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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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."

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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Sunday, August 3, 2014

R.I.P. Paul St. Pierre, 1923-2014

In the summer of 1968, I was a naive minion of the Liberal Party, helping manage the coastal part of Paul St. Pierre's campaign to become MP for Coast Chilcotin.

It was a strange riding. Almost 700 words were needed for the official description of its boundaries, four or five times more than a typical electoral district. Surface travel from one interior community to another on the coast involved almost 1,000 kilometers, ferries and at least 15 hours. The constituency map was product of officials who knew nothing of the places.

Nevertheless, St. Pierre was a guy comfortable in small towns and rural lands. If anyone fit Coast Chilcotin, it was him. The only problem was that he was too intellectually honest to succeed as a politician.

I remember an all-candidates meeting in Powell River. Paul had little interest in listening to campaign staff about "local issues" and what we thought would go over well with the crowd. He trusted his own ideas and was unwilling to shape them for the comfort of others.

In those days, labour disputes were commonplace; Canada was among the worst for days lost to strikes and the Liberal Government was not the best friend of organized labour. The political meeting that day was in Dwight Hall, beside MacMillan Bloedel's huge pulp and paper mill, in a town made affluent by good union wages.

Inevitably, candidates were asked about back-to-work and other labour legislation. While his foes obfuscated, St. Pierre merely said that no government would tell him where and when to work. It was a 10-second answer but one that probably won him hundreds of votes.

Paul served a single term in Parliament. His election was helped in 1968 by Trudeaumania and that had disappeared by 1972. He lost, by a handful of votes. But, I don't think he belonged in Ottawa.

He was blunt, did not suffer fools gladly and disliked meaningless B.S. Those are not qualities of career politicians.


Addendum: I was a fan of St. Pierre's writings and mean to dig them out the book boxes we've accumulated. I suggest you read Rod Mickleburgh's fine remembrance, PAUL ST. PIERRE, ANOTHER LEGEND GONE.

Here's another piece to read, From BREAKING SMITH'S QUARTER HORSE to the Walt Disney movie SMITH!

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Saturday, August 2, 2014

This week's Liberal direction: lower LNG expectations

Friday, The Common Sense Canadian — a site that usually provides worthwhile journalism — posted an article written by Keith Baldrey for Glacier Media, publisher of numerous community recyclables. Not surprisingly, anyone reading the Global News reporter's account needs the rest of the story.

Here is part of Baldrey's item,
"...Clark is arguing that the glut of natural gas on North American markets has kept the price low, and therefore B.C. must look to other markets to make money. China, Korea and Japan all loom as potential customers of B.C.’s LNG.

"To be fair, she has a point here. The steady decline in the price of natural gas in North America has meant dwindling revenues to the provincial treasury arising from royalties on gas sales, and this has been going on for several years.

"Annual natural gas royalty revenues for the B.C. government peaked in 2005-06 at almost a whopping $2 billion...

"The revenues bottomed out at a measly $169 million in 2012-13 and are expected to hit nearly a half-billion dollars or so this year, but the days of royalties generating more than a billion dollars per year appear over..."
Apparently, Liberals asked media friends to lower the public's LNG expectations. It is what RossK, The Gazetteer, calls "The Downgrading of the Sparkle Ponies." Vaughn Palmer did his part this week, recounting how pre-election talk of a debt-free province rolling in cash from gas royalties was merely aspirational. Baldrey does not suggest that Christy Clark and friends were lying. Instead, he blames citizens for Liberal deceit,
"People seem to at least want to believe the fairy talelike talk about billions of dollars coming our way to help eliminate the provincial debt and even the sales tax."
Regular readers here will be better informed than our timid reporter but I'll recount the numbers that Baldrey ignored.

Unrecorded credits owed gas producers have been growing steadily. These liabilities, which total $1.2 billion at the end of fiscal year 2014, will reduce future royalty payments. While Global's reporter states that royalty revenues were "a measly $169 million in 2012-13," he fails to mention that the future royalty credits owed producers grew by $160 million in that same year. Were the province not inventing its own accounting standards, the gas royalty revenue would have been reported as an even more measly $9 million.

The province's Budget and Fiscal Plan, dated February 18, 2014, reported 2013/14 royalties of $368 million in fiscal 2014, not the "half-billion dollars or so" that Baldrey writes. However, credits owed gas producers grew another $316 million so the net royalty revenue for the fiscal year was $52 million, not $500 million or so.

Even Baldrey's "almost a whoppping $2 billion" of revenues reported for 2005-06 was misleading. In those years, while the gas industry enjoyed high prices, the province was still offering about $250 million a year in production subsidies. Net gas royalties were closer to $1.6 B than $2.0 B in 2005/06.

