Get ready to pay a pandemic premium

In a sneaky move, the Trudeau government has proposed a revised Emergency Response Benefit (CERB) just after they prorogued Parliament. Now the opposition has no opportunity to debate the proposal until after the Speech from the Throne on September 23. It gives the government time to run the plan up the flagpole and see who salutes it.

A $2000 Canada Emergency Response Benefit  image: THE CANADIAN PRESS IMAGES/Lars Hagberg

Conservatives say that while the conversion of CERB to EI is an improvement because it provides incentives for the jobless to accept work, it delays the democratic process. MPs Dan Albas and Pierre Poilievre say the delay in debating the legislation is unacceptable.

“It is unacceptable that the Trudeau government announced these changes days after locking out MPs and shutting down Parliament,” they said in a joint statement.

The revised CERB hands a lifeline to those who have been surviving on it. It extends existing benefits of $500/week until September 26.

The problem with CERB, as some see it, is that the unemployed don’t have to look for work. That’s a disincentive say employers in the service sector: workers would rather stay at home and collect CERB than go to work. “CERB is definitely an issue,” B.C. Restaurant and Foodservices Association president Ian Tostenson told iNFOnews.ca. “We’re hearing things like, ‘Why would I come back to work? I’m making a couple of thousand bucks a month.’ (June 26, 2020).”

B.C.’s restaurant sector has been hit hard: about 100,000 of the province’s 190,000 food and beverage workers were unemployed.

After September 26, when CERB ends, the jobless will have three options to choose from.

If they choose EI, they will have to look for work. Changes to EI mean that they will get a minimum of $400/week. Before the changes, there was no minimum EI and the average was just $312/week. That’s an improvement but some jobless might complain that it’s not as good as CERB.

Gig workers and the self-employed are not eligible for EI. Instead, another program will provide $400 a week for up to 26 weeks. If their annual net income exceeds $38,000, then 50 percent of that benefit will be clawed back.

For those who become ill from contracting COVID-19, or for those who must self-isolate, they can receive $500 a week for up to two weeks. That will be a help. Former University of Ottawa Professor Miles Corak says: “If you get COVID – and trust me, I did – it’s something that lasts longer than two weeks and is quite debilitating,”

Some say the new benefits are too generous, others say they are too frugal –the hallmark of a Canadian compromise.

But where will the money for these programs come from? For those of us who can afford to pay more taxes, it’s what we can do to support fellow Canadians.

And the cost of running the service sector is going to become more expensive. Workers returning to work can reasonably expect to be paid more, given the increased risk they encounter. Restaurants can’t hold as many customers and revenues will decline if nothing is done. The increased costs will have to be passed on to customers.

More taxes and higher costs will result in a pandemic premium. I’ll happily pay it -that’s the price of living in a civil society.

 

 

 

 

 

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Fears of out-of-town workers spreading COVID-19 in Kamloops are unfounded

Some Kamloopsians worry that the 50 pipeline workers from out of town will bring the Cov2 virus into our community. That number of workers will swell to 600 by August.

Pipe stored in Kamloops. image: National Post

The Site C dam site serves as an example. After concerns were raised in March, several workers went into self-isolation. Even though none of the workers had been tested positive at the time, people in the closest town of Fort St. John worried that the hospital would be inundated. Town councillor Trevor Bolin said the site should be shut down and added:

“If there was an outbreak at Site C, our hospital would be inundated with patients that we could not handle, that our health system couldn’t handle, with the seven ventilators that we have in the community.”

Months later, one case of COVID-19 has been recently indentified at Site C. That person has been isolated before having contact with other workers. Just one case. Fort St. John’s hospital has not been inundated.

No COVID-19 cases have been indentified in Kamloops pipeline workers, despite ongoing work in preparation of the new pipeline near Ord road. This month, crews will start to pull the new pipeline under the Thompson River.

Last weekend saw a dramatic rise in COVID-19 cases in the interior of B.C. So why hasn’t the presence of 50 pipeline workers not resulted in an outbreak in Kamloops?

