New Zealand’s experience with electoral reform

I sat down with Helen Clark, Prime Minister of New Zealand from 1999 to 2008, to talk about her country’s experience with electoral reform. She was in Kamloops on June 21 at a reception held at a local pub where about 70 people had gathered.

   image: Wikipedia

“You have five minutes for the interview,” the organizer of the event told us. We made our way to a quiet table.

Two referenda were held in New Zealand, she told me. The first in 1992 was non-binding. It asked whether voters wanted to retain the present first-past-the-post (FPTP) system or if they wanted a change. And if they wanted a change, which of four systems of proportional representation did they prefer?

The results were overwhelming with 85 per cent in favour of a change. Of the four systems, Mixed Member Proportional (MMP), was a clear favourite.

A second referendum was held a year later. This time the referendum was binding and the results closer with 54 per cent choosing MMP over FPTP.

I wondered how proportional representation had changed the culture of political parties. MMP leads to minority governments, Ms. Clark told me, which means that parties need to get along, not only after election but before. “Be sure to make friends”, she said, “you never know when you’ll need them later.”

After 20 minutes, I had asked all my prepared questions and we just chatted. “I thought the interview was only going to be five minutes,” the organizer scolded when he found us. Ms. Clark returned to the group where photos were taken and she gave a speech.

Afterward, I thought about the similarly of our upcoming mail-in referendum this fall to the one in New Zealand.

Two questions make sense to me: Do you want a change? If so, want kind do you want?  However, a B.C. lobby group called Fair Referendum disagrees. In a robocall call, they said that there should be just one question. I had to chuckle. The Fair Referendum proposal illustrates what’s wrong with our voting system. They want a single question with four choices, three of which are a type proportional representation and one being the existing FPTP. Those in favour of change will have their vote split three ways and those who don’t want change will have one choice. The ballot is rigged so that even if, say 60 per cent want change, 40 per cent will make sure it doesn’t happen. It seems obvious that’s what Fair Referendum hopes for.

The referendum, to be held from October 22 to November 30 by mail-in ballot, is shaping up along party lines. The Greens and NDP favour proportional representation and the BC Liberals oppose it.

Kamloops-South Thompson MLA Todd Stone says the referendum would be biased in favour of the NDP and that’s probably true –but only because the BC Liberals choose not to cooperate with other parties.

The Greens and NDP have made an extraordinary effort to be nice to each other because, as Ms. Clark suggests, it’s the only way that future governments under proportional representation will work. It’s a shift in party culture that the BC Liberals have yet to realize.

 

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Good riddance to B.C. LNG

There were lots of things wrong with former Premier Christy Clark’s plan to produce liquefied natural gas but let me start with the good.

image: the Tyee

At least it was a plan that labour and business could agree to. It was a provincial strategy that had workers and industry pulling together in the same direction.

It was an ambitious plan but unrealistic from the start. Markets for were weak and no one wanted to develop the plants. Now one of the last players, Petronas, has pulled the plug.

I can only speculate why they bailed out only one week after the BC Liberals were defeated. Was there some deal with the Clark government to provide concessions such that the LNG plant would be built regardless of whether it was viable? It’s not inconceivable considering how much political capital Clark had invested in the project.

Or was it because of Canada’s so-called anti-business climate, including high taxes, environmental reviews, and Indigenous land claims? Instead of recriminations, let’s celebrate the passage of Petronas says economist Jim Stanford.

Stanford has a unique perspective of LNG projects in B.C. and Australia. He’s a professor at McMaster University in Hamilton, Ontario, and lives in Sydney, Australia.

“In fact,” says Stanford, “far from blaming government red tape for the collapse of this misguided project, we should be collectively grateful. Those rules likely saved us from wasting tens of billions of dollars on the biggest white elephant in Canadian history.”

Stanford’s analysis shoots down an impression I had. I wrote that Australia was a LNG success story and that Australia’s early entry into the market was why B.C.’s plants were doomed. I now realize that Australia’s experience was not as rosy as I thought.

