't have, in Norway we don't spend money we have."
Each one of the 5,156,451 Nordmenn (Oct 2014) has a share worth $226,080.

In Alberta, the Heritage Fund had a net value of $17.381 billion as of September 2014, giving each one of 4,146,000 Albertans a share worth $4,192. In addition, the Alberta government is operating with a deficit or, as Stoltenberg would say, "They are spending money they don't have."


Worthwhile resources:
Prime Minister Jens Stoltenberg of Norway addressed the topic “Avoiding the Oil Curse: The Case of Norway” at the John F. Kennedy Jr. Forum at the Harvard Kennedy School. Stoltenberg discussed how the “Oil Curse” occurs in countries with natural resources, noting the negative relationship between countries with a large amount of natural resources and real GDP per capita. Stoltenberg focused on the Norwegian experience and how although oil and gas has a large impact on the economy it is balanced in a way to combat the common “curse.” Stoltenberg highlighted other elements of the Norwegian economy that make the country exemplary in social equality including high employment and the dual maternity, paternity leave granted to citizens.


Lifting the resource curse, George Soros (free registration required):
Countries that are rich in natural resources are often poor, because exploiting those resources has taken precedence over good government. Competing oil and mining companies, backed by their governments, are often willing to deal with anyone who can assure them of a concession. This has bred corrupt and repressive governments and armed conflict. In Africa, resource-rich countries like Congo, Angola, and Sudan have been devastated by civil wars. In the Middle East, democratic development has been lagging.

Curing this “resource curse” could make a major contribution to alleviating poverty and misery in the world, and there is an international movement afoot to do just that. The first step is transparency; the second is accountability.

The movement started a few years ago with the Publish What You Pay campaign, which urged oil and mining companies to disclose payments to governments. In response, the British government launched the Extractive Industries Transparency Initiative (EITI)...

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Friday, January 23, 2015

With Ian Jessop, CFAX1070, Jan 22




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Thursday, January 22, 2015

Speaking for the future - Updated

This week I got confirmation that new corporate funding has been assembled to counteract bloggers and writers in alternative media who reveal mismanagement of provincial assets and emphasize the public’s declining share of natural resources. This will involve typical media greenwashing (like that by Kinder Morgan and Northern Gateway) but also an internet campaign with front groups and artificial grass roots organization and coalitions. Some efforts involve people close to the BC Liberal Party.

That multinational resource companies believe they must spend heavily to blunt our messages is evidence we’ve been effective. However, our progress is fragile and the financial power of those we oppose is immense.

If you are comfortable with B.C. functioning as a plutocracy, rest assured, all is well.

If you believe that young people should grow and have opportunities to prosper with respectful attachments to the province's lands, cultures and history, then you must act to protect valued qualities of British Columbia.

That might involve a personal effort or expense but, if we maintain the current trends, more punitive costs will emerge in the long term. If not for ourselves, we act for our children and grandchildren. The public share of natural resource values has declined by billions and that has reduced spending for environmental protection, education and vital social services. If we continue to downplay or ignore the building blocks of a just society, a price will be paid.

Government politicians, traditional media, lobbyists and social media trolls are paid to look after the interests of powerful people. The Legislature functions for only a handful of days each year and the union movement is eroded. There are rather few major outlets for discussions not shaped by self-interest and each deserves your attention and support.

Read widely, participate in comments, forward articles and links to friends and contact your MLAs and MPs. Write letters to the editor and hold the papers accountable if they refuse to publish or change your message by editing.

Make your voice heard. It is essential.

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ADDENDUM:

From an article by Professor Sharon Beder, Public Relations' Role in Manufacturing Artificial Grass Roots Coalitions:
When a corporation wants to oppose environmental regulations, or support an environmentally damaging development, it may do so openly and in its own name. But it is far more effective to have a group of citizens or experts -- and preferably a coalition of such groups -- which can publicly promote the outcomes desired by the corporation while claiming to represent the public interest. When such groups do not already exist, the modern corporation can pay a public relations firm to create them.