The answer is precautions. It is not in Trans Mountain’s best interests to have a skilled, expensive workforce out of commission.

After the COVID-19 pandemic hit, Trans Mountain delayed construction in Kamloops for two months to ensure its pandemic safety measures were in place, including temperature checks (Kamloops This Week, June 2, 2020).

In addition, Trans Mountain will implement precautions such as one person per hotel room, spacing for dining, extra cleaning requirements and maintaining spacing during transport to worksites.

The economic benefits to Kamloops are substantial. Seventeen hotels and motels in Kamloops will accommodate Trans Mountain’s workforce. Construction spending in the Kamloops area is expected to be more than $450 million over the next two years. The workforce will spend an estimated $40 million for goods and services at local businesses.

There is no room for complacency when dealing with Cov2. Contagion is an obvious risk with this virus. Kelowna’s experience is a cautionary tale. On the Canada Day weekend an advisory for downtown Kelowna was posted after eight people had tested positive following two house parties involving visitors from other parts of B.C. That number quickly grew to 13 on July 13, then to 35, and now to 60 plus.

According to reports, those parties were not wild free-for-alls like some Texas bar scene.  The parties were mostly done with the right intent with the numbers were kept small. The mistake they made was not the high numbers at any one time but that there were different people every night.

The fact that there are no COVID-19 cases in pipeline workers in Kamloops is no accident. With careful precautions, Kamloops can economically benefit without a COVID-19 outbreak from the workers.

What will cause an outbreak is the assembly of large numbers of people who blissfully don’t practice good pandemic hygiene.

Emergence of Canada’s economy from a coma must be done carefully

Canada’s economy has been placed in an induced coma since it was infected with the novel coronavirus. Arousal from the coma must be done carefully to avoid a devastating setback.

The Dirty Thirties. Image: Canadian Encyclopedia

Keeping the comatose economy on life support has been expensive. We’ve blown the wad on the first wave of the pandemic to the tune of one-quarter trillion dollars. We can’t afford an expensive relapse.

Canada’s debt, manageable now, could lead to consequences worse than that of the Dirty Thirties if the recovery is not done right.

Royal Bank of Canada CEO Dave McKay puts it this way: “We can’t screw this up because we don’t have enough fiscal firepower. We can’t fail the re-entry. We don’t have enough money for a massive step back.”

Bringing the economy back to life is as much an art as a science; a little wakefulness here, a few stimulations there. Hurry up and wait to see what happens. The patient’s urge to run must be tempered with the pitfalls that lie ahead.

Deep thinkers are at work. We need to listen to the advice of health professionals, who understand the mortal dangers of this virus, and to economists who appreciate the long-term social and economic costs of tanking the economy.

Unemployment already exceeds anything in the past century, except the Great Depression. The sheer number of people affected is staggering. A projected 8.5 million Canadians will receive $2,000 monthly from the Canada Emergency Response Benefit (CERB). That’s nearly 40 per cent of Canada’s work force.

Unlike Employment Insurance, the CERB does not require recipients to look for work. It doesn’t require them to accept a job offer. Recipients can only earn up to $1,000 a month, anything more and the CERB is lost.

The disincentives to find work are part of the induced coma. Rest and relaxation is the prescription. Workers must stay home to avoid contagion. To encourage workers to help wake up the economy, they should be allowed to keep a larger portion of the benefit as they return to work with a gradual clawback as earnings rise.

This would be a step towards a basic annual income for all Canadians –an idea supported by both the right and left ends of the political spectrum. Sheila Regehr, chair of the Basic Income Canada Network, is urging just such a change. The group issued a policy paper in January that proposed a $22,000 annual benefit for a single adult. Under that proposal, benefits would be reduced by 40 cents for each dollar of earnings and would be eliminated entirely after a person’s income rose above $55,000.

Child care is another knotty problem. Parent returning to work need affordable child care, but they need to assured that they are not sending their children into harm’s way. Any uncertainty about public-health risks at daycares and schools will prove to be a significant disincentive for many Canadians to return to work.

