Tuesday, August 18, 2015

Beautiful British Columbia

We're travelling again this week, back to Vancouver Island and Alert Bay on Cormorant Island with a few more grandchildren. We took a trip on a sailing ship...with Seasmoke Whale Watching. A great day for viewing Humpback whales and other ocean creatures.

I'll be back to writing here next week.

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Saturday, August 15, 2015

Restraint not designed for les grand fromages

In Thursday's CFAX session, I talked with Ian Jessop about British Columbia's pension fund management agency. bcIMC has had attention here before and the graphs below represent information from the recently released 2015 Annual Report. I will have additional commentary later but these graphs demonstrate that it remains business as usual at bcIMC.

As mentioned in the audio, the Washington State Investment Board, which also manages over $100 billion, again outperformed bcIMC. However, they achieve results with a much less costly — and decidedly less pretentious — operation.

Since much is invested outside Canada, a significant part of the bcIMC return in fiscal year 2015 was from the decreased value of the Canadian dollar. For example, Bank of Canada reports these conversion rates for the U.S. dollar:

March 31, 2014 - 1.1053
March 31, 2015 - 1.2683

In the fiscal year ended March 2015, bcIMC hired a new CEO. The new guy instantly became British Columbia's highest paid public servant but Doug Pearce, the outgoing CEO, stayed on the payroll for five months, which was enough time for him to score $1.72 million.

Check out earlier articles about bcIMC.

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Friday, August 14, 2015

Farrell with Jessop, CFAX1070 August 13, 2015

The audio file below is a recording of my time with Ian Jessop August 13. We talk about bcIMC, provincial debt and other matters.

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Thursday, August 13, 2015

Sea to Sky Highway subsidy $12-$15 each vehicle UPDATED

This item below from February 2014 is a good reminder of how behaviour of BC Liberals differs when it involves spending closer to their hearts, heads and wallets than education. This project is also a demonstration of what Liberals mean when they say "on-time and on-budget." It wasn't on budget for the public but probably was for the private companies hidden behind the Sea-to-Sky Highway Investment Limited Partnership.

Liberals are masters of public finance in one particular way. They deliver opportunities to deal makers and deal flippers, with details of all transactions hidden from view. It wasn't long before the first flip happened on the Sea-to-Sky project. This is from a 2010 press release,
"A consortium of Canadian investors led by Fiera Axium Infrastructure Inc. and composed of Fiera Axium Infrastructure Canada L.P., Régime de rentes du Mouvement Desjardins and Nova Scotia Pension Agency (the “Consortium”) today announced it has acquired 100% of the economic interests in the design-build-finance-operate (“DBFO”) concession rights associated with the Sea-to-Sky Highway Improvement Project (“S2S”)...from Macquarie Essential Assets Partnership (“MEAP”)...a private unlisted fund established in 2003..."
* * * * *
News item, June 10, 2005:
"VANCOUVER (CP) - The British Columbia government has signed a deal with a transportation consortium to design, build and manage improvement to the Sea-to-Sky Highway north of Vancouver.

"Transportation Minister Kevin Falcon said the project is on time and on budget after he announced the $400 million agreement with the S2S Transportation Group..."
In a 2009 letter to the National Post editor, Falcon had more to say about "on time and on budget:"
"Re: Vancouver Should Pay, editorial, Jan. 13.

"This editorial incorrectly stated that the Sea-to-Sky Highway expansion is "behind schedule" and "over budget." The fact is that the $600-million improvement project is both on budget and on schedule..."
A 2012 report by the Auditor General noted the capital costs were $795 million and reminded that the public private partnership was responsible for building only part of the Sea to Sky Highway,
"...the Province (represented by the Ministry of Transportation and Infrastructure) entered into a P3 agreement with the Sea-to-Sky Highway Investment Limited Partnership (a group of private companies) to design, build and finance about two-thirds of the highway improvements and to operate and maintain the entire highway for 25 years. The ministry is responsible for managing the remaining one-third of improvements..."
We shall examine whether or not the project was "on budget" or slightly over the $400 $600 $795 million figure.

