Monday, 23 January 2012

Affordable housing - it's our responsibility, too

There was an interesting piece on housing affordability in The Province over the weekend.  You know The Province.  It’s the go-to paper for those who want to gripe about the relentless expansion of the tax-and-grab nanny state.  And yet the strong message in Sunday’s paper was that “it’s up to all three levels of government to find a solution to the problem of high [housing] prices.”  Otherwise, as the story made clear, people from Vancouver will have to move somewhere else, like (oh no) Powell River or Montreal. 

Without doubt the question of housing affordability is important.  It’s also complex and emotion-laden.   But it is more than a little tempting to reflect on the fact that the most effective cure for those who are suffering from the malady of affordable housing is, just as the news story suggested, to move somewhere more affordable.

Sooner or later, if everyone in Vancouver decided to move somewhere more affordable, guess what would happen?  Vancouver would become more affordable. 

Oddly enough, that’s probably the reason why most of us came here in the first place.  We - or our forebears - saw this as a place of greater opportunity than wherever it was we came from.  And now there are so many who want to live here that the demand for that scarce commodity - land - has caused prices to rise to levels which are beyond the reach of many.  

Now I am quite certain that government can play a role in helping create the conditions for an increased supply of relatively affordable housing.  I am particularly fond of policy options like increased density, laneway houses and smaller lot sizes.  These help create options for affordability without dictating outcomes, and do not impose costs on taxpayers.  Good planning and zoning policies can also make a real difference in increasing the diversity of housing options.  However, you can call me a greedy neo-con (and some people have), but it’s just not clear to me why my tax dollars should be used to subsidize housing for people who are perfectly capable of earning a reasonable, family-supporting income, but would like government to subsidize their preference to live in an expensive neighbourhood.

In thinking about these issues, I am reminded of some conversations I had at Parent Advisory Council meetings at schools in my constituency when I was an MLA.  Some may recall that in 1996, NDP premier Glen Clark imposed a tuition freeze on post-secondary education in BC.  The intention was to make post-secondary education more accessible.  Instead, within a year or two - in what was a perfect example of the law of unintended consequences - the result was that university admission standards began to rise to levels never before seen.  Parents of school age children began to worry that their children would actually not qualify for post-secondary education.  (As a parent of school age children, I had some of the same worries myself.)

In my constituency (Richmond-Steveston) many parents saw UBC as the destination of choice for the children.  And the admission standards at UBC were becoming very high.  At the same time, however, UBC was rising up the international rankings for universities.  I remember asking a couple of parents whether they thought that their kids might have a good start if they first attended the local university college (Kwantlen), as a more accessible (and high quality) entry point to post-secondary education.  The answer was often no. Without saying it in so many words, these parents were perfectly clear about what they wanted for their children: to be able to attend a world-class university, and to do so without achieving world-class grades.

Now I completely share the desire of these parents to get the best they could for their children.  But you cannot square that circle:  you cannot create a world-class university with under-achieving students. 

And in some respects, our desire for housing affordability in Vancouver represents the same flawed reasoning.  Vancouverites enjoy a wonderful quality of life: a benign climate (well, okay, maybe not last weekend); astonishing natural beauty, good public infrastructure, great health care and public education systems, safe streets, and more.  It’s an amazing place.  Apparently we want all this and affordability, too.  I’m not sure that the one is not in some respects exclusive of the other.  Or to put the point more starkly: the reason houses are practically free in some neighbourhoods of Detroit is that no one wants to live there.   

Of course there are complicating factors.  Because we are nearly completely surrounded by water and mountains, we don’t have much room for expansion, unlike the big cities elsewhere in Canada.  And I’m also not ignorant of the impact of speculation, but one of the reasons why there is speculation is because investors believe that the underlying asset is or will be in great demand.

But at its most basic, we are, I think, paying a price for our own success.  To put it another way, if housing affordability is our biggest problem, perhaps it is because we have got everything else right.

I acknowledge that as a result, some of us who have grown up here will not be able to afford to live here - or at least not, perhaps, in the same neighbourhood or the same kind of house in which we grew up.  I don’t discount the difficulties of dislocation, but sometimes, perhaps, displacement is just the glass half empty view of opportunity.  My wife and I both grew up on the west side of Vancouver, and we moved to Richmond to buy our first home (a townhouse) because we could not afford to buy a house anywhere near our childhood neighbourhoods.  And everything seemed to work out for us.  And although I am from a family that has been in Vancouver for a long time, my grandparents and great-grandparents mostly came from far away, and while I am sure the decisions each of them made to leave their homes were not easy they all found opportunity here.  So maybe movement and dislocation are in my blood. But if that is true of my case, it is surely true of a city where we are almost all first or second-generation immigrants.

