Gabriel Yiu: Gordon Campbell's $100-billion legacy
Recently, the Fraser Institute again praised Gordon Campbell as the best premier in fiscal management in Canada. This is indeed a big joke, as well as a lie. But such an absurd matter was reported by many media outlets.
This so-called “research report” has shown again the total lack of trustworthiness of the right-wing think tank.
Let’s take a look at the Campbell Liberal fiscal record from 2001 onward.
When the NDP formed government in 1991, the provincial debt was $20 billion. In 2001, the year the Liberals got into power, there was an operational $1.2-billion surplus and a debt of $33.8 billion. In other words, after a decade of NDP rule, the provincial debt increased by $13.8 billion.
The biggest deficits in BC’s history were recorded during the decade of the Liberals’ governance.
On the debt front, the Liberals' record is very scary. In 2011, the traditional debt on the books is $53.4 billion—that is, an increase of $19.6 billion in the years after they formed government. It’s 42 percent higher than the NDP government's debt increase in the 1990s.
Nevertheless, behind the image of adroit fiscal management, the Liberals have another ledger that they’re unwilling to account for. The debt load in this ledger is a staggering $80.2 billion!
It’s because the Liberal government has been using the P3 (public-private partnership) model instead of the traditional approach for financing their capital-spending projects (building bridges, roads, hospitals, etc.).
In the traditional model, the cost of construction is borrowed by the government, so it’s defined as debt and must be reported in the budget this way.
Since the government can borrow at a much lower interest rate than the private sector, its cost is less compared to proceeding with a P3.
Under the P3 model, the government still needs to pay for capital projects, but this payment is defined as a “contractual obligation” and not debt. As a result, this enormous “contractual obligation” (in fact, debt) is not shown in the B.C. budget.
The humongous “contractual obligation” also includes long-term power purchase contracts signed by BC Hydro with private power merchants. These contracts last for decades and the purchase price is double that of the market value, or 15 times the cost of B.C. Hydro’s generation cost. The price under which the provincial government agreed to buy private power is higher than what B.C. Hydro charges its customers.
The Liberal energy policy brings huge losses not only to B.C. Hydro. B.C.’s residents and businesses all have to pay higher electricity bills as a result.
The intriguing coincidence is that many of these private power merchants who benefit from the deals are generous donors to the B.C. Liberal party.
At this time, the public can only find out the contractual obligation “debt” in the B.C. Public Accounts. If the former Auditor General had not instructed the government to declare the contractual obligation, then the public would have no idea how serious the matter is.
The contractual obligation was first revealed in 2005. Since then, the sum has grown threefold. Just last year, the Liberals added $27.2 billion “debt” to the contractual-obligation ledger.
So if you add the Liberals’ traditional and non-traditional debts together, the last decade has seen an increase of debt to the tune of $99.8 billion.
That is seven times more than that accumulated by the NDP in the 1990s.
Ten years of Liberal governance with almost $100 billion of new debt, and yet we don’t see a single media feature on this grave matter. Instead, we have a right-wing think tank praising Campbell as the best fiscal manager. That’s truly incredible.
Gory details revealed in megaproject estimates
The about-to-be-completed new roof of the B.C. Place was supposed to cost $365 million, according to government announcement in January 2009. Now, the government says it will cost $563 million.
That’s more than 50 percent over budget, but the Liberal government keeps saying the project is “on budget”. And so many media just report the deception without checking the facts.
Yet Campbell can still be held up as fiscally the best premier in Canada. Isn’t it amazing?
The fact is, this kind of nonsense is not unique. Earlier, the Fraser Institute released a shocking study, which said that immigrants are a huge burden on Canada. Each year, according to the report, the government has to subsidize an immigrant $6,501 on average or $23 billion in total.
Immigrant communities immediately rebutted the findings of the report. But since this is a study conducted by a renowned research institution and the media has reported it, many Canadians would think that it’s true.
Then, two scholars at Simon Fraser University studied the Fraser Institute immigration report and concluded that it overstated the subsidy by 11 times! According to the calculation of the SFU scholars, the average subsidy per immigrant is $450.
Many might recall that in June last year, just before the implementation of the HST, the Fraser Institute released a “study” supporting Campbell’s HST. The right-wing think tank stated that HST is revenue-neutral, so the B.C. government would not collect more tax. The Fraser Institute study also stated that low- and middle-income families would save money due to the HST.
After more than a year with the HST, we all know how unreliable the Fraser Institute study is. By now, I hope the media and the public will realize that the mandate of the Fraser Institute is given by big businesses, and it definitely does not stand for the public interest with these types of studies.
Gabriel Yiu is a small businessperson and a former NDP candidate in Vancouver-Fraserview.