From B.C. Public Accounts (Updated for FY 2015):


Fiscal Year Payments Future Obligations Grand Total
2006 $ 7,104,157
2007 $ 25,369,209
2008 $ 36,364,125
2009 $ 53,795,523
2010 $ 58,293,523
2011 $ 63,003,619
2012 $ 66,140,676
2013 $ 58,173,389
2014 $ 53,578,713
2015 $ 55,656,106
2016 $ 51,000,000
2017 $ 50,000,000
2018 $ 50,000,000
2019 $ 49,000,000
2020 $ 48,000,000
2021 & beyond $ 451,000,000
Totals $ 477,479,040 $ 699,000,000 $ 1,176,479,040

From The Vancouver Sun, December 23, 2005:
The portion of the highway between West Vancouver and Squamish has the largest traffic volume, with an average of 13,500 vehicle movements each day.
The Squamish - Whistler traffic counted about 8,000 per day. Averaging the two segments over a full year suggests about 4 million vehicles using Sea to Sky Highway annually. With operating cost around $60 million a year, each vehicle movement costs taxpayers about $15. If traffic has grown by 15%, the subsidy would be about $12. However, the subsidy would be higher if we factored in the cost of the one-third portion of the Highway paid for directly by the province.

So, if you are a taxpayer paying tolls to cross the Fraser River or if you are using one of BC Ferries' profitable routes — Tsawwassen - Swartz Bay and Departure Bay - Horseshoe Bay — take satisfaction in the financial assistance you provide through subsidies to the poor folks headed for Whistler ski hills.

More than three years ago, Laila Yuile wrote excellent pieces on the Sea to Sky Highway. Click HERE to begin looking at her work.

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Wednesday, August 12, 2015

They are friends, neighbours, family members UPDATED

A few days ago, I published an item about misguided Canadian drug policies. This week, the British Columbia Coroner reported that Fentanyl was involved in 12 deaths in BC during the past month, 54 in the past five months and 90 during 2014. It's reported that 145 Albertans died using this easy to manufacture synthetic opiate in the first seven months of 2015. Large numbers of people are dying in other provinces too but there appears to be no coordinated tracking of related statistics.

The Harper Government is spending huge sums to wage war on terrorism, including $1.2 billion on an Ottawa building described as an "architectural wonder." Government employs 2,000 staff there to hack into computers, read emails and intercept phone calls. While funds are available for authoritarian spy actions, there is little money for tracking the current toll of illegal drug distribution. Of course, there's no political interest in doing that work since the Prime Minister previously expressed fear that someone might "commit sociology."

Stephen Harper's response to hundreds of young people dying from a new dangerous substance on the street is creation of a "help line" and rededication of his government's opposition to relaxed marijuana laws. This policy exists even though polling done for Conservatives in 2014 showed 71% of Canadians believe the government should either legalize marijuana or decriminalize possession of small amounts.

The foolishness of Harper's position was demonstrated in Tuesday's account of one teenage boy's near-fatal encounter with Fentanyl. The 18-year-old son of CTV News journalist Anthony Hampton is in hospital with an uncertain future. His family spoke with CTV News, which reported:
Police looked through Anthony’s cell phone, and told the parents they found texts showing he tried to buy pot before his overdose.
His drug dealer claimed he was out of marijuana and suggested Anthony try harder drugs instead: supposed oxycontin, which police believe was likely fentanyl.

“From all accounts, he tried this once,” Hampton said. “He just tried this pill that he thought was oxy, one time.”

The following was first published August 4, 2015.

- - - - - - - - - -
Reading of another tragic Fentanyl death — this time Jack Bodie, a Burnaby youth on the cusp of adulthood — I began to think it is time for each of us to have a Howard Beale moment, "I'm as mad as hell, and I'm not going to take this anymore!"

"This" is the insane Canadian drug policy that satisfies no one, except perhaps for people in the police, justice and prison industries and villains involved in distributing drugs, laundering money or trading in Conservative Party votes.

According to BC's Chief Coroner, almost 200 residents of the province suffered Fentanyl related deaths since 2012. The justice ministry reports 322 died from illicit drug use in BC during 2013, more than twice the victims five years before and also double the number of fatalities from motor vehicle collisions.