The next decade may well be known as the Dark Twenties. The economy that awakes from the induced slumber might not recognize its former self.

Low income Canadians could benefit from automatic tax filing

Many low income Canadians are missing out on benefits because they don’t file tax returns.

image: Victoria News

While most Canadians such as me think of what they owe at tax time, low income Canadians should be thinking about what they could receive. They pay virtually nothing in taxes and receive the greatest household income in terms of benefits from the Canada Revenue Agency.

So, why wouldn’t low income Canadians file returns? The reasons vary but when you don’t have much money, you can’t afford to pay for someone to prepare your taxes or to pay for a program like TurboTax that helps navigate the tortuous forms.

And this year could mean even fewer low income Kamloopsians file returns because the volunteers who usually help out with taxes are physically isolating themselves. That’s certainly the case for the society I belong to, CSI Kamloops. In normal times, we help thousands of people prepare returns at our North Hills Mall location. This year, we might be able to help at our Brock Activity Centre dependent on whether we can open.

For low income Canadians, the CRA is more like a social service than a tax collection agency. Since returns are used to determine eligibility for a abundance of other benefits, low income Canadians could be missing out on them as well. Professor Jennifer Robson of Carleton University explains:

“For many Canadians, the tax system can be more like a social service system. It delivers cash benefits such as the GST credit and Canada Workers’ Benefit, for example. Through a notice of assessment from CRA, the system also helps people prove their annual income so they can qualify for means-tested programs including housing and daycare subsidies, home heating rebates, and many others (Canadian Centre for Policy Alternatives Monitor November/December 2019).”

Working-age Canadians in the bottom 20 per cent of other income get the vast majority of their income from government transfers, “income that could be put at some risk if they can’t or don’t file a return,” adds Robson.

One way to ensure that low-income Canadians receive the benefits of filing a tax return is to have their returns automatically filed for them.

Almost everything is now in place for that to happen. You no longer have to apply for the Canada Workers’ Benefit because the CRA automatically assesses returns for eligibility for the tax credit. The same is true for the Guaranteed Income Supplement. Automatic enrolment is in place for the GIS so that seniors no longer have to apply for this benefit.

When I filled out my tax return using TurboTax, my forms were automatically filled out by accessing my CRA account. Except for political and charitable donations, CRA already had all my information.

Automatic tax filing doesn’t mean that the returns can’t be reviewed and corrected. In my case, I had the option of changing the CRA generated forms or not. Automatic tax filing probably wouldn’t work for those with complex returns such as business owners who could opt out the automatic return.

Not everyone thinks it’s a good idea. The tax preparation industry including Intuit, maker TurboTax, has spent $6.6 million in the U.S. lobbying against government tax filing. If taxes could be filed automatically, it would eat into their profits.

Norway, Denmark and Sweden already offer automatic tax filing. Other jurisdictions such Chile, Spain and California are coming on board. It’s all but done in Canada.

Kamloops’ rental shortage is no accident

The shortage of affordable rental units in Kamloops is the result of deliberate government policy starting with the Mulroney Conservatives in the 1990s. Not just Kamloops but all Canada was affected.

CSI low-income housing in Kamloops

Governments stopped investment in affordable rental units for a number of reasons: strong wage growth from 1996 to 2006 coupled with declining interest rates and modest housing prices enticed more renters into home ownership.

But by the mid-2000s, stagnant wages and the growth of low paying jobs along with escalating housing prices pushed people into rentals.

Now the federal Liberals in cooperation with the B.C. government and CMHC have reversed that trend with an investment in affordable housing.

Our society, the Centre for Seniors Information in Kamloops, is one of the city’s non-profits involved in the construction of affordable housing (I am the president of the society). We are building a five story apartment with112 units, ranging from studio-sized, to two bedrooms on the site of the old Cineplex Odeon theatre on the corner of Sixth Avenue and Victoria Street.

Judging by the response that our housing manager is getting, the building could be full when it opens its doors in just over a year.

