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The moderating effect of moderation

Posted March 28, 2015 by Norm Farrell
RossK writes about the Pro-Media Club and its implicit rulebook, which includes a requirement that no one reprove a colleague, even if overstatements and misrepresentations morph into purposeful lies. The blog world doesn’t follow those guidelines so we can point at any load of old codswallop encountered. In coverage of the Metro Vancouver transit plebiscite, there is plenty, particularly from alternative media that claim to publish content less influenced by special interests. Unfortunately, the interests are still special, just different.

Although a photo of the writer attached to the article gives a hint of bias, there is no indication Paul Hillsdon’s work is a paid advertisement. His Vancouver Observer “Special Report” presents implications of a “NO” vote. These are but a few:

  1. TransLink’s …communications to the outside world effectively eliminated.
     
  2. The Pattullo Bridge will be delayed for three more years, but eventually begin construction under a tolling regime.
  3. Broadway [SkyTrain subway extension] will become the next priority. …The project will start moving forward in 2020.
  4. Governance, administration or corporate structure will not see any major changes.
  5. The TransLink-owned and operated subsidiary Coast Mountain Bus company will be dissolved.
  6. To address issues of governance and regional equity, TransLink is dissolved.
  7. TransLink will make strategic investments in property that produces dividends for the agency.

This “special report” is not worth special attention but, if TransLink were to end communications to the outside world, would tens of millions of dollars paid to friendly communication contractors also end? Would TransLink continue to publish bus schedules and explain SkyTrain stoppages? Would $110,000 a year fare checkers be allowed to talk with transit riders?

#2 claims Pattullo bridge tolls would result if the sales tax is defeated, which leaves one to assume their absence if the vote is yes. In fact, TransLink intends to collect tolls on the new crossing regardless of the vote result.

In #3, The Observer reports the Broadway subway will not move forward until 2020. However, TransLink has already spent millions on design and property acquisitions for the SkyTrain extension. It’s construction is, shall we say, on track.

#4 is in direct conflict with #5 and #6. As Stephen Leacock might have written: The yes vote proponent flung himself upon his horse and rode madly off in all directions.

The final item references the possibility of financing transit improvements through “value capture” by securing a portion of incremental values gained by commercial properties after installation of mass transit facilities. However, such a policy is not dependent on a regional sales tax vote, it needs elected governments to alter taxation philosophies. As the yes side claims elsewhere, this issue is not on the ballot.

Top Five Myths about the Transit Vote by David P. Ball is an improvement but The Tyee allows partisan enthusiasm to get in the way of accuracy. Ball goes wrong in his second sentence. He writes the vote is “on whether to boost sales taxes by 0.5 per cent to add $7.7 billion to the transit and transportation budget.”

The proposed sales tax would not guarantee that sum is added to TransLink’s budgets. By the company’s own reckoning, it would raise $250 million in the first year, which wouldn’t pay 3/4 of the annual interest on $7.7 billion, if TransLink can borrow at the province’s rate of 4.45% (FY 2014) and not the 6.7% paid on Golden Ears Bridge financing (Note 8, 2013 audited financials).

Clearly, the addition of almost $8 billion to the transit and transportation budget is more dependent on decisions of senior government than the choice of Metro Vancouver voters to accept or reject a new type of taxation dedicated to TransLink. Of course, there is also the possibility that the 0.5% regional sales tax would elevate to 1.75%, which is sufficient to repay $7.5 billion over 20 years.

Ball writes that myth #2 is “TransLink tax grab will cost households $258 per year.” The Mayors’ Council claims an average cost of 35¢ a day, or $128 a year. Of course, any tax that imposes a $250 million burden on roughly a million homes, needs a little mathematical manipulation to fit the Mayors’ assertion. I’ve seen convoluted calculations and explanations but none that fit this OED definition of an average:

The value obtained by dividing the sum of several quantities by their number.

Yes, some households will pay more, some will pay less, but the average is not $128. The myth listed by David Ball should have referenced the average cost propagated by the YES side.

The Tyee reports the third myth is “The debate is between the political left versus right.” No knowledgeable person has made that statement and suggesting existence of this fallacy undermines the writer’s credibility. A more accurate argument would be that the debate is between the publicly paid entitled (like TransLink’s countless media contractors) and the people who do the paying.

Ball says it is a myth that TransLink’s high CEO salaries are wasteful and offers a defence that “that other government agencies pay high salaries to their top executives.” That latter assertion is true but it is like arguing that I should be able to drive 80 km/hr through a school zone because drivers elsewhere are driving even faster. In reality, many people have complained about high TransLink salaries, but not just the amounts paid their imperfect CEOs. Excessive salaries in the corner offices creates a demand elsewhere in an organization and removes the moderating effect of moderation.

