Wednesday, 20 December 2017

Fooled you once, fooled you twice. Vision Vancouver's property tax increases.

This is a blog post about Vision Vancouver’s relentless property tax hikes, but I need to start with a story about Elon Musk and his SpaceX rocket program.  The story is from 2004.  Musk, the serial entrepreneur who had decided to build reusable space rockets, asked one of his engineers to source a thing called an actuator that would help the second stage of the prototype rocket steer itself.  The engineer went out to get some quotes from suppliers and got one back for $120,000.  The way the story is told, Musk laughed, told his engineer that the part was no more complicated than a garage door opener, said his budget was $5,000 and told him to go make it work.  Nine months later, the engineer, who became the director of advanced projects, returned with a fully designed and constructed part for a cost of $3900.

There’s a moral to this story.  Much of what is being done now could be done for less money and better. It’s a lesson which is constantly repeated in the private sector, where the motivations are different: do it better and less expensively and you get a competitive advantage.  Fail and eventually you go out of business.

Cities, of course, rarely go out of business.

That brings me to Vision Vancouver’s endless tax hikes. In the last five years, Vancouver’s taxes have risen at any average rate of 2.3%, or more than twice the rate of inflation.  This year - and I will have more to say about this year below - property taxes will rise by 4.24% against an inflation rate in British Columbia of 2%.  This is a remarkable record of failure to manage public expenditures.

But it’s worse than that.

First, for a city that cries so loudly and often about the problem of housing affordability it is nothing short of embarrassing that the one thing it could do to alleviate that problem across the board, namely restrain tax increases, it cannot bring itself to do.  The result is that for those who are homeowners, whether they be people who scrimped and saved three decades ago to buy a detached house, paying mortgage rates of as high as 20%, or a young couple who bought a condo a couple of years ago because they had cobbled together just enough money for a down payment, all face the prospect of increasing costs of home ownership because of property tax increases. Increases at rates twice as fast as the price increases in any other aspect of their lives.  Is this because of some rapacious capitalist plot, or the evil spectre of foreign buyers turning residential housing into safety deposit boxes for overseas money?  No. The people I’m talking about already do own houses.  There are tens and tens of thousands of them. And every year, the city government that claims to care about affordability makes home ownership less affordable.

Second, Vision Vancouver has now found a very clever trick that has managed to distract everyone’s attention from this serious problem.

Last year, at more or less the last minute in the City’s annual budget process, the Vision council decided to tack on an extra half a percentage point to its already excessive tax increase. The stated purpose for the extra money was to help address the fentanyl crisis.  Now no one could question the urgency of the need to do something to respond to the fentanyl crisis.  But here’s what happened.  First, no one questioned whether there might be some place in the City’s $1.3 billion budget where funds were being spent for a purpose that was less vitally important than the fentanyl crisis.  Some initiative that could be reduced in scope or even eliminated in order to help address this emergent crisis.  No, the decision was made to add 0.5% to property taxes to pay for this new initiative.  Why do you think Vision made this decision?  You might think it’s because they were really concerned about the fentanyl crisis.  Well, perhaps they were.  But I think the reason they did it they way they did it was to distract attention from the fact that they were raising property taxes by twice the rate of inflation.

The trick worked, by the way.  When you go back and read the headlines in the media accounts of last year’s budget process, you’ll find headlines like this: “City increases taxes by 0.5% to address fentanyl crisis.”  Um, actually, the City raised property taxes by 3.9%.

Clever, eh?

So I credit Vision with one thing.  When they find a political trick that works once, they’ll use it again.  And so it is hardly surprising that this year they trotted out another version of this neat trick.  On the very eve of passing this year’s budget, Vision Councillor Raymond Louie introduced a motion asking that the proposed tax increase of 3.9% (already twice the rate of inflation in BC) be increased by a further one third of a percentage point to pay for a number of important initiatives.