The drought in affordable housing has had a devastating effect on low and middle wage-earners.

Canada’s five most common occupations are low-paid and often not full-time. (admin assistants, retail salespersons, cashiers, food and kitchen helpers, food and beverage servers) representing 1.8 million workers or 12% of all jobs,

According to calculations done by David MacDonald, senior economist with the Canadian Centre for Policy Alternatives, wages don’t pay the rent any more. He has come up with a measure of how much wages are short, something he calls the “rental wage.”

He defines the rental wage as the amount you would have to earn so that no more than 30 per cent of your wages goes to rent. In Kamloops, the rental wage is $25 an hour for a two-bedroom apartment. That would leave a reasonable remainder of 70 per cent for groceries, medicine, clothing, fuel, etc.

Another way of measuring rent is by the number of hours you would have to work at a minimum wage of $12.65. In Kamloops, you would have to work 78 hours a week to pay for an affordable two-bedroom apartment.

I suspect that many Kamloopsians are doing without essentials because they pay more than 30 per cent of income for rent.

Between 1980 and 1993, 49% of all rentals built were affordable. Federal tax incentives and loan programs to private investors also played a pivotal role in apartment rental construction over that period.

Now, new federal programs plan to deliver more than 110,500 new units by 2027-28. Combined with other provincial and federal programs, 15,100 and new affordable units were committed in 2017-18 and 16,600 in 2018-19; almost as many as from 1970 and the early 1990s before the cuts.

Canadians desperately need affordable rentals. One-third of Canada’s 14 million households rent their homes.

Without deliberate government policy, private investors can’t deliver the housing needed.

Everybody wins. Mortgages are given specifically for low income rentals, developers build the units and employ trades people, people can afford rent with money left over, and non-profits like ours take ownership of the buildings to generate much needed revenue.

Baby boomers’ long term care goes bust

The long term care of boomers is an unfunded liability. Unlike the Canadian Pension Plan and Old Age Security, the long term care of boomers is not funded at all. Our health care is not prepared to receive their numbers.

image: genx67.com

Other countries with similar long-term care pressures, such as Germany and Japan, have established various forms of public long-term care insurance. Not in Canada.

As it now stands, long-term care falls on the shoulders of family members who provide for 75 per cent of home-care for older Canadians, unpaid. Canadians typically don’t see the gaps in the current publicly-funded care programs until they or a family member falls through them.

Research from the National Institute on Ageing at Ryerson University shows that if Canada continues on its current track, the cost of publicly funded long-term care for seniors – including nursing homes and home care – is expected to more than triple in 30 years, rising from $22-billion to $71-billion, in today’s dollars. Authors of the research, Bonnie-Jeanne MacDonald and Michael Wolfson, warn:

“There is no special fund or program to cover the costs of long-term care in Canada. And it is not covered under the Canada Health Act in the same way as physician and hospital care (Globe and Mail, October 8, 2019).”

Canadians are dreaming if they think that our health care system can deal with the onslaught of boomers that will be falling into long term care. Hospitals are now struggling to place seniors in long-term care facilities and the wave of boomers hasn’t even hit yet.

Private long-term care insurance is available but expensive because of the low number of people buying it. It hasn’t worked here in Canada and is unlikely to work in the future.

Private long-term residences are having trouble staffing. In Kamloops, Berwick on the Park’s supportive living unit will close next year leaving 20 residents without round-the-clock care, despite the fact that residents pay $5,000/month for the service. The director of Berwick wrote to residents:

“There are significant challenges to retain healthcare staff in the current labor environment. An extraordinary amount of energy has been directed at recruitment and onboarding staff to meet the obligations to successfully operate our licensed care unit. The forward looking labor forecast indicates that these challenges will continue for the foreseeable future (Kamloops This Week, October 10, 2010)”

Even if private long-term care were available, many boomers couldn’t afford it. Debt among seniors is increasing according to Stats Canada. In 2016, the proportion of senior families with consumer and mortgage debt doubled since 1999.