When Asian gas prices started to surge in 2009, Australia decided to chase after those markets. Unlike Canada, Australian developers faced few environmental hurdles and Australia’s Indigenous people had little negotiating power.

What followed was a spectacular construction boom in which $200 billion Australian was spent on LNG plants.

The boom had a dramatic effect on Australia’s economy. Their dollar, now at par with Canada, spiked up to $1.30, resulting in what economists call the “Dutch disease.” When Australia’s currency rose dramatically, the price other countries paid for Australia’s products rose. As well, imports were cheaper. Exports fell, imports rose and Australian factories could no longer compete. Australia became deindustrialized including the shutdown of their auto industry.

With the drop in gas prices, Australia’s LNG online plants are marginal. Boom towns that sprung up during the construction years are becoming ghost towns. Housing prices have collapsed.

Gas plants are selling into markets at discounted prices. Unlike Canada, Australian plants don’t have to supply the country first and so, ironically, there is a shortage of gas in Australia and a glut of gas on world markets. Domestic prices have doubled because of diversion to export markets.

B.C. has no economic strategy. Only one per cent of our GDP comes from mining, oil and gas and most from finance and real estate.

Our new NDP government faces a challenge. In our polarized political climate, unifying strategies are rare. Just ask former Premier Clark.

Double-dipping and wait times

Doctors are to blame for double-dipping but not for the long wait times in B.C.

image: Global news

Rosalia Guthrie of Salmon Arm found out the hard way about double-dipping. After waiting for 16 months, her surgeon’s secretary gave her the number of another clinic. To her surprise, she discovered that the other clinic was run by the same surgeon –and that she would have to pay.

Guthrie paid $500 to get in the door of the private clinic and another $3,850 for a written report. She didn’t have to pay for the actual surgery. That was covered by health care and only one-tenth of what she paid. The surgeon was paid $410.67 for the surgery done in a public hospital at UBC.

The surgeon did a number of things wrong. Double-dipping is illegal. That’s where doctors bill both the patient and the province for different aspects of the same treatment. And doctors are forbidden from charging patients for reports while advising patients on publicly-insured treatment. Also, the B.C. College of Physicians and Surgeons dictates that before referring patients to clinics, doctors must disclose if they have a financial interest. The surgeon did have a share in the clinic where Guthrie was treated and that wasn’t disclosed.

Doctors are not to blame for long wait times. That blame for that lies squarely at the feet of the government of British Columbia. The BC Liberals have failed to provide access to operating rooms for surgeons says Judy Darcy, the NDP spokesperson for health:

There are operating rooms that sit idle, MRIs that sit idle for many hours of the day. We need to invest in innovation to use our capacity to the maximum.”

If hospitals can’t provide operating room times for doctors, the province should build public clinics I argued earlier. There is no shortage of doctors; there is a shortage of operating rooms for them to work. In a survey done by the Royal College of Physicians and Surgeons, 208 fully trained specialists -16 per cent of those surveyed- were under-employed because “. . .there aren’t enough ORs.”

Some doctors contend that, while they may be doing something illegal, they are relieving patient suffering. Patients may lose their jobs while waiting or they may become addicted to pain-killing opioids.

Private clinics are expensive. Doctors can’t run them without charging patients. Dr. Ross Outerbridge, The founder of the Kamloops Surgical Centre, explains: “We factored in all the cost and a reasonable profit margin and that is what we charge the private patients.” But the whole realm of private clinics is unregulated. “I know that at other clinics, they overcharge,” says Dr. Outerbridge. ” I don’t personally agree with that – but it is very difficult, because nothing is being done about it.”

The BC Liberals have balanced the provincial budget by underfunding health care. British Columbia has the largest number of private clinics in Canada. While we are paying fewer taxes, we are likely paying more for health care when the cost of private clinics is factored in.

Yes, taxes would be higher but public clinics would be better than the illegal, unregulated, Wild West of bootleg medicine sold on the side of public medical practice.