Responding to financial pressures, one very large private company had this response:

Samsung Group said Friday it will freeze wages for about 2,000 executives next year as Korea’s largest conglomerate tightens its belt.

…In order to reduce costs, Samsung Electronics in July ordered executives to travel in economy class for flights under 10 hours and reduced allowances for business trips. It also encouraged employees to take vacations instead of receiving pay for unused time off.

As for the group, it has taken other cost-saving measures, such as reducing the number of executive promotions, restructuring business divisions and redistributing employees…

By the way, annual TransLink revenues are about 1/2 of 1% of Samsung revenues. The Korean company is a sophisticated conglomerate with a record of steady growth and substantial profitability. It also has a record of paying its top executives a small fraction of what individual executives make at North America’s largest companies.

At the North Shore News, former full-time journalist Trevor Lautens writes about transit tax proponents, saying they:

Overwhelmingly have this in common. They are politicians, downtown business people, high bureaucrats, self-important media types, charity moguls, and the delivery people who supply and sustain them. They write off their driving and parking costs. They don’t take public transit themselves. Never will. They want other people to take it.

At the same newspaper, estimable columnist Elizabeth James concludes,

TransLink, the agency that believes your pocket is the gift that keeps on giving — whether or not you are given good value for your money in return.

At The Common Sense Canadian, Rafe Mair makes an argument for a yes vote but commenter Evil Eye provides a response that is worth reading. It includes this:

To exaggerate the number of people taking transit, TransLink uses the number of times that transit-users board or alight transit. TransLink in effect creates clones to inflate ridership on transit and to make certain key statistics for transit (tax subsidies) by TransLink seem less bad than they really are:

“However, TransLink is unique in using that number — both Toronto and Seattle use “revenue passengers.” Seattle doesn’t even make “boarded passenger” counts public. Dermod Travis, executive director of IntegrityBC, questioned why TransLink would use a different term. He said… TransLink’s rationale is illogical.

“If you are using different measures, people will naturally feel that you’re doing it because you don’t want to be compared,” he said. “If you don’t want to be compared it’s because you don’t think you’ll measure up.”

TransLink is dishonest, rotten to the core and my gorge rises if even I contemplate a YES vote!

Transit Referendum and Congestion

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Transit referendum and Pandora’s box

Posted March 11, 2015 by Norm Farrell

When financial numbers involve billions, many of us struggle to gain understanding and perspective. Usually, the beneficiaries of large scale spending are the worst sources of information. Here’s an example.

A “fact-check” statement from the paid-for-by-taxpayers Mayors council website says:

A “Yes” to Transit vote would cost average households $125 a year.

Readers are invited to click on a link to view “the math” and that brings up a PDF file that states:

The Mayors’ 10-year plan to improve transit and transportation as the region grows by one million more people will cost the average household $125 a year. That’s about 35 cents a day.

You don’t have to be a mathematician to know an average is calculated by dividing a sum by the count of numbers contributing to that sum. Transit referendum proponents claim the 0.5% tax will raise a sum of $250 million and they admit the count of households in Metro Vancouver is 967,948. Those numbers produce an average of $258.28 in new tax collected for each household.

TransLink proposes to spend $7.5 billion to expand its asset base. Financing that amount at 4.45%, the effective rate it paid to the Municipal Finance Authority according to TransLink’s most recent annual report, would require annual payments for 20 years of $568 million.

That results in an average burden of $587 per household, almost five times the amount suggested by the Mayors Council.

The tax proponent’s website also states:

The Mayors’ 10-year plan to improve transit and transportation as the region grows by one million more people…

The implication intended is dishonest. If Metro Vancouver grows by 1.24%, the annual percentage forecast by Stats BC, population will grow by 310,000 in ten years, not by one million they want you to believe.

However, there is more important set of facts ignored by the Mayors Council and their army of public relations operatives. Substantial capital expenditures result in additional operating costs and when those are not covered by transit fares, there is an additional burden placed on taxpayers. These reported numbers are taken from the 2013 annual report, the projected numbers I calculate:

It is egregiously wrong to pretend that a yes vote on this transit referendum will affect families by only $125 a year. It could be ten times that amount.

Personally, I’m not against improving transit but there are fundamental questions that we must ask and they are not part of the conversation that most municipal politicians and plutocrats want to hold.

TransLink management, I’ve said repeatedly, is a too comfortable place for too comfortable people. They claim to serve the less privileged people of British Columbia but those customers are often the ones at or below British Columbia’s individual median income of about $30,000 a year (Statistics Canada. Table 111-0008). We need to ask if we should pay executive salaries a dozen times greater than what half the system users earn and we need to rethink the levels paid for many other TransLink positions that result in 6-figure salaries.