The Canadian Drug Policy Coalition advises:
The current approach to Canada’s “drug problem” is not working. It relies far too heavily on the criminalization of people and punitive policies. It’s expensive, wasteful, ineffective and damaging to those who are most in need. It is time for innovative solutions.
The ACLU summarized:
After decades of criminal prohibition and intensive law enforcement efforts to rid the country of illegal drugs, violent traffickers still endanger life in our cities, a steady stream of drug offenders still pours into our jails and prisons, and tons of cocaine, heroin and marijuana still cross our borders unimpeded.

Not only is prohibition a proven failure as a drug control strategy, but it subjects otherwise law-abiding citizens to arrest, prosecution and imprisonment for what they do in private. ...The ACLU believes that unless they do harm to others, people should not be punished -- even if they do harm to themselves. There are better ways to control drug use, ways that will ultimately lead to a healthier, freer and less crime-ridden society...
Forbes quoted the economics textbook by Cowen and Tabarrok:
The more effective prohibition is at raising costs, the greater are drug industry revenues. So, more effective prohibition means that drug sellers have more money to buy guns, pay bribes, fund the dealers, and even research and develop new technologies in drug delivery (like crack cocaine). It’s hard to beat an enemy that gets stronger the more you strike against him or her.
Writer and UN envoy Omer Aziz wrote in The Globe and Mail.
The disquieting impulse the anti-drug crusaders share is the puritan wish to control desires and create a drug-free Utopia by excommunicating sinners behind steel bars. The Conservatives are tapping into a well of religious sentiment in this country to advance policies that have proved ineffective elsewhere. Ottawa should refocus its attention instead on creating opportunities for Canadians born into broken families and neglected neighbourhoods, and initiate new programs to combat poverty. Attempting to create heaven on earth is a fanciful dream, and like all wars on sin, it too will end in abject failure.
In 2007, Stephen Harper announced his government's crackdown on drug crime and, despite admitting failure of the program in 2012, he committed to another five years and another $500 million for extra measures of enforcement. This time though, increased budgets for police and prosecutors were accompanied by deep cuts in Health Canada spending on drug treatments.

Author Paula Mallea considered different drug policies in her book The War on Drugs: A Failed Experiment:
We have to begin by rejecting the rationale behind criminalization. It is essential that we stop considering drug users as "the other." When we set up this kind of dichotomy, it becomes easy to justify harsh treatment of people whom we consider to be "lesser." Yet far from being the demented, dangerous individuals that we seem to fear, drug users are our friends, neighbours and family members. It behooves us to treat them as we would want to be treated -- with care, respect and compassion.

Root causes of drug use and addiction must be a part of this discussion. Our current prime minister thinks a consideration of root causes is an offence in itself -- "committing sociology," as he puts it. But we as a society need to put resources into identifying and alleviating these root causes...
When Stephen Harper claims to wage war on drugs, he has mixed motivations. One is that vested interests invariably prefer the status quo, which is a drug trade now worth between 100 and 300 billion dollars in the Americas. Low level enforcement is tolerable, even helpful to the drug leaders by ensuring a constant churn within the ranks of dealers and mid-level distributors. As a result, few drug business operators gain sufficient power to threaten the insulated top layer. Money, once laundered, is available for consumer goods, real estate and investment in "legitimate" enterprises and political parties. Additionally, billions of taxpayer dollars are spent on police, courts, prisons and parole systems that deal with drug offenders. Decriminalization would severely affect these interests.

Another reason for continuation of current policy is social inertia, the resistance to change in societies or social groups. Describing political inertia, Jay Ulfelder noted that norms and institutions may be social manifestations of an inborn and profound preference for routine and regularity. Even failed policies pursued for decades can remain comfortable while radical solutions seem likely to be dangerous.

With Harper, we cannot underestimate his comfort with the fundamentalist base that believes moral rules, drawn from a Christian God, are absolute and unchallengeable. As the Southern Baptist Convention explains, "God Himself made us free. But He didn’t intend for us to use our freedom in destructive ways."