Sep 25, 2011 at 4:53pm
Your article is a little over my head. Still, I do agree, Campbell with his Arts degree and Mickey Mouse MBA was over rated.
P3 and TransLink might have been included.
Sep 25, 2011 at 5:40pm
But Garbriel, they're LIbERalS! They know how to give away a province, it's resources and labour better than anyone now or before. Harper is right on their heels with lowering taxes, and signing more free trade agreements to ensure unemployment increases as well as family debt. This is the right wing! They really know how to kill a country!
Sep 25, 2011 at 6:08pm
What did BC expect after electing 3X a DRUNK DRIVER!
How bad do things have to get before Voters realize that Neo-Cons are FOR BIG CORPORATIONS NOT PEOPLE!
Add the LOSS on the FAST FERRIES SALE for PENNIES ON THE DOLLAR THAT THE LIBERALS SOLD OFF!
BC RAIL how much is that COSTING US?
There should be a LAW that BC RESIDENTS DEMAND THAT NO GOVERNMENT CAN WRITE OF EXECUTE CONTRACTS BEYOND THEIR TERM IN OFFICE!
Finally if ANY Government charges higher Royalty / Fees for ANY RESOURCE EXTRACTION (WHICH IS A ONE TIME EXTRACTION that is NON-RENEWABLE) we will have little OPERATING DEBT IF ANY!
LIKE NEWFOUNDLAND, AUSTRALIA, NORWAY + NOW THE UK ON NORTH SEA OIL + GAS!
Sep 25, 2011 at 7:12pm
@Gabreil Yiu I love this stadium and lets get on with getting rid of this vision vancouver council, move on with expanded and relocated casino, Gabriel why are your colums in the Straight always have baked, you left wing wing nut!
Sep 25, 2011 at 7:13pm
where do you find your writers GS? Gosh thats bad.
Sep 25, 2011 at 7:21pm
Your numbers make a lot of sense Gordon but it is a shame you try to play games with the Hydro numbers. I you buy a car today, is it going to cost more than it did 20 or 30 years ago (and more) Hydros average cost of generating a kilowatt of power is considerably less than it would cost for a kilowatt of power coming out of any new plant they built today.
Having said that, it is clear that massive debt has been "hidden" off books through the PtoP process. It is a wonder the lenders of the world and the auditor general have not caught on.
As for BC Place, it is a travesty that we spent so much money and that it went so very far over budget but at least if the NDP were to win the next election, they could not sell BC Place in attempt to embarrass the Liberals in the same silly way the Liberals sold the fast cats for that very reason.
Sep 25, 2011 at 8:20pm
The only thing he was ever liberal about was the spending of our money.
Sep 25, 2011 at 9:24pm
Well, duuuuh. One of the biggest lies extant is that the right are the only ones that know how to manage money and therefore look after an economy. Look at Reagan and Bush jr and how much American debt increased under their tenure. Sadly in BC, while the entire world went through a period of tremendous growth, our child poverty rate kept going up and the minimum wage stayed frozen for ten years. Mr Campbell's approach to looking after the province's books basically amounted to selling off publicly held assets: BC Rail is gone, the rights to our rivers are gone, BC hydro has been made the private power producer's bitch and BC Ferries is some kind of quasi corporate Frankenstein.
Gordo should be charged with breach of trust never mind handed out the Order of BC and fatuous awards from that perverse little group of neo-cons that calls itself an Institute.
It is time to get the message out that the FI knows FA about the economy and are given far too much credence.
And what the fuck is all this nonsense (federally and provincially) about paying down the debt over the next three years while in the midst of a world wide recession? Why hasn't this been challenged by the official opposition? You don't need an MBA from Harvard to understand that paying down the mortgage is not a smart idea when you're unemployed.
Sep 25, 2011 at 10:09pm
One of the true victories for pure political propaganda in this province is the myth that the BC Liberals are good financial managers. A lot of people actually believe that to be true. While it is true that the NDP had the fast ferries to answer for, the Liberals have brought us a colossal waste of money ($563 million) for the BC Place Stadium roof and renovations. They also spent $900 million on the new convention center, when it was budgeted for $450 million. Then there are the sweetheart deals over BC Rail and private power projects, all of which benefited prominent Liberal supporters. We still don't have the real financial story about the Olympics.
Back in the 90s, the NDP generally delivered balanced budgets, or budgets with very small deficits. They were sound financial managers. Yet the right wing propagandists in the business community, who essentially run the Liberals, persist in using the Big Lie technique (if you say it enough times people will start to believe it) in trying to paint the NDP as fiscally irresponsible. People need to look deeper than the latest headline from some business group or the Fraser Institute to get the real story.
Taxpayers R Us
Sep 26, 2011 at 12:58am
Vision Vancouver and Gregor Robertson rob us blind on a daily basis and where is the outrage for that?