The economic plan

Posted October 24, 2008 by Sacha Peter
Category: Economy

As soon as I heard the Premier say “10 point plan“, I was wondering which point the NDP would cherry pick to attack.

I was thinking the NDP would attack #4 - the 50% rebate on the school component of select industrial property taxes (being relatively beneficial to select corporations), but the winner turns out to be #8 - the 1/3rd rate reduction on BC Ferries in December and January - the argument being that of supposed non-interference by the government.

The point is valid - the whole point of converting BC Ferries into a separate (albeit 100% owned by the government) corporation is to avoid exactly the political interference that went behind the announcement.

It’s a populist move designed to shore up the support of those that depend on the ferry system, but one would wonder where the positive electoral impact for the BC Liberals would be - the coastal regions of BC are dominated by the NDP except for the Saanich/Comox regions - perhaps trying to shore up support in these areas? The government will probably take more damage via credibility attacks than helped via happy ferry riders, especially after the January price decrease is reversed - people are going to get used to the low prices and will wonder what happened after they rose again in Februrary. Presumably the NDP will be fishing for comments made after the structuring of BC Ferries in 2003 for their 2009 election advertisements.

The other measures, especially the taxation ones (#3, #5), are reasonable (although in the case of the proposed defined pension plan, one would wonder how this would mitigate against adverse economic times). The tax decreases muddies the water with respect to how the revenues from the carbon tax will be allocated to tax reduction (i.e. the “revenue neutral” part) - do these accelerated tax decreases go into the category of revenues from carbon tax, or are these stand-alone tax cuts?

The Legislature recall date of November 20 was quite odd - it is a Thursday. This will allow for exactly 5 days of debate on the proposed bill that will enact certain elements of the plan.

The government is clearly in a “need to be seen to take action, although don’t want to take too much action so we don’t blow our election platform” mode, and the NDP is playing the same way - it’s likely that they’re holding their cards close to their chests because they don’t want their ideas poached for the upcoming spring election session.

This election race is getting interesting - the economy is going south just at the worst moment for the government, although it will be very interesting to see how the public assigns blame in the voting booth in just over 6 months. Perhaps a single data point will be the upcoming by-elections?

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Economic update Wednesday

Posted October 21, 2008 by Sacha Peter
Category: Economy

The Premier has announced that there will be an economic update of sorts on Wednesday.

This fiscal year (ending March) will likely be safe with respect to having a balanced budget, but next fiscal year will probably contain some risk with respect to tax collections. I would guess that it would include some announcement that natural gas royalties will drop in the future, offset somewhat by a weaker Canadian dollar. The spending side of the ledger will likely be unaffected (other than potential cost overruns on certain capital projects, something the NDP will inevitably pick on).

The government’s surplus projections in the future will likely have a much slimmer margin of error.

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Marriage penalty in BC

Posted October 3, 2008 by Sacha Peter
Category: Economy

From a press release, announcing that the “climate action dividend” will be distributed to low income individuals, we have the following quotation:

In addition to the personal, corporate and small business income tax cuts provided this year, the tax-free B.C. Low Income Climate Action Tax Credit will be sent to more than one million residents. Individuals with incomes of up to $30,000 in 2007 and B.C. families with incomes of up to $35,000 will receive the maximum annual amount of $100 for each adult and $30 for each child in the first year. Single parent families will receive $100 for the first child.

I always wondered why the government has different tiers for income testing between singles and married people.

For example, if I made $25,000 in a year, and got together with somebody else making $25,000 a year, we would collectively get $200 a year from the government for the climate action dividend. However, if we got married, that would vanish as collectively we would be pulling in $50,000 a year.

This logic also applies to other income-tested programs, such as the federal GST rebate.

Most of the financial benefits (in terms of government benefits) through marriage only occur at much later stages of life (e.g. pension income splitting).