Were we fooled again?  Of course we were!  Instead of having a really good debate over the important question of how to protect property owners from yet one more excessive tax increase we had instead a thoroughly entertaining political scuffle about the process by which these initiatives were added at the last minute, rather than introduced earlier.  By the way, here are the initiatives that apparently no one had ever thought of before the day of the budget debate in City Council:
$1.1 million for a tactical response team to review city-wide zoning regulations and establishing a renter protection manager.
$550,000 to support a bid for Chinatown to be named a UNESCO heritage site and support for "Chinatown Historic Discrimination programming."
$500,000 for additional social grants not in the original budget.
$300,000 to "reduce the amount of time to achieve permit approvals.”

Okay, we have to pause for a minute and scratch our heads at the prospect that nowhere in the machinery of a City government that now has a budget of $1.4 billion is there a single poor soul who is not so overburdened by the pressure of the daily grind of delaying building permit approvals that he or she could not turn his hand to the business of asking the UN if they’d like to declare Chinatown a UNESCO heritage site.

No, this was a stunt alright.  A repeat visit of last year’s trick.

Were we fooled again?  The discourse ought to be about how the City undermines housing affordability with tax increases. That’s a hard conversation, about hard choices, the kind of choices governments make when they take fiscal discipline seriously. But instead the discourse is about the politics of last minute budget manoevers.

So this brings me back to the Elon Musk story.  I was thinking of that story as I was listening to Councillor Louie endure the persistent questioning of CBC’s Steven Quinn one afternoon last week.  In Councillor Louie’s mind, every activity of the City requires staff, and if you want to add or increase activities, you have to increase staff.  It’s a simple equation.  It’s another version of an old familiar story, that the answer for any problem in government is always more.  More money.  More staff.  If you want to support a bid to Chinatown to be named a UNESCO heritage site, you need to hire more people to do it.

We need a different approach.  We need an approach that is founded on this principle:  Do it differently, get better results, and do it for less money.

An approach that is relentlessly unforgiving about public priorities, that funds only those which make it to the top of the list of necessity, and drops those that are simply yesterday’s hangers on.

According to a May 2017 Fraser Institute study, it takes three times longer to obtain a building permit in Vancouver than in neighbouring Burnaby.  What if we had a city council who cared enough about housing affordability, who cared enough about the burden of taxation, to say this to its planning staff:

“You must change the way you do business.  You must reduce the time it takes to approve building permits.  Not so that we can do it as quickly as Burnaby.  We will do it three times faster than Burnaby.  And with better results.  And for less money.  Now go away and make it so.” 

Remember the cardinal rule.  We always get the government we deserve.  Two years in a row, Vancouver has covered up its lack of fiscal discipline with clever last minute distractions that are intended to hide the real problem  Are we fooled?  Next November we might find out.

Sunday, 26 November 2017

What do a bottle of ginger beer and aboriginal title have in common?

In 2014, the Supreme Court of Canada issued its landmark ruling in the Tsilhqot’in case.  At the very least, the decision is profoundly important as marking the first time in the history of Canada that an appellate court found an area of Crown land to be subject to aboriginal title.  However, the decision immediately gave rise to a debate. How broadly should it be read?  Is it just a decision about 1700 or so square kilometres of land in the remote Chilcotin region of British Columbia?  Or does it signal that much - perhaps most - of British Columbia is subject to aboriginal title?  Does it, in other words, transform our understanding of who really owns the lands and resources of BC?

These two readings reflect different perspectives about indigenous rights.  One takes a narrow view of aboriginal law in the long-held belief that this is needed to preserve the Crown’s ownership and control of public lands.  Another perspective is that Tsihlqot’in represents a watershed moment in the history of our province, a time to acknowledge that indigenous ownership of traditional lands persists, that it has never been extinguished, and that it is prevalent throughout the province.  Those holding the latter perspective argue that Tsilhqot’in should require us to replace the policy of denial which has been a lynchpin of land policy in British Columbia since 1871 with a policy that takes recognition as its starting point.

Some guidance in choosing among these perspectives can be gleaned from an unusual source. A case that started in a cafe in Paisley, Scotland in the summer of 1928, when a widow named Mrs. Donoghue found a snail in her half-finished bottle of ginger beer. The sight made her ill. She sued. What happened to her case changed the course of legal history.