Edmund Burke wrote, "Those who don't know history are doomed to repeat it.” If you believe the philosopher's statement a truism, you might do well to wonder how far unsympathetic moral supremacists will go in fighting against drugs and drug users. There is a shocking example of what American liquor prohibitionists were willing to do.

The little-told story of how the U.S. government poisoned alcohol during Prohibition with deadly consequences, Deborah Blum, Slate Magazine, February 19, 2010:
[Within a few days of Christmas 1926, New York City's Bellevue Hospital] tallied up more than 60 people made desperately ill by alcohol and eight dead from it. Within the next two days, yet another 23 people died in the city from celebrating the season.

Doctors were accustomed to alcohol poisoning by then, the routine of life in the Prohibition era. The bootlegged whiskies and so-called gins often made people sick. The liquor produced in hidden stills frequently came tainted with metals and other impurities. But this outbreak was bizarrely different. The deaths, as investigators would shortly realize, came courtesy of the U.S. government.

Frustrated that people continued to consume so much alcohol even after it was banned, federal officials had decided to try a different kind of enforcement. They ordered the poisoning of industrial alcohols manufactured in the United States, products regularly stolen by bootleggers and resold as drinkable spirits. The idea was to scare people into giving up illicit drinking. Instead, by the time Prohibition ended in 1933, the federal poisoning program, by some estimates, had killed at least 10,000 people.

Global News

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Tuesday, August 11, 2015

Bloggers miss you Bill Good

It's now a year since Bill Good departed from his morning place at CKNW. His absence has been bad news for scribblers in the nether regions of the internet since it means no more easy pieces like the ones linked here. Two audio clips from my bank of favourites:

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News not fit to print

A Wall Street Journal story, repeated by The Australian and Financial News, other Rupert Murdoch News Corp properties, is apparently not worthy of coverage by Canadian media. I found no reference to this matter in any Canadian pro-media reporting.

Aug. 6, 2015 7:40 p.m. ET

Canada’s top banking regulator has found that money-laundering controls at the country’s banks failed on numerous occasions, according to a document obtained by The Wall Street Journal.

Between 2009 and 2014, the Office of the Superintendent of Financial Institutions logged 72 failures of anti-money-laundering controls at the country’s banks, according to an OSFI document released under the Canadian Access to Information Act.

The document was heavily redacted to exclude the names of the banks. Other details, such as the dates of the failures and specifics about those instances, weren’t included. It also isn’t clear whether any of the banks ever faced penalties related to the episodes.

...Canada has been facing growing pressure to step up efforts to fight money laundering, in line with efforts of regulators and law-enforcement agencies globally. In 2013, the US State Department named Canada and the US as countries of “primary concern” over money laundering, highlighting currency transactions at financial institutions involving large sums of money from international narcotics trafficking as being problematic.

...Canada’s biggest bank, Royal Bank of Canada, moved to close down its Latin American and Caribbean wealth-management operation late last year.

The bank made the decision, the Journal reported, after a string of investigations in different countries and a 2013 warning from a US regulator that RBC’s anti-money-laundering controls were unsatisfactory...
Inside Royal Bank of Canada’s Latin Misadventure is an earlier Wall Street Journal story by the same authors:
MIAMI—As Royal Bank of Canada mounted an aggressive campaign to reel in business from Latin America’s growing class of superrich, a Miami-based banker made a big catch: Gilberto Miranda Batista, a former Brazilian senator with a $500 million fortune, three houses, four farms and a Rolls Royce.

While some bankers celebrated, RBC’s compliance department soon raised a warning flag. Worried that Mr. Miranda’s accounts might attract scrutiny from global regulators over potential money laundering, some compliance officers began recommending that the accounts be shut down around 2007, according to people familiar with the episode.

...In 2013, Mr. Miranda’s accounts attracted the attention of a U.S. banking regulator, the Office of the Comptroller of the Currency, which that year deemed RBC’s anti-money-laundering controls unsatisfactory, according to people familiar with the matter.

The tensions between compliance and business officials at Canada’s largest bank, revealed in internal company documents seen by The Wall Street Journal, underscore the dilemma faced by many of the world’s financial giants as they balance the promise of lucrative accounts in emerging markets against the increased risk of regulatory action.