I do not think it is an aspect of our social contract as Canadians that we are entitled to (as the Dixie Chicks put it) “live in the same zip code that our parents lived.”  What is guaranteed to us by our Constitution is the right of mobility, which is, I would suggest, critically indispensable in a free and democratic society.  But the converse, a right, as it were, to stay put, irrespective of the flood tides of changing economic and social circumstances, is a much more complicated and contestable proposition.  There’s a role for government in addressing the difficult question of housing affordability, but each of us is also responsible for making the choices which best match our aspirations with what is actually achievable. 

Monday, 16 January 2012

Of parks, libraries and taxes

On New Year’s Day my wife and I decided to celebrate the arrival of 2012 by cross-country skiing in Cypress Provincial Park on the North Shore Mountains above West Vancouver.  It was cloudy, almost mild, and while conditions were not ideal, it was very fine to start the year out of town and out of doors, surrounded by trees, snow and quiet, and yet only half an hour’s drive from the heart of the city.  And as I plodded my way around the trails on Hollyburn Ridge (“glided” isn’t quite the right word to describe my cross-country skiing technique) I couldn’t help thinking that I am lucky to live in a place where there is such beauty, set aside for the use and enjoyment of all of us, so close to my home.  And if you want to visit, it’s free.  
At home later that day, I read a couple of chapters from the Nelson Mandela book I quoted from on this blog a week or so ago: Conversations with Myself.  Not, perhaps, the first book to read if you know nothing about Mandela (A Long Walk to Freedom is his magnificent must-read autobiography.).  But if you already know the basic biography, it’s a really wonderful collection of interviews, notebook entries, draft writings and other miscellany that gives you great insight into Nelson Mandela as a person.  My copy of this book was borrowed from the Vancouver Public Library.  Here is how I obtained it.  I found the book in the online VPL catalogue, reserved it and waited a week or so, and when it was available the staff delivered it to my nearest branch, sent me an email to tell me it had arrived, and I picked it up.  For free.
Of course neither a park nor a library book is free.  Public goods are never free.  They cost money.  How are they paid for?  By taxes.  
This is as good a starting point as any for me to say something that’s increasingly been on my mind over the past couple of years.  It’s simply this:  I think government is not a malevolent dark force, it’s a necessary good.  So, too, I believe, are taxes.  
Perspective matters.  It colours the way we think about things.  And attitudes can change behaviour.  Nearly two generations ago, Ronald Reagan trained Americans to see government as the source of most of what was wrong about his country.  Over time, the same attitude has migrated north.  It is surely right to demand accountability from government for the decisions it makes and the money it spends, but to maintain a measure of balance in our outlook, we have to decide how we orient ourselves to that demand.  And to see government as inevitably bad and over-bearing and intrusive and irrational is not just wrong in fact, it’s a self-limiting perspective on the possibility of collective human achievement. 
Governments make mistakes.  Governments overreach.  Governments can always do better.  But taxes make possible a wide range of programs and services that are essential to our lives.  A great deal of what we have achieved is only possible because of government, paid for by taxes.  As a community, as a society, and as a country, we are the poorer for our refusal to embrace this reality.  
I’m tired of the mantra that taxes are a “necessary evil.”  I’m with Oliver Wendell Holmes, when he said, “I like to pay taxes.  With them I buy civilization.”  

That doesn’t mean I want to pay excessively high taxes.  Taxes should spread the burden of the cost of government fairly, not punish ambition, and give people a wide degree of freedom to choose what to do with their money.
We can and should debate whether particular programs and services are needed, and we ought to be diligent to ensure that government spends our tax dollars are efficiently and effectively as possible.  But I choose to participate in that debate from a perspective that argues that there are many important goods that can and can only be delivered by government, and paying for them with our taxes is an affirming act through which we contribute to the discharge of our common responsibility for things we hold dear.  Like parks. And libraries.  Not a task to be begrudged, but something, in principle at least, to be celebrated. 

Monday, 9 January 2012

Before we ask government to spend, let's ask one simple question: how will we pay for it?