Boomers have led privileged lives. They grew up during a period of increasing affluence due in part to widespread post-war government subsidies in housing and education. Baby boomers were more active and more physically fit than any preceding generation and were the first to grow up genuinely expecting the world to improve with time. While they have accumulated wealth, many boomers have lived beyond their means.

Boomers’ optimism for a better world is going to be severely tested as they age.

Canada needs to establish a new long-term social insurance program.  Given that health care is controlled by provinces, a patchwork system will be the likelihood as boomers totter into old age.

The current rickety long-term care system is not prepared for the wave of boomers.

 

 

Closure of the Vavenby mill was so predictable

Who could have predicted the collapse of B.C. forestry industry 15 years ago? Bob Simpson, that’s who. Back then the NDP MLA for Cariboo North was derided by the BC Liberals in the B.C. legislature and dubbed “Chicken Little” when he raised concerns about the future of our timber supply.

image: Kamloops This Week

Now, the sky is falling. As the wildfire season approaches, it’s the ashes of what was once marketable timber.

The writing was on the wall when the pine beetle turned 50 per cent of B.C.’s commercial lodgepole pine a rusty red a decade ago. Lumber mills worked overtime to harvest the trees before they became worthless. What remains now lie on the forest floor, ready to burn.

The Vavenby sawmill, 150 kilometres north of Kamloops, was just the start of a string of closures. It’s closing for good in July, wiping out 180 direct jobs in a community of just 3,500 people.

Canfor is shutting down all sawmills, except one, for at least two weeks. Not just sawmills but also their oriented strandboard plant in Fort St. John is closing, affecting 190 workers. The lack of wood supply is forcing Canfor to close their pulp mill until August 5. West Fraser will permanently close its Chasm lumber mill and eliminate the third shift in their 100 Mile House mill.

The loss of forests is threatening B.C.’s woodland caribou. If B.C. doesn’t do something to protect them, the feds will.  Environment Minister Catherine McKenna has threatened to impose an emergency protection order if we fail to implement species-at-risk protection. B.C. is one of the few provinces in Canada without a species-at-risk law, and yet we have the greatest number of species in danger.

The politics of navigating the dwindling lumber supply versus jobs is tricky. While inaction by the BC Liberals while in power to address the pine beetle, climate change, and endangered caribou is obvious neglect, Todd Stone, BC Liberal MLA for Kamloops-South Thompson sees it differently:

“British Columbia’s forestry industry is in crisis as mills close and job losses mount due to John Horgan and the NDP’s increased taxes, red tape and growing uncertainty on B.C.’s land base (CFJC Today, June, 13, 2019).”

Bob Simpson is familiar with the politics of forestry. His prophecy of doom for the forestry industry did not go over well in the previous provincial election. It was a hard message to swallow. Before the election, Simpson was warned by his staff that his message of an unsustainable lumber industry would be a hard-sell in mill towns. He was too blunt. After deadly blast levelled the main sawmill in Burns Lake in 2012 he said “You can’t be a sawmilling town forever (Globe and Mail, June 6, 2012).”

Speaking the truth in politics is dangerous. Simpson lost his seat in the riding of Cariboo North in the previous provincial election. Now as mayor of Quesnel, Simpson is preparing for the “industry meltdown.”

Like the cod in the Atlantic, B.C. forests seemed eternal. Our forests have not only been marketed as a provincial brand, they are part of our identity –an image that now needs a makeover.

Mexico could ease Canada’s cannabis problem

The plan to drive illegal cannabis growers out of business is going slowly.

The problem is supplying enough legal cannabis to lower retail prices. Eventually illegal sellers will be a quaint memory, something like the bootleggers of alcohol of the past. For that to happen, a plentiful supply of cannabis has to be available and it’s going to take years for that to happen with Canadian growers only.

image: Greenhouse Canada

The cost of legal cannabis remains nearly 50 per cent higher than potleggers according to crowd-sourced data obtained by Statistics Canada. The cannabis store Kamloops seems to fairly well-stocked but in some parts of Canada like Quebec, stores have had to close on some days of the week due to lack of supply.

