Test Your Baloney Detector

The BC Liberal leadership contest is heating up as the new year begins. All six candidates are stumping the province, "listening" to the people and making a slew of promises.

Should British Columbians believe any of these hopefuls as they vow to make the government more accountable, open and honest?

Five months from now the BC Liberals will mark the 10-year anniversary of their historic, May 2001 election to government. And that means we have a decade's worth of promises and activities to look at to determine if the BC Liberal party and its leadership candidates can be trusted.

This exclusive Tyee quiz will assist readers in that task.

LOOKING OUT FOR TAXPAYERS

1. The job the leadership candidates seek is that of premier. In 2001, when Gordon Campbell became British Columbia's 34th premier, his taxpayer-funded, take-home pay added up to $123,120. That was 4.5 times greater than B.C.'s per capita personal income, which then stood at $27,076 per annum.

By 2009, after eight years of BC Liberal government, per capita personal income had increased to $35,196 -- up an even 30 per cent.

Over the same period, Campbell's annual earnings:

A. Fell by 71.4 per cent -- to $35,196. ("It wouldn't be fair if I made more than my constituents," the premier declared in a famous speech than won praise from both his supporters and political opponents.)

B. Rose by 30 per cent. ("My pay should not rise at a rate faster than it does for the people who elected me," said Campbell.)

C. Soared by 68.5 per cent.

AVOIDING APPEARANCE OF CONFLICT

2. One of the most important tasks facing a B.C. premier is to appoint people to vital public posts, such as the Executive Council and Crown corporations' boards of directors.

In Feb. 2008, then-Finance Minister Carole Taylor said that the BC Liberal government would abolish the corporation capital tax on large financial institutions, thereby saving the country's biggest banks, trusts and insurance companies about $100 million annually.

Ten months later, effective Dec. 22, Taylor resigned her seat and quit politics. How many days after her retirement did she accept an appointment to the board of directors of one of Canada's biggest banks?

A. 248 days.

B. None. Given that the government had effectively killed B.C.'s tax on banks, Taylor refused the appointment because she didn't want even a smidgeon of a hint of an apparent conflict of interest.

C. The whole question is based on a faulty premise. Taylor is so virtuous that in Feb. 2008 she actually refused to introduce or support the BC Liberals' abolition of the corporation capital tax on banks. That's because her husband, Art Phillips, was then in the process of selling his interest in a financial services firm for millions of dollars of bank stock.

3. Vancouver lawyer Jonathan Drance was appointed to the board of directors at BC Hydro and Power Authority on May 8, 2008. His compensation over the next two years added up to nearly $84,000.

How many board of director meetings in that time period did Drance have to leave so as to avoid the appearance of a conflict of interest over his and his law firm's involvement with Independent Power Producers?

A. None.

B. All of them.

C. Five

KEEPING THEIR WORD

4. The BC Liberal 2001 election platform -- A New Era for British Columbia: A Vision for Hope & Prosperity for the next decade and beyond -- pledged to "stop the expansion of gambling..." (page 26).

In 2000/01, the fiscal year that ended just before the BC Liberals won election to government, there were 2,399 slot machines in the province. How many slot machines did B.C. have at the end of the latest fiscal period, 2009/10?

A. 2,399 (the same number as in 2000/01, because the BC Liberals have honoured their commitment to stop the expansion of gambling).

B. About 2,700 (a slight increase, but just to keep pace with population growth -- the BC Liberals have kept their word).

C. 9,438.

5. Gambling revenues at the BC Lottery Corporation totaled almost $1.5 billion in 2000/01, a third of which (nearly $500,000) was derived from casino revenues. The comparable numbers in the latest fiscal year, 2009/10, were:

A. Roughly the same (because the BC Liberals wouldn't break their solemn pledge to stop the expansion of gambling).

B. Slightly higher (a teensy increase merely to keep pace with population growth and inflation -- the BC Liberals generally kept their word).

C. Dramatically higher, with casino revenues alone soaring by 168 per cent.

6. George Abbott has promised that if he becomes premier, his government will convene "regular regional caucus meetings in communities across B.C." Christy Clark has vowed to hold "12 town hall meetings a year... to hear directly from British Columbians."

It's all reminiscent of a pledge in the New Era document -- known by insiders as "NED" -- to "create the most open, democratic and accountable government in Canada." A key component of that promise was to "hold open Cabinet meetings at least once a month... televised and broadcast live on the Internet" (page 30).