 

 

Is spending on B.C. education really at “record levels?”

The BC Liberals claim in a fact sheet that spending on education is at record levels. A reality-check shows otherwise. Sure, spending is up if you consider only dollar amounts. When inflation is factored in, a different outcome emerges: there is no increase at all.

CCPA on Twitter

CCPA on Twitter

For example, from 2009 to 2013 B.C. education spending increased by 5.6 per cent which is almost exactly the rate of inflation. Across Canada, spending is actually increasing. It’s up by 12.3 per cent according to the Canadian Centre for  Policy Alternatives. Their assessment of the BC Liberals’ claim is blunt:

“As much as government may like to brag about the dollar amounts of funding, ignoring the basic inflation rate and other cost pressures obscures the meaning of those numbers.”

Spending is not at record levels and spending per student is dismal. Compared to the rest of Canada. B.C. is second last with PEI at the bottom. Alberta is second highest with Manitoba at the top.

However, Premier Clark can truthfully boast about record spending in one area. Funding for private schools has increased at more three times the rate of public schools over the past ten years, and is now projected to reach $358 million in the 2016/17 school year.

Premier Clark clearly likes private schools: she sends her son to St. George’s School in Vancouver at a cost of about $20,000 per year. In welcoming a new parliamentary secretary to the minister of education for private schools, she said: “I’m pleased to have him joining our excellent team of parliamentary secretaries, advocating for independent schools throughout B.C.”

She is mistaken in the belief that private schools are better. Student performance is affected by their parents’ socioeconomic status. In a study by Statistics Canada and reported by the CBC, the success of students is a result of resources at home.

“For example, compared with public school students, higher percentages of private school students lived in two-parent families with both biological parents; their total parental income was higher; and they tended to live in homes with more books and computers,” the report says.

Premier Clark makes it evident that she no intention in catching up with the rest of Canada on spending. In her mandate letter to Mike Bernier, Minister of Education, she instructs him not to increase spending:

“1. Balance your ministerial budget in order to control spending and ensure an overall balanced budget for the province of British Columbia.”

At first glance, the plan to close underutilized schools seems perfectly rational until you consider the details. They count computer labs, art and music rooms, as “empty” because they are shared by all students. By this warped calculation, a school with seventeen full classrooms and three “empty” rooms would be only 85 per cent full.

Despite all the perky talk about how great Clark’s government is doing, the real agenda of the BC Liberals is clear: keep spending on public schools low and ensure that private schools are available to the deserving rich.

The ruin of BC Hydro by the BC Liberals

It wasn’t an easy birth. The private companies opposed it. It took the vision of one man to bring BC Hydro into existence in1961. Before that, a patchwork of power companies supplied the province. The largest, BC Electric, served the lower mainland. Premier W.A.C. Bennett had a dream. He wanted a single provincial power grid but the power commission of the day was dragging their feet explains Norman Farrell in The Tyee, (September 12, 2016.)

Our dam power

Our dam power

“But Bennett, premier since 1952 and an MLA since 1941, was unhappy with the power commission. He wanted faster expansion of the electrical grid — and he wanted greater control.”

Bennett faced problems in the creation of BC Hydro. His vision included the Two Rivers Policy –the damming of the Peace and Columbia rivers –something BC Electric wasn’t interested in doing. Worse still, BC Electric was antagonistic: proclaiming that they would not buy power from the Peace River dam even if it was built.

Damming the Columbia River presented a different problem. Kaiser Aluminum wanted to build a dam on the river, not for generation of public power but for the production of aluminum. Outrageously, they wanted to control water flow so that power could be generated in the U.S. by the Kaiser’s parent company.

Bennett was not going to see Canadian water go to the U.S. for hydro power, so he negotiated a deal with U.S. Kaiser to receive 20 per cent of the power generated downstream plus taxes and water license fees. The Government of Canada, headed by PM Diefenbaker, quashed the deal citing federal jurisdiction.

