Tuesday is BC's Annual "Deception Day" (a.k.a. "Budget Day")
by Rafe Mair - Common Sense Canadian
February 14, 2016
This coming Tuesday will be Annual Deception Day in the BC legislature as the Minister of Finance sets forth the budget for the coming year. That it is a deception, perhaps self-deception, can’t be blamed entirely on this government, since it’s been going on, as the lawyers say, since “man’s mind runneth not to the contrary”. Back in WAC Bennett’s days, the “contingent liability” was invented and in one form or another, it is alive and well today.
What is the fault of the current premier is perpetuating the fiction that somehow the budget reflects something of importance. Well, it doesn’t. Twice in the past few days the premier has announced that there will be a balanced budget because “the people expect it.” This tells me that the “balance” bit is not created to reflect the truth but because voters have come to accept that as “very good thing”.
A few rating agencies help perpetuate this myth by declaring that it’s important that a budget is balanced – but it’s not, they know it, they are not telling the truth, and we ought to know that.
To start with, it is merely guesswork as to what the Government will take in and spend next year and the results achieved are likely to bear very little resemblance to the predictions. We don’t have a special day in the legislature where the Minister of Finance stands up and tells us all how he really screwed up and that the result was considerably different than the crap he predicted. And the game is scarcely unique. Surely we all remember the famous “fudge-it budget” from Glen Clark and the later one from Gordon Campbell that was even more atrocious.
British Columbians pay for Hydro’s losses
What’s so deceptive about the budget process is that people believe it reflects the financial health of the province. Well, it comes nowhere near. There is not enough time in an article like this to begin to give the full picture, but let’s just consider BC Hydro.
BC Hydro is a Crown Corporation and its finances are not part of the budget process. Note that well – your elected legislature has no control over and no way of knowing what Hydro does other than what the Liberal-schmoozing media tells them. Hydro does its own thing, subject only to discipline from cabinet, which never happens. Cabinets, being the premiers, would all be in jail if they were directors in the private sector, so egregious has been their neglect.
Every year, BC Hydro incurs an enormous loss, but while that’s none of our legislature’s business, it becomes part of the provincial debt and serviced by the government at huge cost. This means that, far and away, the most expensive part of government, with Site C at 9 billion bucks-plus to come, is paid for by me and thee, including the huge debt it adds annually, completely outside the budget debated and passed by the legislature.
Where the current Liberal government uniquely has a great deal to answer for is the unbelievable burden they placed on Hydro with their political giveaway made to private/Independent Power Producers (IPPs) under Campbell’s Energy Policy of 2003, whereby Hydro must buy all its new power from private companies for at least double the proper cost. Moreover, Hydro must take that power when it’s offered, whether they need it or not. Unhappily, nearly all private power is made during the run-off when Hydro reservoirs are full to overflowing.
IPPs cost British Columbians big time
It’s hard to put a hard cost on the results because all of the agreements are secret – fellow voters, we’re not allowed to know! Moreover, unless you’re an economist, you quickly get dazzled by the figures. One man I have come to respect for thorough and honest analysis, in addition to Erik Andersen, a colleague of The Common Sense Canadian, is Norman Farrell, another CSC colleague, who breaks it down like this:
In fiscal year 2015, BC Hydro purchased 13,377 GWh of electricity from independent power producers for $1,064,000,000 ($79,540 per GWh). In the same period, BC Hydro sold 14,020 GWh to large industrial users for $748,000,000 ($53,250 per GWh).
In other words, each GWh of power purchased from IPPs was resold for $26,290 less that it cost. However, the loss was not limited to $352 million, since the utility had to pay distribution, administration and other overhead costs in addition to the power acquisition price.
See no evil, hear no evil
In 2014 the BC provincial debt was $60.693 billion, of which $15.559 billion for is BC Hydro. This means that 1/4 of the debt you and I owe, is totally outside the budget process and none of its anticipated income and expense will be examined by our legislators. Amongst other things, we’ll not learn why Hydro’s debt has risen about $9.4 billion since the Liberals took over, about $3 billion since Christy Clark became premier. We’ll not learn how much the secret deals with private companies (IPPs) have cost, nor a thing about the real cost of the proposed Site C Dam, to name but three areas. The obvious Liberal maxim is “best to keep the tiresome rabble in the dark”.
The budget, which Clark and de Jong tell us is so critical, bears no relation to what really happens, is made up by politicians for politicians with figures to match, and shields BC Hydro the uncontrolled, apparently uncontrollable, and biggest of all fiscal items by far, from any scrutiny.
Some people enjoy being fooled, whether by the carney at the fair, the guy with the shell and two peas or the guy who deals off the bottom of the deck. To them, “Come one! come all!” for next Tuesday is Annual Deception Day in the BC Legislature!
Rafe Mair, LL.B, LL.D (Hon) a B.C. MLA 1975 to 1981, was Minister of Environment from late 1978 through 1979. In 1981 he left politics for Talk Radio becoming recognized as one of B.C.'s pre-eminent journalists. An avid fly fisherman, he took a special interest in Atlantic salmon farms and private power projects as environmental calamities and became a powerful voice in opposition to them. Rafe is the co-founder of The Common Sense Canadian and writes a regular blog at rafeonline.com.
More articles by Rafe Mair