How many open cabinet meetings did Gordon Campbell's BC Liberal government hold between their 2001 election victory and the end of 2010?

A. 115 (one every month, just as NED promised).

B. 32.

C. None.

7. One of the highest-profile promises in NED was to "not sell or privatize BC Rail" (page 9). Yet on Nov. 25, 2003, Gordon Campbell announced the privatization of BC Rail, sold to CN Rail for $1 billion.

Almost exactly two months later, following the resignation of Judith Reid as minister of transportation, Campbell named Kevin Falcon to that post. Responding to questions in the legislature on May 5, 2004, Falcon described BC Rail as "a railway that was losing money year after year after year."

How many years did BC Rail lose money before the BC Liberals privatized it?

A. None. BC Rail actually was a profitable company -- it did not have operating losses.

B. A whole bunch of years. Too many to count.

C. Three.

8. On that same date Falcon also claimed that BC Rail's debt-servicing costs were an intolerable burden on B.C. taxpayers. "The $38 million last year that we paid in interest costs on the half-a-billion dollars in debt that BC Rail carries will no longer have to be paid," he told the House.

"That's $30 million that taxpayers can now invest in health care, in education and in other options that British Columbians have recognized as a priority here in this province."

What were the annual interest costs borne by B.C. taxpayers as a result of BC Rail's operating losses?

A. More than $30 million every year, just as Falcon said.

B. Nothing. BC Rail was a commercial, "self-supported" Crown corporation, and so taxpayers contributed nothing to its debt charges.

C. Nothing. BC Rail did not have any operating losses.

FISCAL ACUMEN

9. On June 6 and July 30, 2001, the newly-elected BC Liberal government unveiled tax cuts totalling more than $2 billion annually. Christy Clark, the freshly-appointed minister of education, wasn't concerned about a loss of revenues for her department, however.

"In every jurisdiction where personal income tax cuts have been tried, they've worked," she told the legislature on Aug. 2, 2001. "It's meant more revenue to government from personal income taxes. That's what we are going to create in British Columbia."

How much "more revenue" did the BC Liberals' personal income tax (PIT) cuts produce over the last decade?

A. Oodles. PIT revenues more than doubled under the BC Liberals.

B. A little bit more. PIT receipts have increased along with population growth and inflation.

C. None. Victoria's PIT revenues not only have failed to keep pace either with population growth or inflation over the decade, they've actually declined in real terms. As a consequence, the province today has less to spend on education and other programs than it had back in 2001.

10. On Feb. 14, 2002, George Abbott, then minister of community, aboriginal and women's services, delivered the following lecture on the perils of deficits and debt.

"Only in British Columbia over the decade of the 1990s did we see a provincial administration that... because of their inability to come to grips with the situation they faced, to do the right thing. That was to get their spending under control, to get deficits under control and to begin to reverse the very destructive piling up of debt that continuously robs our social programs in British Columbia."

He concluded: "... you can't keep piling up deficit after deficit, building the debt, seeing more and more costs for borrowing, and hope to preserve intact all of the programs that exist across government."

According to the latest BC Liberal budget, the province's debt at the end of the 2012/13 fiscal year will be:

A. Much lower than it was in May 2001. The BC Liberals' tax cuts and other fiscal policies have worked miracles.

B. At about the same level as when the BC Liberals' first won election to government.

C. Higher by 65.3 per cent. If the BC Liberals complete their current term in office, they'll have added an average of $1.8 billion annually to the province's debt.

ANSWERS

1. C. The 2009/10 public accounts show (see pages 7 and 9 here) that Campbell last year took home $90,962 as premier, another $101,859 as MLA for Vancouver-Point Grey, plus $14,673 in capital city living allowance -- for a total of $207,494. (This amount does not include about $65,000 taxpayers contributed last year alone to Campbell's post-government pension.)

Thanks to legislation the BC Liberals enacted in 2007, Campbell's annual income has increased from 4.5 times greater than that of the average British Columbian, to 5.9 times greater.

The 2007 legislation also provides the soon-to-be ex-premier with a life-long, taxpayer-financed pension of approximately $135,000 per annum.

2. A. Taylor's appointment to the board of directors of the TD Bank Financial Group was announced on Aug. 27, 2009.

As finance minister, Taylor told the legislature on Feb. 19, 2008 that the government was abolishing the corporation capital tax on large financial institutions. Two days later, on Feb. 21, the Royal Bank of Canada announced that it had concluded a share-swap arrangement to purchase Phillips, Hager and North Investment Management Ltd., a Vancouver-based firm founded in 1964 by Art Phillips, Taylor's husband. Taylor's 2007 financial disclosure statements shows that Phillips owned two per cent of PH&N's shares.