However, restraint and moderation is not going to happen when people who’ve grown fat at the public trough are making decisions. There is a very small clique that chooses TransLink directors and they cast eyes over very few candidates, none from groups that typically use transit. That governance structure is the first change needed. Without substantial movement down the road of reform, I’m not prepared to vote yes to a regional sales tax.

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No celebration of another contract to foreign ship builder

Posted March 5, 2015 by Norm Farrell

The following was first posted here December 19, 2012. It is a reminder that TransLink is not always aligned with serving British Columbian workers’ long term interests, despite the present position of trade unions representing transit workers.
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Do you use electricity, live in a space that attracts property tax, purchase motor fuel or pay fees to park your chariot or ride transit after after actually paying a fare? Well, if you do any of those things, you’re putting money in the bank accounts of TransLink.

However, while the transit agency is eager to put its hands into each and every one of our pockets, it’s not so keen on spending that money in British Columbia. Spending that might create jobs, as in shipyards that may or may not, eventually, someday, build navy ships, if F35’s don’t empty the armed forces budgets first.

The Seabus vessels have been cost effective successes and long-time symbols of west coast industrial capability but the TransLink board decided to hire Damen Shipyards Group of The Netherlands to build a replacement vessel, at a cost of $25 million. That price is 75% more than original cost of the locally built MV Burrard Beaver, price adjusted for inflation. Also, there was no announcement about fuelling the new SeaBus with natural gas, something that should have be a no-brainer in this gas-rich province. Norwegian operators are not reticent about using this fuel. Read Reinventing the wheel, timidly.

After the TransLink decision, I did note the failure of Premier Photo-Op and her Jobs Plan entourage to hold a celebration of the award of an actual contract to build an actual ship, in the Netherlands. She was more than willing to take credit for possible BC shipyard spending by the federal government so why not the same for spending of the transit agency created by her administration.

Premier Photo-Op addresses a character from central casting

Once, the SeaBus vessels were proof of BC’s design and manufacturing prowess. The all-aluminum catamarans were the first of their kind anywhere in the world. Each of the two ships cost $3.7 million in 1976, $14.25 million in today’s dollars. Transit officials came here from all over to examine this highly efficient people mover.

Perhaps because it was an initiative of the Dave Barrett government, a Vancouver Sun columnist called the SeaBus project “a great civil service boondoggle.” It was no boondoggle. The entire project has been undeniably successful and 25 years passed before a vessel missed a single day of service. Operators claimed 99.993% reliability. Despite 35 years of service MV Burrard Beaver continues dependable operations day after day hauling thousands of passengers in comfort and safety.

The TransLink board is populated entirely by affluent dilettantes, who don’t worry about where next month’s rent money is coming from. Jobs? Most of the directors are collecting remuneration from numerous sources, many of them funded by taxpayers. Too bad there is so little commitment to creating employment for British Columbia trades people.

Here is a list of TransLink diectors, not exactly representative of the community it allegedly serves. Note the absence of people representing labour, community groups or, gasp, transit users.

  • Nancy Olewiler, board chair – faculty member, Simon Fraser University;
  • James Bruce, board vice-chair – investment manager;
  • Robin Chakrabarti, investment manager;
  • Rick Christiaanse, GM at Glentel, wireless retailer;
  • Lorraine Cunningham, ship broker, agent and itinerant board member;
  • John Dawson, accountant and investment manager;
  • Barry Forbes, credit union CEO;
  • Sarah Goodman, VP Tides Canada;
  • Howard Nemtin, real estate developer;
  • Don Rose, lawyer specialized in resource industries;
  • Marcella Szel, former CNR VP, another itinerant board member;

A reader’s comment to this article recognizes the multiplier effect of spending. It is an important issue when government or consumers consider purchasing locally created goods and materials versus the import of finished goods. From a helpful British site, Economics online, we have The multiplier effect:

“Every time there is an injection of new demand into the circular flow there is likely to be a multiplier effect. This is because an injection of extra income leads to more spending, which creates more income, and so on. The multiplier effect refers to the increase in final income arising from any new injection of spending.

“…It is important to remember that when income is spent, this spending becomes someone else’s income, and so on. ..For example, if 80% of all new income in a given period of time is spent on local products, the marginal propensity to consume would be 80/100, which is 0.8.

“Hence, if consumers spend 80% and save 20% of every $1 of extra income, the multiplier is 5, which means that every $1 of new income generates $5 of extra income.”