According to English law at the time (and for that matter Scots law, which applied to the case) Mrs. Donoghue might have had a claim against the owner of the cafe if she had purchased the bottle of ginger beer.  But she would have had no claim against the bottler.  The reason is that there was no direct contractual relationship between her and the manufacturer and the law required the existence of a contractual relationship before a claim of negligence could be brought.  The case made its way to the House of Lords, the highest appellate court in the United Kingdom.  In 1932 the court decided (by a vote of 3 to 2) that Mrs. Donoghue could sue the manufacturer for negligence even in the absence of a contractual relationship.

The leading judgment in the case we now know as Donoghue v Stevenson was delivered by Lord Atkin.  Many words have been written in an attempt to explain what Lord Atkin decided.  Some have argued that the point of the case is as narrow as this: manufacturers of ginger beer have a legally enforceable duty not to make bottles of ginger beer containing the decomposed remains of dead snails.

Read less absurdly, the case is authority for the proposition that there is a distinct tort of negligence which can arise without a contractual relationship and imposes a duty upon manufacturers to consumers as the intended users of their product.

But the case is far more important and broad-ranging than that.  This is because Lord Atkin grounded his ruling in an expression of a general principle which has had an enormous impact upon the development of the common law.  It’s called the neighbour principle, and it was expressed by Lord Atkin in the following words:

The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

This principle, studied by generations of law students, has supported the expansion of the common law far beyond the realm of what we now call product liability.  It is used to ground liability in car crash cases, professional malpractice and much more.  Its reach has not expanded infinitely, but it has been and continues to be an enormously influential principle in the common law.

Tsillhqot’in is meant to have the same impact as Donoghue v. Stevenson.  It is not intended to be read simply as an application of the developing law of aboriginal title to one claim by one First Nation in one small area of British Columbia.  Rather, in setting forth the requirements for proof of aboriginal title, in applying them to the circumstances of a semi-nomadic indigenous people in a way that plainly interprets the evidence of traditional use and occupancy generously, and in making it clear that aboriginal title confers rights that are tantamount to fee simple, real ownership, and not just a right to be consulted, the Supreme Court established a legal framework which, applied reasonably, rather than narrowly, necessarily means that aboriginal title is pervasive in British Columbia.  Yes, elements of the framework had been established in prior cases.  But these cases did not prevent lawyers from arguing that while Aboriginal title might exist in theory, it did not exist in any actual place.  That changed with Tsilhqot’in.

This argument does not find its footing in a single, dominant passage from the decision, but rather from the reasons read as a whole, because the case deals with a series of issues, all of which are important.  Two excerpts, however, give some sense of what the Court is trying to do.

[32] In my view, the concepts of sufficiency, continuity and exclusivity provide useful lenses through which to view the question of Aboriginal title.  This said, the court must be careful not to lose or distort the Aboriginal perspective by forcing ancestral practices into the square boxes of common law concepts, thus frustrating the goal of faithfully translating pre-sovereignty Aboriginal interests into equivalent modern legal rights.  Sufficiency, continuity and exclusivity are not ends in themselves, but inquiries that shed light on whether Aboriginal title is established.

And in paragraph 50, summarizing its analysis of the elements required to prove aboriginal title, the Court concludes:

Occupation sufficient to ground Aboriginal title is not confined to specific sites of settlement but extends to tracts of land that were regularly used for hunting, fishing or otherwise exploiting resources and over which the group exercised effective control at the time of assertion of European sovereignty. 

With these passages in mind, the the question that arises is this: given that a semi-nomadic group such as the Tsilhqot’in were able to establish aboriginal title over some 1700 square kilometres, can there be any doubt that the province’s more than 200 First Nations have title over significant portions of their traditional territories?

Aboriginal title may not exist everywhere.  Conflicts over traditional use that amount to what are called overlapping claims are not easily resolved. The implications of aboriginal title for private lands remain unclear.  But to read Tsilhqot’in as having established nothing more than a finding of aboriginal title in one narrowly defined situation is to make the same mistake as those who, all those years ago, argued that Donoghue v. Stevenson was just a case that established a cause of action by cafe patrons for the harm caused by the discovery of snails in bottles of ginger beer.