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Coleman exonerated

Posted September 30, 2008 by Sacha Peter
Category: Scandal

The conflict of interest commissioner clears Rich Coleman.

The NDP will try to claim that the commissioner was somehow partisan in this decision, but it will not stick and this issue will be politically dead with respect to the May 2009 election.

The residual “known unknowns” for the BC Liberals revolve around the special prosecutor investigation of John Les and the ALR rezoning, and any resolution concerning the legislature raids approximately five years ago (which is going on at a snail’s pace).

Another uncontrollable variable will be the state of the economy and the commodity markets (of which BC is vulnerable to economically) but it will be impossible to predict until closer to the election date.

I highly suspect that if the election dates were not fixed there would have been an election called by now. As a humourous note, it would have been amusing if Premier Gordon Campbell said to the Union of the BC Municipalities (UBCM) that “We have lost the confidence of the BC Legislature. I will be going to the Lieutenant Governor and dissolving the legislature”, which is roughly equivalent to what the Prime Minister said before pulled the plug on parliament.

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Saving those Okanagan seats

Posted September 26, 2008 by Sacha Peter
Category: Transportation

Removing the tolls on the Coquihalla Highway is a brilliant political decision, and indeed, a good policy decision - one that should have been made years ago. This decision will have an impact on the Kamloops and Kelowna-area electoral districts.

The Coquihalla Highway (and the Okanagan Connector linking to Kelowna) is a major feat of engineering. It reduces the time of a trip from the Lower Mainland by two hours, opposed to using Highway 3. Anybody driving this road will know it is engineered well (although the maintenance side of the highway has to see some improvement, especially in winter conditions).

This move will reduce the provincial government’s revenues approximately $57 million in yearly revenues, and this is offset by a reduction of $2.3 million in toll administration costs.

The NDP will have no defense to this other than by repeating the years-old news of the government attempting to privatize the highway, but this argument will have no sticking power whatsoever. It will also mitigate arguments that the Sea-to-Sky Highway should have been tolled after its improvements are completed.

The future Port Mann Bridge and the Golden Ears Bridge are currently the only structures that are slated to have tolls enacted on them - The Golden Ears Bridge will be $2.85 per direction assuming you have your car equipped with a transponder (similar to the device used in California toll roads).

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Justice system reform a probable target

Posted September 5, 2008 by Sacha Peter
Category: Justice

With the BC Supreme Court deciding to overturn the Kelly Ellard conviction (Ellard was accused of murder in Reena Virk’s slaying over a decade again), there will potentially be a fourth trial.

Presumably the public is tired of the justice system taking 11 years to resolve a court case, whether the accused is innocent or guilty.

Chances are either party that presents a coherent platform of reforming the justice system to make it a little more grounded in reality would likely resonate with members of the public that have been adversely affected by criminal activity.

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Executive pay hikes issues gaining traction

Posted September 3, 2008 by Sacha Peter
Category: Analysis, Scandal

The NDP has been giving a lot of attention on the government’s August 8, 2008 press release concerning the pay increases given to deputy ministers. When this issue initially came out, I did not think it would gain much traction (the press release time was perfect - on a Friday afternoon, the day of the Beijing Olympics opening ceremony). I might be mistaken here.

The media had an opportunity today (via press conference) to interview the Premier, and CKNW has been fairly active in publicizing the executive compensation issue, with a quote of the Premier saying that “I didn’t think I communicated the challenges that we faced”, in addition to stating what was stated on the press release (mainly that the compensation levels are targeted to being third in the country, and the increases being needed to ensure having quality people in the public service).

Attributing the backlash to “a lack of communications” is going to be pour fuel on something that was a candlelight fire - a lack of communications was the rationale that was used for restructuring the MLA pay increase. The initial (November 17, 2005) MLA pay hike legislation was repealed (November 21, 2005) and a commission of three people was set up to study the issue.

Ironically, what the commission recommended was significantly higher than the initial legislation.