By now, Bennett had enough. In 1961, with the support of the NDP forerunner (the CCF), he seized control of the private BC Electric and formed the public crown corporation BC Hydro. Bennett understood the obvious: governments can borrow money cheaper than private developers. Now he could proceed with a plan that would span generations; something that private developers, who require quick returns, would never do.

Things were falling in place at the federal level, too. Liberal PM Lester B. Pearson replaced Diefenbaker as prime minister. Pearson negotiated a deal with the U.S. that effectively restored the former Kaiser one. With the money raised from the Columbia deal, Bennett built the Peace River hydro dam eight years later.

The ruin of BC Hydro came when the Campbell government decided to re-privatize power generation. Ideology drove Campbell into thinking that privately operated generators could do a better job. To push his ideology, he had to subsidize private suppliers in order to get generators built.

Campbell’s gift to private operators was to lock in prices that BC Hydro would have to pay. Last year, BC Hydro bought power from private sources at nine cents per kilowatt hour and sold it at three cents.

It doesn’t take a marketing genius to figure that selling a product at one-third what you pay for it is not good business. Worse, the BC Liberals are pushing for more hydro production at Site C on the Peace River –power that will be hard to sell in a market with flat prices.

NDP critic Adrian Dix said BC Hydro’s errors are a disaster for domestic customers and taxpayers.

“Both the government and BC Hydro misread the market years ago and are pushing ahead hoping no one notices,” Dix said. “The company failed to admit previous errors in demand forecasting and continues similar projections without explanation.”

B.C.’s Carbon Tax not as advertised

B.C.’s carbon tax is praised nationally and internationally as achieving the best of both worlds: reducing CO2 emissions (GHG) without weakening our economy. I wish that it were true because I take pride in B.C.’s  leadership.

carbon tax

B.C.’s economy has not been hurt, but that’s because our carbon tax is small compared to other taxes.  The carbon tax is only 7 cents per litre compared to 30 cents per litre for fuel tax, excise tax, and GST.

The only way that B.C. meets its target for GHG reduction is by buying debatable carbon credits, not through the carbon tax. Marc Lee, senior economist for the Canadian Centre for Policy Alternatives, explains the mischief:

“The B.C. government makes the dubious claim that they met their interim GHG reduction target for 2012 of 6% below 2007 levels. Even then, B.C.’s numbers showed only a 4.4% drop, which, as noted, involves a one-time drop from 2008 to 2009. The claim of 6% reduction is based on the purchase of bogus carbon credits (offsets), making it more fiction than fact.”

The trouble with the purchase of offsets is that there is no detailed reporting on how offsets were used. The whole scheme suffers from “massive credibility problems” after a scathing report by the auditor general.

The 4.4 per cent drop in GHG wasn’t because of the carbon tax. It was because of the Great Recession of 2008 when the world saw a reduction because of slowing economies. Even the U.S. reduced GHG. Between 2007 and 2009, emissions fell by 10 per cent, half of it due to less coal burned, half due to the recession. The Smithsonian magazine says:

“In effect, more than half the carbon decline was due to a drastic drop in the volume of goods consumed by the U.S. population.”

Even the claim that B.C.’s economy was not hurt by the carbon tax is suspect; all of Canada’s economy grew. From 2008 to 2013, B.C.’s economy grew by 12.6 per cent while Canada was 15.1 per cent.

“If we go to constant dollars, there is a very slight edge to B.C. over Canada, but it works out to 0.07% per year in GDP growth rates.”

Our carbon tax could be something worth bragging about if it was significant. With relatively low fuel costs, now would be the time to increase them. If the tax was increased from the current $30/tonne to $200/tonne, fuel prices would only increase to what they were last year.

And since the carbon tax is revenue neutral, there would be no net increase in taxes. Even then, a better idea would be to invest the tax in renewable energy and public transit to lower GHG further. Meanwhile, let’s get real about our carbon tax.

“We need to stop telling fairy tales about the province’s climate action policies and its carbon tax (and I say this as a general supporter of carbon taxes).”