The use of such 'front groups' enables corporations to take part in public debates and government hearings behind a cover of community concern. These front groups lobby governments to legislate in the corporate interest, to oppose environmental regulations, and to introduce policies that enhance corporate profitability. Front groups also campaign to change public opinion, so that the markets for corporate goods are not threatened and the efforts of environmental groups are defused. Merrill Rose, executive, vice president of the public relations firm Porter/Novelli, advises companies:
Put your words in someone else's mouth... There will be times when the position you advocate, no matter how well framed and supported, will not be accepted by the public simply because you are who you are. Any institution with a vested commercial interest in the outcome of an issue has a natural credibility barrier to overcome with the public, and often with the media...
I am interested in other articles by the same writer. One is Power Play - The fight for control of the world's electricity:
Noted author Sharon Beder argues persuasively that the track record of electricity privatisation and deregulation around the world indicates that it is a confidence trick. Her book shows how simplistic ideology and economic theory have been used to mask the pursuit of self-interest; how control of electricity has been wrested from public hands to create profit opportunities for investors and multinational corporations; and how an essential public service has been turned into a speculative commodity in the name of ‘reform’.

Power Play explores the battles between private and public ownership in the United States, the United Kingdom, and Australia since the early twentieth century, and the agenda-setting and public relations strategies involved. It investigates the way that developing countries such as Brazil and India have been forced to allow foreign investors to exercise a stranglehold over their electricity systems. And it uncovers the campaigns waged by think tanks, corporate interests, and multinational companies such as Enron to swindle the public in dozens of countries out of rightful control over an essential public service.
Enron? That's a familiar name to British Columbians because billionaire Richard Kinder, now head of Kinder Morgan, was President and COO of Enron before it disappeared in a fog of criminality.

Why industry is trying to tell you how to think, The Center for Public Integrity, January 2015:
And so [American Petroleum Institute] along with their PR counsel Edelman created online groups called Energy Citizens and had an advertising campaign called “Vote For Energy”, and it was really a chance for oil and gas to polish its reputation...
Port Metro Vancouver Hires Disgraced Edelman PR Firm, American Lobby Group to Push Coal Exports, DeSmog Canada, December 2013:
When it comes to shipping coal, it looks like the Vancouver Port Authority is taking a page out of the U.S. coal lobby's books. In an effort to combat negative public opinion about coal and the proposed expansion of coal exports through Fraser Surrey Docks, the port authority has hired public relations firm Edelman Vancouver to revamp its image.

Edelman is the largest public relations firm in B.C. and the company has a history of both pushing coal exports and disregarding public opinion...


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Motorcycle Guy roars, we should listen

This was a comment on the preceding article from a regular reader. He's a man I've come to admire for his dedication as he tries to reveal that government cut deals to enrich a few people at the expense of many. Additionally, those dishonest politicians forced environmental regulators to abdicate statutory responsibilities.

Work was done on coastal lakes and waterways that destroyed nature's irreplaceable assets, not because the public had need but because influential people bought the opportunity to make quick bucks. It is so typical of the way BC Liberals do business today, while corporate media pays no attention.

I know what follow is accurate because I've been kept informed and I've read materials exchanged between concerned citizens and government officials who just pretend to carry out their duties. The comment is worthy of being featured:
Yes, someone knows how much [real value is realized from private power contracts] ...but it ain't us ratepayers. I couldn't get the yearly figures for electricity purchased by BC Hydro from Renewable Power Corporation from their Tyson Creek IPP on the Sunshine Coast. My (paid for) FOI came back redacted because release of this info was deemed to be harmful to the private corporation. I wasn't even asking how much we paid for it, just how much was produced! Now the same proponents have secured another EPA (purchase agreement) from BC Hydro, as well as getting Bennett and Polak to sign of on the EAO (environmental assessment office) file. This for the Ramona Lake drain and Chickwat Creek ruin of river project in the same area.....though Site C is likely going ahead, we get stuck with even more more hydroelectric IPP's ....meaning even more water spilled without getting a return on our public investment. It is rather ironic that projects like Tyson and Ramona actually do wear out turbines significantly faster that legacy BCH dams.....large amounts of silt comes down due to the draining of the alpine lakes.

At the same time I was denied info on Renewable Power, I did get very complete info on the Fitzsimmons Creek IPP in Whistler. They produced 0 (zero) during the time of the Olympics. This despite a very in depth Global TV report on how the Olympics were making use of "green" renewable power from projects like Fitzsimmons. This kind of reminds me of the recent talk given by Craig Silverman on the "Hoax Economy".....the business of spreading fake news. One need look no further than Global on this one.

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A few billion here, a few billion there...





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