One way to lower retail prices immediately is to reduce taxes; a solution favoured by the cannabis industry. In addition to provincial sales taxes, the federal government charges one dollar per gram excise tax and an annual cultivation fee of 2.3 per cent of revenue.

Some jurisdictions in the U.S. with legal cannabis markets, such as California, are considering such temporary tax reductions to lure customers away from the illegal market after disappointing early sales.

I don’t think lower taxes are the solution. The whole idea of legalization of cannabis is generate revenue so that other taxes could be reduced. Like other “sin taxes” on recreational drugs such as tobacco and booze, taxes on cannabis provide revenue on a product not currently taxed.

Regardless, Canada has no intention of following the U.S. lead. A Canadian Finance Department spokesperson said: “There are no planned changes to the existing duties at this time (Globe and Mail, February 4, 2018).”

Another way to reduce legal cannabis prices is to increase supply.

Mexico plans to legalize cannabis. The new interior minister of the Obrador government has introduced draft legislation to regulate cannabis. Mexico has been studying Canada’s model of issuing licences for the cultivation, processing, packaging, sale and possession of cannabis.

Mexico has something going for it that Canada doesn’t -climate.  Cannabis doesn’t need to be grown in greenhouses there. The president of Mexico’s National Association of Cannabis Industries says:

“We’re going to be able to create a new industry based on new regulations, to produce cannabis for the rest of the world – our geographic situation and our labour [pool] gives us a major advantage (Globe and Mail, November 8, 2019)”

Enthusiasm is mutual on this side of the border. Canada’s Canopy Growth Corp. is looking at investing in Mexico. Their co-CEO said:

“We think [Mexico] is a real opportunity. When you’re on both sides of America with really well-positioned products, this could be a very good platform to reflect both sides of the border with the U.S. and enter an economy that is substantial.”

However, Mexico faces hurdles. Much of Mexico is controlled by drug cartels who oversee the growth of illegal marijuana. Seizing control of agricultural land will be a challenge. Also, Columbia is also poised to compete in the legal cannabis market and have a workforce experienced in its growth.

Of course, Canada’s fledgling cannabis industry needs to be protected but controlled importation could help our supply problem.

Can blockchain save Robin Hood?

The Robin Hood Co-op was started by a group of artists at the University of Aalto outside Helsinki in Finland. It’s a hedge fund like no other, formed as a piece of “economic performance art.”

image: Information Age

Problems started when the artists began to raise money and invest in the stock market. The university administration took issue with the concept and forced the co-op to shut down.

Instead of shutting down, the artists left the university to venture out on their own.

Since then they focused on building a global network of countercultural investors from Helsinki to California.

The Robin Hood Co-op doesn’t exactly steal from the rich to give to the poor. The goal is to distribute profits to worthwhile causes globally. “Part of the profit generated by the fund is invested into projects building the commons,” according to their website.

They have no regular offices and meet in different places, often abandoned buildings, to hold workshops in conjunction with a local host group.

Reporter Brett Scott went to one of these places in a graffiti-strewn former slaughterhouse in Milan occupied by a radical arts group called Macao. He writes:

“In the hall is a naked woman painted blue, wearing a gas mask, dancing to the sonic violence of industrial deathmetal music. Next door is a punk street-theatre collective manufacturing artificial vomit in buckets to throw at a protest (CCPA Monitor, Nov/Dec, 2018).” Among the assembled were hackers, coders, designers and artists. The meeting had the feeling of the blend of an intellectual salon, a hackathon and a political campaign meeting.

Not your average corporate boardroom.

Portuguese artist Ana Fradique, who co-manages the fund, describes Robin Hood as “artivism”—a mix of arts and activism.

Robin Hood has its critics like Serbian activist Branko Popovic. “I understand you’re trying to be like a vampire on the market,” he says, “but why be a vampire on vampires? They have nothing to give us.”