...For RBC, which weathered the financial crisis to become one of the world’s largest banks, the OCC’s negative review was one in a long line of brushes with regulators and prosecutors over anti-money-laundering controls in its Latin America and Caribbean wealth-management businesses.

...Prosecutors in Uruguay and France also started cases against the bank in the past several years. In 2008, the Uruguayan central bank fined RBC $50,140 for “omissions” in anti-money-laundering controls, according to the central bank’s website...

Related reading at In-Sights:

Money laundering and casinos, who knew?
...It is not unusual for the right course of action to be avoided because it brings with it a financial cost. It may not be right, but it is human nature. Clearly, the government of British Columbia has always been aware of criminal activities such as loan sharking and money laundering in gambling estabishments. However, crime prevention would cost money for effective policing and, more importantly, it would reduce gaming revenues and lead to closures in an industry overbuilt by influential people.

By 2009, BC Liberals had decided that blind eyes were more profitable than diligence when it came to supervision of gambling. They know there are costs in terms of lives ruined and families destroyed but, there are financial benefits to be had. Every now and then, police will complain or a story will appear in the media but politicians are well practiced at promising things will soon change. After reassuring words, everything goes back to normal. Nothing changes and the weak continue as victims.

My supposition is that BC's illegal drug trade is so large that government wants a share and the easiest way to gain it is to skim a share from the extensive money laundering done through casinos...
Ready, fire, aim
..."It's not clear how big of a problem money laundering is in BC casinos but the government admits it's not uncommon for people to walk into casinos with suitcases filled with tens of thousands of dollars in small bills."...
What's a little crime among friends and associates
". . . Add it all up, and you can't help but see British Columbia for what it is — a key hub in the world of international organized crime. For all its natural beauty and its Birkenstock reputation, police now put Vancouver on par with New York and Los Angeles when they talk of cities in the grip of criminal syndicates. By some estimates, criminal activity amounts to roughly seven per cent of the province's total economy. . ."
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Saturday, August 1, 2015

Remembering the desperate nineties - Updated

Sources: BC Public Accounts, BC Stats, Bank of Canada

Sources: BC Public Accounts, BC Stats, Bank of Canada
A recent report from Statistics Canada, Exports and imports of natural gas to and from the United States, Table 129-0004, reveals that natural gas exports grew 70% under NDP administration, from 20.2 billion m³ in the year-ended May 1992 to 34.4 billion m³, declined to 27 billion m³ in the year-ended May 2011 and rose to 28.5 billion m³ in the year-ended May 2015.

The numbers show that despite lower government imposts, reduced environmental constraints and advanced technology, growth in natural gas exports has been negative, having declined materially under BC Liberals. That information is contrary to the "desperate times" meme about life in British Columbia before Premier Gordon Campbell.

The remainder was first published June 25, 2015.

- - - - - - - - - - - - - - - - - - - - -
In 2010, Liberal campaigner Jim Shepard said,
“You know, we lived through socialism in B.C. for 10 years. I know what it looks like and it is not pretty.”
In Shepard's lexicon, apparently "not pretty" means the opposite of what we usually expect. Compared to the NDP's nineties, the time of Liberal rule has resulted in lower growth rates for GDP, jobs and personal income. It's also meant that urban housing is less affordable, that higher education is less accessible and our tax system is less progressive. In other words, while Liberal times may have been good for the wealthiest 10%, they've not been good for the remaining 90%. No doubt, it was the former rather than the latter group that Shepard had in mind.

May 2012, Liberal Rich Coleman told the Opposition in BC Legislative debates:
I know the socialist-communist thinking is that everything should be nationalized and controlled. If you had your way, you probably would nationalize mining, nationalize natural gas. You would nationalize everything, because you don't believe in the private sector.
Questioned by columnist Mike Smyth outside the house, Coleman repeated his description of the NDP:
That's what they are - they're socialists, they're communists. That's what W.A.C. Bennett used to say, "The socialist hordes are at the gates." People should start to think about that.
Instead, people should start to think about the reality that, like BC Liberals, the mainstream media has long represented and promoted special interests. Postmedia, Global, Shepard and Coleman are allies, working obediently for rich rewards allowed by those people to loyal servants.