Back on the issue of public service executive pay increases, I’m surprised to see this issue still in the news.

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Sea to sky rockslide

Posted August 1, 2008 by Sacha Peter
Category: Olympics, Transportation

As work to clear the rock slide continues, I noted the sensationalist media depicting the world almost coming to an end if you lived in Squamish and Whistler.

Fortunately, there is a scenic route that will take six hours from Vancouver to Whistler - compared to the two hours it would normally take. Implied in this is that the extra four hours of driving will not result in Whistler being cut off from the rest of the civilized world.

I was trying to find political reactions to this event as politicians absolutely love to take unexpected events and twist it around. The NDP transportation critic, Maurine Karagianis, who stated the following from an article in the Vancouver Sun:

“This one is huge. Sixteen thousand tonnes of rock coming down on a busy highway that we expect will have to be almost bumper to bumper traffic for the Olympics in order to get the number of people up there — that’s a catastrophe in the offing,” said Karagianis.

“I think it’s a huge problem, and I think this is another wake-up call,” she added.

“I’d like to hear from the government. What is their contingency plan? Who is taking responsibility for this?”

It’s a legitimate question, although laced with the usual adjectives (”bumper-to-bumper”, “catastrophe”, etc.) - what if a rock slide happens during the 2010 Olympics? Christine Penn (a reader of the Vancouver Sun) noted that a slide in the spring of 1996 and 1990 caused highway closures (the 1990 closure being 12 days long). It is unlikely that a rock slide would happen during the two weeks of the Olympics, but if it did it would seriously impact transportation efforts.

Karagianis begins to lose it with this statement:

In an interview, Karagianis said the government should have long ago planned a contingency route to ensure a slide of this magnitude could not have the potential to cripple the Olympic Games.

“I think the government was short sighted in not ensuring there was more than one entryway into Whistler that was adequate for the public use,” she said, adding that should have been an early consideration in the Olympic plan.

Premier Gordon Campbell puts her back in place with the following statement:

When asked about building an alternative route, Campbell responded: “Right now I would not immediately jump and say we should spend billions more on another road through a national watershed.”

While the risks can be mitigated with rock-bolting and other forms of prevention, the risk cannot be significantly reduced further simply because the routing of the Sea-to-Sky highway is in a geologically ripe location for rock slides. Historically, there was a routing that was more expensive to build that involved going up the Indian Arm, but the government of the day decided to settle for the coastal routing. The yellow line in the map depicts such a routing:

Choosing the coastal route (although much more scenic) inevitably turned out to be a rather short-sighted decision as it permanently leaves open the risk that the highway will be closed for significant periods of time due to slides.

You will notice one other routing on the map, with the red line - going through Garibaldi Park, so it will not happen, but topographically it is the most likely route to Whistler.  More likely (and not illustrated) is the so-called “Sasquatch Highway” that would connect Harrison Hot Springs to Pemberton.  There is a 4×4 and forest truck logging road that already connects the two areas.

These routes have been explored and are likely in the historical studies commissioned by the Ministry of Transportation, although there is zero chance of them coming to fruition as long as the government continues to upgrade the Sea to Sky highway. The amount of protest would be greater than the magnitude that the Eagleridge Bluffs upgrade generated. It is virtually impossible to build a new road in the Lower Mainland without generating protests.  The “Sasquatch Highway” route, however, is a lot more likely to happen as there is already a pre-existing road there.

The contingency plan is likely to pray for no rock slides during the Olympics. The unfortunate reality is that even with a ferry service running from Horseshoe Bay to Squamish, it won’t be able to scale up nearly to the volumes necessary for the Olympics if an event of this magnitude occurred. A realist would just write “no plan” in the report, but since this would be rather politically incorrect, ferries will be discussed. But even if a rock slide occurred, ferries won’t be able to do it - the ultimate contingency plan is to take the long way around to Whistler. In February, I’d bring my tire chains.

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