Although the next provincial election is over a year away, we can expect 2012 will bring us an ever-growing list of demands for more government spending from opposition parties, interest groups and others.  No doubt government will also have a few of its own announcements about dollars it intends to spend or save. 
Of course, it’s absolutely essential that we keep track of how much government spends.   But the way we usually talk about government spending isn’t very illuminating or constructive.  I have a suggestion that would, if implemented, make our political discourse more productive, and maybe even also give us better government.
It’s simple: Ask how we will pay for it.
Yup.  That’s it.  Whenever anyone - opposition party, interest group or your neighbour - says government should increase spending on something, ask where the money will come from.  Will it be increased taxes or fees?  Or a reduction in spending somewhere else?  Which program will be cut in order to find the money for this new demand?
That’s how we make spending decisions in our personal lives.  It’s also how government actually makes spending decisions, setting one demand off against another and trying to decide what programs and services to fund, and at what level, from taxes and other revenue.   
But this usually isn’t how we speak about public expenditures.  Most of the time the demands are made in isolation from each other.  We’ve all listened to news stories the whole point of which is to highlight a hardship or problem that could be fixed, if only government did something.  And doing something almost always means spending more.   But it’s rare that the person making the demand is asked the kinds of questions that I am talking about here.  
It’s as though politicians are just standing knee deep in a bottomless pit of money waiting for the nightly news to give them a dozen new ideas for how to spend it, when government, of course, is really just you and me and our precious (and finite) tax dollars.
Interestingly, these questions have been asked over the past week or so in some of the media commentary on NDP MLA Jagrup Brar’s “month on welfare” campaign.  Mr. Brar and the NDP want government to raise welfare rates by 10%.  Some commentators have pointed out that the cost of a 10% raise in welfare rates is approximately $120 million per year, and some have actually asked where the money will come from, given government’s tight fiscal circumstances.  (So far as I can tell, Mr. Brar and the NDP have not answered that question yet.)  
But this is really the exception that proves the rule.   
Now of course, it’s not quite as simple as I suggest.  Sometimes we need to pay close attention when people are explaining how to pay for their particular spending priority. For example, over the last few days, some legal aid advocates have been saying there would be plenty of funding for legal aid if government simply dedicated the revenue from the tax on legal services to fund legal aid.  Now this may sound like an answer to my question, but it’s no answer at all.  Because the reality is that the taxes collected on legal services go into general revenue - where all tax revenues go.  And general revenue is used to pay for all government services, including health care, education and welfare, as well as legal aid.  So when someone says that the tax on legal fees should be dedicated to legal aid, they’re making it sound like it wouldn’t cost anything to increase legal aid spending, but in fact if we adopted this proposal we would pay for increasing legal aid by reducing other government services.
When I say "how will we pay for it", I don't mean a blanket statement about making corporations paying their fair share, hiking taxes on the super-rich, or just simply cutting “wasteful” government spending. I mean thinking about how each of us, personally, will pay for it.  Are we willing to pay more taxes and fees? Are we willing to receive less service? And to what degree for each?  

Clearly, to give effect to my suggestion, we will have to learn how to ask good questions.  But I believe that if these questions were routinely and automatically part of our public political discourse (and maybe office water cooler or beer parlor conversations, too!) the effect would be something close to transformative.  We would be forced to come to terms more directly with our priorities for government spending, and to think about the choices that have to be made when, as is always the case, there are more ways to spend money than there are dollars available. 
And if we stopped permitting each other to pretend that government can do everything, we might make better decisions about what government really can afford to do.

Friday, 6 January 2012

Of Crown corporations, hockey tickets and yes, the fast ferry fiasco

This week the media reported BC Hydro has decided to sell its half share of a suite at Rogers Arena as part of its cost cutting efforts.

The announcement generated a short term media feeding frenzy.  A couple of mornings ago on the way into work I heard what sounded like a contest between CKNW’s John McComb and Michael Smyth to see who could be the most outraged by the shocking discovery of the truly appalling fact that BC Hydro had ever - gasp! - dared pay for someone’s ticket to a hockey game.  

Well, I have a different perspective.  In my opinion, while this particular decision may have been exactly the right one for BC Hydro at this point in its business cycle, there is absolutely nothing wrong with a business that is a Crown corporation spending money on a suite at the Rogers Arena.

I suspect I may be in a minority on this one.  But hey, what’s the point of writing a blog if you can’t say something controversial once in awhile?

For me the decision whether a Crown corporation should spend money this way should be a business decision, and ought to be made on a business basis.  It shouldn’t be about politics.  That way, I say, lies madness, ruin and the fast ferry fiasco.  