A more accurate economic history, one that affected the majority of British Columbians, is revealed by Statistics Canada data in a way that does not reflect the messaging of ruling politicians and their media pals.

Statistics Canada Table 384-0038

Statistics Canada Table 384-0038

Statistics Canada Table 202-0202
The next graph is not directly related but it illustrates points made frequently at In-Sights. BC Liberals achieved a surprise victory in the 2013 election but they did it with a platform of lies, claiming that revenues from natural gas would lead to a debt free province with surplus jobs and tens of billions of dollars available for healthcare and education. Premier Photo Op's precious Pamela pal even promised a "trillion dollar Prosperity Fund." Instead, provincial coffers are almost devoid of natural gas revenues. It's been bad for a few years and it's getting worse, not better.

The remaining material was first published June 3 2015:

Much of British Columbia's recent political history has been written by a Liars Club sponsored by beneficiaries of corrupt public administrations. One fable claims that BC Liberals rescued the provincial economy in 2001 after a decade of socialist mismanagement. Yet facts assembled by Statistics Canada paint a different scenario.

I've previously demonstrated that the NDP (1991-2001) bested Liberal (2001-2014) results in a number of significant areas, including:
  • Gross domestic product value growth,
  • Job creation,
  • Provincial debt management,
  • Natural resource revenues.
Prior to the last election, Jim Shepard, fronting the quadrennial Concerned Citizens for BC, warned that any vote but a Liberal vote would return the province to days of socialist ruin. By the way, Shepard was recently named to the Order of British Columbia, a recognition intended to honour remarkable accomplishments, even if those are lies told on behalf of the ruling political party.

Yet, the level of taxpayer support paid to BC's mostly foreign owned resource industries is currently at unprecedented heights. While the Liberal Government withdraws from resource taxation, it increases direct and indirect corporate welfare to metal, mineral and gas producers. Apparently that style of socialism doesn't bother Shepard and fellow astroturfers.

Here is a representation of natural resource revenues gained by the province:

The situation is growing worse because one formerly large government revenue source is disappearing faster than a fugitive gas well emission.

One further graph demonstrates the massive policy shift that occurred during Liberal years. In 2001, government's natural resource revenues were $5.4 billion in current dollars. In each of the last six years, they have been under $3 billion. Keep that in mind when reviewing this item:

Two things are apparent:
  1. The value of commodity exports grew dramatically in the NDP years and growth has been flat during Liberal years.
  2. The public share of natural resource export values has declined during Liberal administration.
The grid marks I added but the graph was published by Resource Works, the organization headed by former Vancouver Sun editor Stewart Muir, who may or may not remain married to Athana Mentzelopoulos, Premier Photo Op's long time sidekick. Muir's organization is part of the resource industry's multi-million dollar PR campaign to counter facts revealed here and in other independent media sites.

Resource companies are also spending heavily in the corporate media, aiming to convince citizens they are paying more than a fair share in taxes. Obviously, the cash spent on advertising is substantial but it purchases pro-media loyalty and is far less than what might have been paid in taxation under a different government. Current and former journalists have made their own Faustian bargains and, sadly, Jas Johal - once a diligent and dedicated reporter - is among them, acting as spokesman for LNG proponents who will invest money here if they are guaranteed sufficient profits and no risks or net taxes. The only public officials favouring the deals are those with no souls to sell.

There is one additional fact that won't be shared by industry spin doctors or the corporate media. In Liberal years 2002-2014, the number of jobs in forestry, fishing, mining, oil and gas averaged 42 thousand. In the desperate NDP years 1992-2001, jobs in those resource sectors averaged 50 thousand.

Put another way, in 1994, 1.7% of BC's working age population was employed in resource jobs. Twenty years later, that proportion had fallen to 1.3%

The conclusion: resource values almost doubled but the public benefit, by way of taxes and employment, declined significantly. BC Liberals formed government with the aim of delivering benefits to their sponsors. They succeeded without reservation.

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Let's not forget, they tried to steal democracy

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