Tuesday, 29 August 2017

What to do with that $2.7 billion surplus

As I was driving to work this morning, the radio news informed me that the new NDP government would soon be "telling us what it plans to do with that $2.7 billion surplus."

Journalists have been saying this kind of thing for a week now, following the government's release of the audited financial statements for the year ending March 31, 2017.  According to those statements, the government recorded a surplus last year of $2.7 billion.  Note the words "last year" in that sentence.  Why are those words important?  Because that surplus disappeared at midnight on March 31, 2017, at the end of the year in which it was recorded.  It is not available for spending.  In fact, it is against the law to spend it.  It's history. It's bye-bye.  It's gonzo, buddy. It all went - automatically, by operation of law - to reduce the operating debt.

The issue before us now is whether government is predicting a surplus in the current fiscal year, and what, if anything, it plans to do about that.  But that's not an actual surplus, it's a forecast surplus, and as anyone in the Ministry of Finance will tell you, just watch while the biggest fire season in BC's history makes dust out of the hopes and dreams of surplus forecasters. 

Why do journalists so persistently get this wrong?  It's not a complicated piece of public administration.  And it hasn't changed - it's been this way for as long as I can remember.  It's actually just about as basic a fact as there is and there isn't the slightest excuse for getting it wrong.  In fact there's a lot that can and should be said about this profoundly important feature of our public policy, which is that government only gets permission to spend money one year at a time, and has to spend it all in the year or it disappears.  But you can't really start that conversation when people don't understand how things actually work.

Why do I care? It's actually misinforming the public to suggest that the government has this $2.7 billion pot of money which is available for spending on everyone's favourite priorities.  It encourages an entirely misleading discussion about how people would like to spend that money, and there's been lots of that in the past week on the radio and elsewhere.  It sets people up for disappointment when (or if) they find out the truth, and realize that government cannot actually use that money to solve poverty, fix the opiod crisis or build new schools. 

Friday, 17 March 2017

My contribution to trivia - a possibly fun fact about BC's premiers

In the interests of populating this neglected blog with something, anything, really anything, I decided to undertake a small piece of historical research.  One of those little lines of inquiry where the answer is an either open field for thought, or just another piece of useless trivia.  But mine is not to reason why, mine is just to tell you what I found.

It goes like this:

The modern history of BC politics usually begins with the ascent to power of WAC Bennett.  He first took office as premier in the summer of 1952, nearly 65 years ago.

Counting Bennett, BC has elected 8 premiers up to and including Christy Clark.  The others are Dave Barrett, Bill Bennett, Bill Vander Zalm, Mike Harcourt, Glen Clark, and Gordon Campbell.  Three others (Rita Johnston, Dan Miller and Ujjal Dosanjh)  served as premier without being elected, each taking office after a mid-term resignation by their predecessor.  Fine people though they are, they don't count for the purpose of today's exercise.

Now most people would say that this long era has been characterized by a swing between, on the one hand, a coalition party of the centre-right (first Social Credit, then BC Liberals) and on the other hand a coalition party of the left or centre-left (the NDP).  The centre-right has won every election since 1952 but three: 1972 (Barrett), 1991 (Harcourt) and 1996 (Glen Clark).  Five elected premiers of the centre-right; three of the centre-left.  The centre-right has been in power for (roughly) 52 of the last 65 years.  That's quite a run.

Here's my fun fact.  Of the five elected Social Credit and BC Liberal premiers, only one, Gordon Campbell, had a university degree. Christy Clark attended university but did not graduate.  So far as I know, the other three (WAC Bennett, Bill Bennett and Bill Vander Zalm.) never attended university.

All three elected NDP premiers had university degrees.  In fact, they each appear to have had at least two degrees. (Barrett and Clark had masters' degrees and Harcourt a law degree).

Since you are wondering, the current NDP leader John Horgan also has two degrees.