According to the CBC, the Royal Bank's purchase provided PH&N shareholders with "a total of 27 million RBC shares." Based on a pre-deal closing price of $50.39, the CBC put the value of the purchase swap at $1.36 billion. That valuation suggests that Phillips (who owned two per cent of PH&N's shares), received Royal Bank stock worth about $27.2 million.

In 2008, Taylor's financial disclosure form no longer showed her husband as owning equity in PH&N. Instead, an unspecified equity position in the Royal Bank was listed under 'Shares in Public Corporations.'

3. B. BC Hydro issued a Clean Power Call on June 1, 2008, 34 days after Drance was appointed to the Crown's board of directors. On May 19, 2010, under questioning in the legislature by NDP MLAs John Horgan and Bruce Ralston, Lekstrom admitted that "the Clean Power Call was a standing item on every agenda" at the directors' meetings.

Ralston asked: "... did Mr. Drance then recuse himself from every meeting of the board?" Lekstrom: "Yes, Mr. Drance did excuse himself."

He added: "Mr. Drance did recuse himself at every discussion this (the Clean Power Call) took place, but he attended the board meetings. ...he never once remained to deal with anything to deal with this clean power call."

In 2008/09 and 2009/10, BC Hydro ratepayers paid Drance $40,000 and $43,875 for his part-time participation on the board of directors. That puts his two-year total (see page 62 here and page 44 here) at a sweet $83,875.

4. C. From a total of $269 million a decade ago, slot machine revenues under the BC Liberal government skyrocketed more than four fold in 2008/09 to above $1.3 billion. The recent recession caused a decline in 2009/10 to $955 million, still more than triple the figure from when the BC Liberals took power and promised to stop the expansion of gambling.

5. C. From 2000/01 to 2009/10, total gambling revenues at the Lottery Corp. rose from $1.483 billion to $2.517 billion. Over the same period, casino receipts increased from about $492 million to $1.322 billion. Casino income has grown from one third of the Crown corporation's total revenues to more than half (52.5 per cent).

6. B. The Campbell government held seven "open cabinet" meetings in 2001; 10 in 2002; eight in 2003; six in 2004; and just one in 2005. The BC Liberals' last open cabinet meeting was on Jan. 26, 2005.

That suggests that Abbott's promise of "regular regional caucus meetings" and Clark's pledge for monthly "town hall meetings" are likely to be short-lived.

7. A. BC Rail recorded operating profits in each and every year from 1978 through to its sale in 2003 -- 25 straight years. From its profits over that period (see here), the Crown corporation paid to the government dividends -- to pay for health, education and other public programs -- totaling $137.7 million.

8. B. and C. Trick question. Like BC Hydro and Power Authority, the Insurance Corporation of BC, the Liquor Distribution Branch and the BC Lottery Corporation, BC Rail was a "self-supported" commercial Crown corporation. Such Crowns, according to the 2009/10 public accounts, are those that "generate sufficient revenues to cover interest costs and repay principal and may pay dividends to the province."

("Taxpayer-supported" debt is that which requires "operating or debt service subsidies from the provincial government." At the end of fiscal 2009/10, B.C.'s taxpayer-supported debt stood at just over $30 billion -- or 72 per cent of the province's total debt -- while self-supported debt stood at just under $11.9 billion -- 28 per cent.)

BC Rail's self-supported debt, moreover, was not the result of operating losses, but arose from the corporation's purchase of new assets to diversify its operations.

9. C. British Columbia's personal income tax receipts totalled $5.963 billion in 2000/01 (before the BC Liberals implemented their first round of tax cuts), but came to just $5.529 billion in 2009/10. That's an actual decline (see Table A2 here) of $434 million -- notwithstanding population growth and inflation.

As a proportion of the provincial economy, Victoria's total taxation revenues between 2000/01 and 2009/10 have collapsed from 10.9 per cent of GDP, to just 9.1 per cent.

10. C. British Columbia's total provincial debt at the end of 2000/01 was $33.788 billion. By the end of 2012/13 it is expected (see Table 1.22 on page 44 here) to hit $55.862 billion -- an increase of $22.074 billion (or more than $1.8 billion annually since the BC Liberals took power).

As a proportion of B.C.'s economy, the total provincial debt will have increased over the period from 25.7 per cent of GDP, to 25.9 per cent.