Teachable moments and dissing in the BC SFT

As many of you know, the BC Speech from the Throne occurred on Tuesday and this sets an interesting scene for BC budget which will be announced next Tuesday (16 February 2016) at 2pm PST.

There have been some things well discussed in the media, like BC dissing Alberta for spending like drunkin’ sailors and how this SFT paves the way for the 2017 Election which will focus on the BC NDP having spent that drunkin’ sailors in the past. To be fair, just about every province and every party can be accused of spending like drunkin’ sailors, including the proverbial poster child of fiscal prudence: none other than Paul Martin himself. So I really don’t take these digs very seriously at all, and find them annoyingly juvenile. After all, we never have the counterfactual that demonstrates that any party that was not in power would have been any different. But, hey, that is just me.

As someone who trains current and future public servants and critics, there were a few gems in there that relate to that work. Like the BC SFT noting that they have “the courage to get to yes.” Indeed, negotiation, consultation, and dispute resolution are all core competencies in our Master’s programs, including our MPA. Highlighting these necessary competencies in moving any agenda forward reinforces, for me, the hard work we have done to incorporate this material into all our programs. I, therefore, look forward to the BC government turning to us to further hone these skills among its public servants and politicians alike.

The SFT also indicated that we must “end the culture of blame that exists for those public servants…” While this phrase was targeted directly to MCFD staff who have been embroiled in what seem to be never ending scandals, it really should extend writ large. After all, it was this BC Liberal government that summarily and improperly fired BC Health researchers working on pharmaceutical research for alleged improprieties that never occurred. The damage and mistrust that now exists because of these actions can’t be ignored.

The SFT also ends by stating that “British Columbia is entering Canada’s 150th birthday as leaders in Confederation.” Leadership is, of course, a core course in all our Master’s programs and we all know that leadership is not a simple, one-size fits all construct. There are many in BC who would not view BC as a leader, especially related to addressing poverty, inequality, education. Hence, I believe this quote will make for an interesting discussion in our leadership course which takes place this summer (students take note).

Beyond the teaching ‘moments’ in the BC SFT, there are also a few policy gems, all based on dissing. The BC government took direct aim at municipalities, something that is happened a number of times over the last few years. The BC government seems to finally be concerned with housing affordability, but seemed to lay part of the blame at the feet of municipalities. Notably, that BC municipalities are ‘driving’ up the costs of homes by levying development charges.

Development charges are used across Canada by municipalities. These charges are regulatory charges which means their primary purpose is not to raise revenue to be spent willy nilly, but must be used specifically to finance the regulatory scheme or dissuade behaviour. (If you are interesting in learning a bit more about regulatory charges, read my CTJ piece.)

Development charges are fees based on granting the privilege to developers to build housing and the fees used to provide municipal services to those housing. Roads, transit, sewers, water, fire, police, community centers, licensed day care spots, etc. are not free. These are all provided by the municipality and the more building that occurs the more costs the municipalities take on. Do these fees raise the cost of housing? To the extent that the price elasticity permits these fees to be passed down to the buyer, yes. Is that bad? I don’t see why. By buying a new house, you are imposing costs on the municipality and I don’t see why the price of the house should not reflect these costs. And it is not like the province is just giving money to municipalities for these costs. I can’t imagine the BC government suggesting that these costs be funded via taxes paid by taxpayers who are not contributing to these costs.

I also notice that the BC government took aim at those dissing the mining sector. While I am agnostic about what economic sectors exist, I am not agnostic about subsidies that direct taxpayer funded support specific sectors. By supporting one sector, you are, in fact, supporting it over another sector. You are saying this sector is more important than these others ones and you are impeding economic diversification and economic development.

The BC SFT suggests that this support is important, after all consumer products are based on the minerals. This suggests a strategic reason for subsidizing the industry, but I am not big on that argument. There are endless debates about what materials might be considered critical and by whom and for what purpose. And, I might add, innovation more often occurs when constraints permit that innovation to happen.

It also ignores the opportunity cost of the subsidy. It is not as though there is no cost to supporting an industry. The biggest cost is to other industry who benefit from the same labour and capital, of which there is, in fact, only so much to go around. If it does not go to mining, it will go to another sector, likely tech which is a sector that demands similar skilled labour and capital investment. Why is mining so much more important than tech? In a nutshell, I am much happier when we have policies that are neutral and allow the chips to fall where they should. However, that will not win me votes in Elkford, BC.

Finally, the BC SFT also took direct aim at the Liberal government in Ottawa. The BC SFT said specifically that “Controlling spending does not mean failing to invest in the future. There is currently more than $7 billion dollars’ worth of ongoing infrastructure projects. This economic stimulus is happening right now – without pushing B.C. into deficit.” I am not going to go into the pros and cons of the Ottawa approach to deficits, but I will note that the CPC party itself was a bit stunned by Canadians frustration with endless austerity. While the election in the BC is a long way off, this may come back and bite the BC Liberal party in the butt.

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