Now as I say, I'm not sure if this means anything.  As a statistical survey, it's got an awfully small sample size.  Of course one question you could ask is whether in seeking high public office in this province it helps or hurts to have a university education. Some might say it's never electorally groovy to appear to be well-educated, especially in the era of you-know-who-down-South. But I'm more interested in how to advance the cause of post-secondary education as a key policy priority for government.  I've sometimes found it's harder to do that when you're speaking to someone who's enjoyed success in life without much formal education, as opposed to someone like me - who wouldn't have achieved anything in life without a post-secondary education.  Great things have been done for post-secondary education in BC under premiers of all stripes: for example, SFU was established during the long mandate of WAC Bennett, that Kelowna hardware store owner high school dropout.  But looking ahead, BC has no serious hope of social and economic prosperity in turbulent times without recognizing that education, education at the highest levels, is not just a wanna-have, but a must-have.  Yes for now we need welders.  But what we are really going to need are the people who can figure out what we're all going to do when all the welding is done by robots, a day that is coming much faster than most realize. And there's no place quite like a post-secondary education institution to help young minds develop those kinds of thinking skills. 

Sunday, 22 January 2017

That pathetic White House press conference yesterday

There's lots of discussion about yesterday's White House press conference. A few comments posted in a thread on a friend's Facebook site were "critical of the criticism" of this press conference, and one person then asked if anyone was concerned about the fact that there were apparently some negative comments in social media about Trump's son in the context of the inauguration. The author said "Republicans never attacked the Obamas' children." This is the kind of thing people afflicted by one-sided partisan blindness often say. Republican supporters in particular seem utterly incapable of acknowledging their role in massively increasing the personalization of American politics. I completely agree that Trump's 10 year old son should be off limits.  But the statement that Republicans - harumph! - had never criticized the Obamas' children yanked at the tripwire that usually holds me back from weighing into US political debates, and so I got my trusty trigger finger out and responded:
A Republican staffer named Elizabeth Lauren lost her job in late 2014 for criticizing the Obamas' daughters' dress at a Thanksgiving event. That took me five seconds to find via Google so I fully expect there are lots of other examples. After all, Obama was probably the first president to have to produce his birth certificate as a result of the campaign by a number of prominent Republicans led by the POTUS claiming there was 'credible evidence' that Obama was not born in the US. Then there was Trump's campaign co-chair in New York, who said Michelle Obama belonged in the zoo with a gorilla. And so on and so on ad nauseam. The really dangerous thing about conservative Republican zealots is not that they spout such appalling nonsense constantly, it's that they actually believe what they're saying.
It would be great if politics could be conducted on the plane of principle and policy, but that is not how the US election was fought. And no side did that more tenaciously than the Republicans. "Lock her up. Lock her up." Crooked Hillary. Lyin' Hillary. Indeed, they chose as their candidate a man who only sees the world personally, who has no interest in anything that is not personal.
That so-called press conference yesterday was an embarrassment to the office of the US President, and made the United States look foolish. This was, after all, the first occasion on which the White House had the opportunity to address the press in the briefing room. A moment of great promise for a presidency. A chance to define the relationship between a new President and the press. A world waits to hear what the POTUS will do with this opportunity. And his press secretary uses it to give a five minute lecture on crowd counts? I agree, the fact that his rant was error-filled is hardly the point (though I think media fact-checking will be essential under this new regime). The real point is that we now have a very clear insight (and it's not a surprising one) into the new President's abiding, all-consuming obsession. It's not jobs or liberty or peace or security or immigration policy or defence spending or health care. It's his personal popularity. As in, how dare you suggest (what anyone with eyes could see) the crowds were smaller at my inauguration! I'm the most popular President ever!
When you think of the things a moderately conservative Republican POTUS could do or at least encourage: improve the Affordable Care Act, undertake a major reform of the tax code, reform Sarbanes-Oxley, lead a renewed global initiative to expand free trade, for starters. An ambitious, principled, conservative agenda. Instead, Americans elected something quite different. And that pathetic little five minute excuse for a press conference yesterday was a revealing signal of what we're in for over the next four years.