That’s an ongoing tension amongst activists: do you work within the system to build a more equitable world or tear down the system and rebuild it from scratch?

I many respects, Robin Hood Co-op is conventional. They invest in the Wall Street stock exchange using an algorithm they invented called “The Parasite.” Assets in the co-op are called Robyns. In the first year of investment, they made double-digit returns.

Some of its first distributions went to the autonomous arts space Casa Nuvem in Rio de Janeiro (€5,000) and the activist broadcaster Radio Schizoanalytique in Greece (€6,000).

However, Robin Hood Co-op members are impatient to grow. They plan to expand the model beyond the Parasite algorithm to implementing blockchain. “Robin Hood 2.0.” will be “even more monstrous” than the first incarnation said one of the co-founders.

Rather than being based in Finland, they wants to transform Robin Hood into a decentralized global cryptofund using blockchain -the underlying technology of cryptocurrencies such as Bitcoin and Ethereum.

While Bitcoins are turning out to be a bit of a dud, the technology of blockchain is promising. It’s an indelible ledger in which anything can be permanently recorded, including shares in an activist hedge fund. The advantage of blockchain is that it’s decentralized and global.

It’s a big leap. Implementation of blockchain will require a change in the culture of the co-op and paid staff.

Time will tell whether this chimera of art and capitalism will prosper.

 

BC Liberals suppressed Hydro rate hikes

For decades, B.C. governments have hidden the true cost of Hydro rates -especially the BC Liberals.

image: Common Ground

Under the direction of the BC Liberals, the Crown utility used “inappropriate” accounting to pile $5.5-billion in what are known as deferral accounts says B.C.’s auditor-general.

“That debt amounts to $1,300 for every residential customer, more than $10,000 for each commercial and light industrial ratepayer, and almost $5-million for each large industrial consumer,” according to the Globe and Mail, February 7, 2019.

Deferral accounts are not improper when correctly accounted for. They can be used as a temporary measure to avoid the shock of sudden rate hikes. After rates are gradually increased, the deferral account can be paid off.

But that’s not what happened. To keep voters happy and to make governments popular, BC Hydro rates were kept artificially low leaving future governments to deal with the problem of billions hidden in deferral accounts.

“BC Hydro was not allowed to charge its customers enough to cover its operating costs each year,” Auditor-General Carol Bellringer wrote.

The current minister responsible for BC Hydro, Bruce Ralston, said his government is committed to fixing the problem but it will take time given the size of the debt. “We are going to keep rates affordable. No one’s rates are going up by $1,300 in a year.” His government has already reduced the deferral accounts by $950-million by bringing that debt onto government books.

The NDP government also intends to prevent misuse of deferral accounts by future governments by restoring the role of the independent regulator, the BC Utilities Commission (BCUC) and ensuring that BC Hydro adopts ordinary accounting practices.

Industries who are used to cheap hydro are not happy with the prospect of paying the real cost of producing electricity. Industry representative Richard Stout says industrial customers shouldn’t absorb the shock of getting Hydro back on sound financial footing. Since the government is responsible for the mess, they should pay:

“I think most would agree the appropriate source of paying down the debt should be from government, rather than the ratepayer.”

Huh? He wants taxpayers (the government) to pay for the meddling of former governments rather than ratepayers? Last time I looked Hydro users and taxpayers were one and the same.

Critics of BC Hydro will point to the debt incurred in building the massive hydro dam at Site C as an additional source of the problem. The project was started by the BC Liberals and given green light by the NDP who said the project had gone too far to abandon.

The government is faced with a hard choice, says Bellringer: “You can either have a rate increase or you can end up with a deficit that ends up getting covered by the government at some point.”

Hiding Hydro debt, which in reality is our debt, is not an option.

Transferring BC Hydro’s debt to the government’s books is the right thing to do but government debt is not popular with voters because it’s visible. Turning control of BC Hydro over to an independent regulator is the right thing do but hydro rates will go up.

We’ll see if doing the right thing pays off for the NDP in the next election.