B.C.’s Premier Clark has a lot of explaining to do. Her proposed LNG project will result in the province exceeding targets. Clark’s new plan to be released by December will tell us whether our pride in the carbon tax is warranted.

NDP’s public insurance corporation is saving the BC Liberals from heat

It’s all because of the NDP.  That we have amongst the lowest automobile insurance rates in Canada, that is.

The B.C. Liberals are quick to blame the former NDP government for all their troubles. But they would never admit that our public insurance corporation, ICBC, is saving them from a lot of political heat.

Premier Campbell will grin and bear the distinction of being the only right-wing government in Canada with socialist auto insurance.  He will even strengthen the public insurer that was incorporated by NDP Premier Barrett in 1973.

While Campbell eagerly dismantles BC Hydro, he dare not touch ICBC.  Not now.  Campbell has learned from political blunders.  No, I don’t mean his impaired driving conviction in Hawaii.  I mean the one in New Brunswick.

The otherwise popular Premier Bernard Lord of New Brunswick and his Conservative government were nearly defeated in the last election over auto insurance.  Voters were mad as hell with the price-gouging of private insurance and they were prepared to toss out the government to show their anger.

And the Campbell can’t even look for comfort in that fortress of free enterprise, Alberta.  Their insurance rates are the highest in Canada.   His friend, Alberta premier Ralph Klein is frantically trying to control the political damage by freezing insurance rates.  Klein shrewdly knows when to control the marketplace.  The competitive free enterprise system is the best way to keeps prices low – – except when it doesn’t.  Jim Rivait, with the Insurance Bureau of Canada, was caught off guard by the freeze. “We certainly don’t like them, it’s interventionist. I think we should just fix the problem.”

Private insurance companies fix the problem by making customers pay for their bad investments.  Ironically, insurance companies don’t make money by selling insurance.  In the last 25 years, 1987 was only year that selling insurance was profitable, according to Paul Bobier in his article for the Canadian Centre for Policy Alternatives (September, 2003).

Private insurers make money by investing your money in the hope that the investment returns will cover the true cost of insurance and provide a profit for shareholders.

Before the collapse of the stock market, insurance companies (and almost any fool) made big returns by investing money in inflated stocks.  After the bubble burst, pickings are much slimmer.  Now drivers are paying for bad investment returns.

To make matters worse court settlements for injuries to people are rising, now exceeding the cost of repairs to vehicles.  The costs for insurance companies are going up and the returns from investments going down.  But those costs have increased for both private and public insurers, so why the difference in what drivers pay?

The difference is that public insurers are in the insurance business, not the investment business.  Public insurers reduce driving risks, reduce accidents, and consequently damage claims.   For example, ICBC identifies dangerous intersections and roads, and works with local governments to make them safer.  They work with police forces to reduce speeding and violations that cause accidents.

The B.C. Liberals have wisely reversed earlier thinking.  They eagerly canceled photo radar because it was unpopular with speeders.  They put police out of a job.  Now the Liberals have ordered an extra 100 cops to patrol highways with more road checks and speed traps.

“ICBC is willing to fund enhanced enforcement, because that’s one of the best ways to make roads safer, to reduce injuries and fatalities, reduce ultimately ICBC’s claim costs,” says spokesperson Doug McClelland.

And who will pay for those extra police?   You and I will through our auto insurance.  ICBC will pay cops to crack down on speeders to prevent us from hurting ourselves, and thus keep insurance rates down.  Not exactly right-wing policy.

The only other provinces with public insurance plans are Saskatchewan and Manitoba, where insurance increased by only 8 per cent.  In all other provinces with private insurance, increases averaged 58 per cent.

When he thinks he can get away with it, Premier Campbell will revert to his old ways and privatize auto insurance.  He will carve up ICBC the way he is slicing up BC Hydro.  We will soon pay the same high electricity rates and the same high auto insurance rates as Alberta.

Too bad that Campbell doesn’t learn from Alberta’s mistakes.  Public corporations are best served whole, not sliced up.