Potentially, local manufacture of a new SeaBus at $25 million, could add more than $100 million in spending to the BC economy. That would depend on the actual multiplier effect and the proportion of goods and services originating here.

Nevertheless, if TransLink thinks they can save 8% buying overseas, they have no understanding of first year economics. A cynic might imagine other reasons for sourcing large acquisitions overseas. It’s some BC Liberals do frequently.

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Sales tax war resumed

Posted March 4, 2015 by Norm Farrell
The good doctor at The Gazetteer diagnoses a similarity between issues underlying the now debated transit sales tax and the late and unlamented HST. RossK is focused on the tax ‘shiftyness’ involved in both.

Quite right. BC Liberals have slowly shifted away from progressive taxation, preferring revenues from fees and taxes that have greater impact on the lower and middle classes. For example, the provincial tax on clear gasoline is 32.17¢ a litre. To a person earning $200,000, average fuel consumption would result in a tax of 0.5% of income. To a person earning $50,000, the same amount of fuel tax is 2.0% of income.

If that were the only regressive tax element, we might not have concern. Of course, it is not. Here is one example. If you are one of the fortunate few with employer paid extended health, vision and dental care, you are less burdened than others. Employer contributions for those are tax-free but uninsured individuals pay for the services with after-tax dollars. For example, if you face a $5,000 orthodontia bill and have a marginal tax rate of 30%, you must earn $7,150 to pay the dentist bill. The uninsured tend to be the retired and the people working in small business and on the margins of the economy.

Consumption taxes on necessities are not progressive and even if one begins at a small rate, it may not stay small and will become destructive to people who can least afford it. This year in BC, the richest taxpayers are relieved of about a quarter billion dollars in income tax, which is about the amount to be raised in the first year of the transit sales tax, if TransLink numbers are incautiously believed.

Additionally, the province is allowing natural gas producers over $600 million in credits to subsidize production costs, while it annually spends over $400 million more to promote the gas industry and aims to spend $8-10 billion so Site C can provide underpriced power to mining and gas companies. (The promotion the industries really wants is relief from paying the actual cost of electricity used, relief from assessment of royalties and taxes, waivers of environmental rules and employment standards and the right to import foreign workers.) In the meantime, we close plants that once added value to forest products and ship raw logs overseas and BC Hydro sells electricity to other industries for less that what equivalent energy costs, without calculating the number of jobs that result, if any. Residential consumers are asked to make up the difference.

A taxation system is much more than a way of raising money for essential public services. It can be a means to address inequality and promote a healthier economy. Alternatively, it can be a way to enrich influential insiders and their pals. The Liberal Government chose the latter path and it has had remarkable success. You won’t find a label on the door, but the most powerful segment of British Columbia’s government is the ministry of graft and corruption.

When transit tax proponents argue that its imposition is the only way to improve transportation services, they are wrong and they know it. As is apparent from my earlier scribbling, I believe the first action should be to clear out Translink’s self-serving Board of Directors and any part of senior management not willing to maximize efficiencies and economies. The Board should not be a resting place for patronage appointees who only come close to transit vehicles when they drive past them on the street. Management must commit to zero-base budgets and to full transparency and detailed, timely reporting of financial information. The veils of secrecy must be torn down so diligent reporters like Bob Mackin can let in the sunshine.

Translink must eject the self-interested consultants who’ve taken control and they must engage transit users in decision making, without filtering by consultants. Independent experts, conducting peer-reviewed work, should examine transit plans for effectiveness and determine that goals being addressed are the right goals. All of this could be done in a few months. Then, there could be an open discussion about how best to fund the objectives, including the capture of value created by new transportation infrastructure.

Once TransLink has set a new course, then we will move forward. Without change, we dig a deeper hole and the people who benefit most are the ones selling us shovels.

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With Ian Jessop, CFAX1070, Mar 3

Posted March 3, 2015 by Norm Farrell

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Spending billions without evidence?

Posted March 3, 2015 by Norm Farrell

[View the story “New Story” on Storify]

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Who is being served by TransLink?

Posted March 3, 2015 by Norm Farrell

[View the story “Circles of Spin” on Storify]

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LTC Meeting Agendas & Minutes

Posted December 14, 2014 by From My Bottom Step

London Transportation Commission
450 Highbury Avenue N.
London, Ontario; N5W 5L2
c/o Ms Caroline Roy; Executive Assistant
Please accept this added communication for the Commission’s 2014/12/17 meeting.
By deliberate design, the London Transportation Commission has only ever provided a limited number of archived agendas & minutes via it’s public website, ie. http://http://ltconline.ca/Agendas.htm.
For the sake of increased public transparency, please accept […]

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