The earlier Northern Insight article, From outside the Liberal spin machine, provides numbers in a downloadable form.


From 2013/14 Audited Financial Statements, Public Accounts:

"The province offers credits for certain costs incurred by producers including the deep well, road and summer drilling programs. Deep well credits of $1,241 million (2013: $997 million), road credits of $6 million (2013: $12 million) and summer drilling credits of $3 million (2013: $9 million) have been incurred by producers and will reduce future natural gas royalties payable when wells go into production."

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Friday, August 1, 2014

Before taxpayers spend billions on LNG...

Since Paul Taylor's keys to the public sector were taken away, again, I've been waiting for news of his latest landing ground. The Report of the Joint Review Panel (JRP) for BC Hydro's Site C Project offers an idea suited for Taylor. It arises from these JRP words,
"There are alternative sources of power available at similar or somewhat higher costs, notably geothermal power. These sources, being individually smaller than Site C, would allow supply to better follow demand, obviating most of the early-year losses of Site C. Beyond that, the policy constraints that the B.C. government has imposed on BC Hydro have made some other alternatives unavailable. (emphasis added)

"...The Canadian Geothermal Energy Association (CanGEA) objected to BC Hydro’s labelling of geothermal power in B.C. as technically unviable. It claimed that 'BC Hydro has not properly informed themselves about the geothermal option and continues to perpetuate the just-ain't-so information to the public, especially around using Meager Creek as their example of why the industry is not viable.'

"This was a different view than in many other areas of the world where geothermal power is used. It provided cases where geothermal energy has been installed in similar geology. CanGEA addressed the economics of geothermal power, noting that, in many countries, it is often the low-cost provider with power prices well below what BC Hydro has indicated in the IRP..."
Clearly geothermal needs a champion in British Columbia, a person with close connections to power and the ability to work any file, even ones well beyond personal expertise. Taylor is that sort of guy and geothermal seems perfect.

A whole new industry could roll out; billions could be spent with foreign contractors and much could still leak into the hands of BC Liberal pals. That alone would satisfy the government's main business requirement but the good news is that geothermal could be a non-destructive, renewable solution to British Columbia's future energy needs. Carbon-free thermal energy in the earth’s crust is virtually limitless and it can provide base load or peak power, with a smaller footprint than other energy sources. Unlike tar sands oil, the energy return on investment (EROI) could be attractive.

Were Canada's federal government not a division of the multinational oil industry, geothermal might look attractive to the nation's leaders. In 2010, Tyler Hamilton, energy and technology columnist for Toronto Star, wrote,
"Canada could technically meet all its electricity needs and dramatically lower greenhouse-gas emissions if it moved aggressively to develop enhanced geothermal power projects, according to the first comprehensive assessment of the country’s deep geothermal resources.

"The study, published online in the Journal of Geophysics and Geoengineering, reports on the potential of using enhanced geothermal systems (EGS) to tap hot temperatures kilometres below the earth’s surface as a way of generating clean electricity.

"It found that the most promising Canadian sites are located in parts of British Columbia, Alberta and Saskatchewan at depths ranging from 3.5 to 6.5 kilometres. Drill deeper, however, and the potential extends right across the country – including parts of Ontario.

"...The findings aren’t surprising – I’ve been pounding on this drum for several years now. But it’s encouraging to finally see it expressed in a peer-reviewed journal. Canada, shamefully, is the only country along the so-called Pacific Ring of Fire that has yet to switch on a conventional geothermal power plant.

"The irony is that Canada is home to several of the continent’s leading geothermal power developers. Problem is they’re mostly developing in Nevada, California, Nicaragua, Iceland, Chile – everywhere except Canada, where no formal development program exists...

"Add to the equation the new technologies that make EGS possible and geothermal power could play the kind of role that hydroelectric power has historically played in Canada, particularly in western Canada’s many hot spots."
A paper from the College of Environmental Science and Forestry, State University of New York, discusses Energy Return on Investment (EROI) but notes that, despite its importance to making correct energy decisions,
"there seems to be very little interest by governments and industries in supporting this research or in using or promulgating such research as has been done. We view this as critical as our main fuels are progressively depleted and as we are faced with making extremely important decisions on a very meager analytical and data base, and with few scientists trained to cut through the reams of insufficiently analyzed energy advocacy saturating our media and the blogosphere."
So, despite evidence that expanded production of unconventional fossil fuels is both dangerous to the environment and a wrong economic choice, governments close eyes to alternatives and allow the existing vested interests to dictate public policy.

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