I’m all in favour of BC Hydro doing what it can to reduce its costs, particularly given the difficult economic times and the need to keep rate increases within some reasonable range.  But I’m not bothered by the idea that it might actually be good business for a Crown corporation to entertain its customers. 

After all, this is what businesspeople do - they entertain each other.  Why?  To help maintain and grow their businesses.   It’s not just big businesses, either.  The coffee shops near my office in downtown Vancouver are busy all day long with business folks meeting clients, customers, and even, god forbid, their lawyers.  In truth the hospitality sector would be pretty quiet if business people stopped entertaining each other.  

And it needs to be said that thousands and thousands of jobs in our province depend upon this long-established practice.

Interestingly enough, those jobs include the talented and highly-paid folks who play hockey for the Vancouver Canucks.  After all, it’s the expensive game tickets and suites at Rogers Arena - so many of which are paid for by businesses large and small - that help make the Vancouver Canucks a viable enterprise.  And I bet you generally don’t complain about the fact that, thanks to your support of our local NHL franchise, Roberto Luongo earned more in this first week of January than the premier of our province will in a whole year?

But I digress.

If entertaining is good for private businesses, why isn’t it good for Crown corporations that run businesses?

One of the CKNW commentators said it’s wrong for a monopoly to spend money this way.  

But that’s at the very least a profoundly ignorant statement about BC Hydro’s business. 

The fact is that there are some awfully large consumers of electricity in British Columbia. Mining companies, forest companies, and oil and gas companies spend millions of dollars each year on the electricity needed to power their facilities.  And many of these companies do have a choice about where and how they get their electricity.  In fact, many of them even make their own electricity.  (For example, BC Hydro just announced a 15-year deal with Nanaimo Forest Products representing a $45 million investment by that company in constructing a proposed 25-megawatt turbogeneration plant at Harmac)  

For these companies BC Hydro is potentially both a supplier and a customer. The question whether they choose to enter into business arrangements with each other is a business decision like any other.  Discussions and negotiations about these kinds of arrangements are exactly the sorts of things that business people do in all the other suites and seats in Rogers Arena.  It’s really difficult to see why BC Hydro is any different from any other business in that regard.  

Another argument is that there is something wrong about a Crown corporation spending “my” money on this kind of thing.    

Hmm.  Some part of the price of everything we purchase is attributable to the cost of advertising, marketing, and yes, people taking other people out for lunch.  When you are buying Nike running shoes or an iPhone, do you complain that some of your consumer dollar is being spent by these companies on marketing and advertising?  

The critical question for all these expenditures ought to be whether they make good business sense.  Do they produce enough return to make the investment worthwhile?  If they do, then are they not worthy objects of expenditure?  If not, then they are unnecessary frills and should be stopped.  That’s surely as true for Crown corporations as it is for private businesses.

I know that in some sense, every Crown corporation belongs to all of us as citizens, residents, and voters.  

But I think that fact argues in my favour.  

In BC there is a vivid history lesson from the fast ferry fiasco of what can happen when a Crown corporation is used as a tool for a purely political objective - in that case, trying to kick-start the BC shipbuilding industry.  The result was three vessels that cost nearly half a billion dollars to build, were completely unfit for their intended purpose, and ultimately sold for scrap value - and there was certainly no long term spin-off benefit for shipbuilders.

My view is that the best way to maximize the value, and (equally importantly) minimize the risk to taxpayers from owning businesses like BC Hydro is to require them to operate - as far as possible - like businesses.  That’s the best way to protect “my” investment in “my” Crowns.

If this means that, like other businesses, Crown corporations need to spend some money on entertainment to build productive relationships with its customers and clients, then that, it seems to me, is entirely worthwhile.

Tuesday, 3 January 2012

Nelson Mandela on the practice of politics

From Nelson Mandela here is a remarkably insightful statement about the practice of politics.  Perhaps this could be the basis of a New Year’s wish for all our political leaders?

Only armchair politicians are immune from committing mistakes.  Errors are inherent in political action.  Those who are in the centre of political struggle, who have to deal with practical and pressing problems, are afforded little time for reflection and no precedents to guide them and are bound to slip up many times.  But in due course, and provided they are flexible and prepared to examine their work self critically, they will acquire the necessary experience and foresight that will enable them to avoid the ordinary pitfalls and pick out their way ahead amidst the throb of events.

(From Nelson Mandela’s Conversations with Myself , published in 2010, at page 35 – the source is his unpublished autobiographical manuscript written in prison.)