Hey hope you are available for a chat today. There’s something I really would love to share with you. We should pay attention to this as we get closer to voting on May 9th. Not that far away! If you follow any news hopefully you’ve heard about this. Let’s sit down and get started. Sorry it’s been a while but my health comes first.
A few days ago the Office of the Auditor General of BC released its audit of BC’s financial situation. It has several things we really should dig our teeth into. We could talk about all of the report but one thing stands out to me more than anything else. It’s contractual obligations.
Why is this important? Well, BC’s Premier and cabinet haven’t really been telling us about this. As it turns out, even though we aren’t the province with the most people, we are the one with the most contractual obligations. We have so much owing in the future it’s 2/3rds of the entire Canadian federal contractual obligations.
So what are we talking about? Let’s see if I can describe it in a way that will show you why this is a pending disaster for anyone living in Beautiful British Columbia. All of us have some type of contractual obligation.
I was going to use marriage as an example but perhaps talking about other types of contracts most of us have had is better for now. Let me use cell phone contracts as an example.
Now many of us have had one of those 2 or 3 year contracts from a cell carrier. We were handed a contract that had millions of pages of fine print and those selling it to us would say, don’t worry about it read it later its just a standard contract.
What this is a personal contractual obligation. We’ve made a deal to promise to pay so much every month for the term of the contract and at the end we will own the cell phone. But only if we pay as we’ve signed up for.
Well one day comes along and your contract isn’t over and you don’t want it anymore, but there is still 2 years left on your contract. You take your phone back and find out that you still have to pay for it even though you won’t be using it.
Somewhere in that fine print we failed to read a clause that says, if we cancel early we owe not only the rest of the money. We owe a buyout on the phone and we owe every month payment to the end of the contract. Even though we won’t ever use the service again we might have a phone that doesn’t work for what we wanted it for and we have to pay a penalty for not using it.
Well our BC government signed a ton of these contracts for things we don’t need and probably will never use. But on our behalf they committed us to paying for these contracts that some are up to 60 years long. And adding the value of all of these contracts up is our provinces contractual obligation.
Now some of these contracts are great ideas but sadly many are just taxpayer money being paid out for services that are now overpriced or unnecessary. But some pretty smart guys managed to arrange contracts during the Enron power broker scandal in the California energy market at the same time as the BC Liberals became the sitting government.
Many ex-Liberals formed small Independent Power Projects (IPPs) and negotiated excessively long term contracts to sell power to our crown corporation BC Hydro. Not only were these contracts for ridiculously long terms, they were on an escalating purchase scale that guaranteed them more each year for the life of the contracts and still have buyout penalties.
There are also many similar contracts that were negotiated for the Transportation Investment Corporation (TIC) for Public Private Partnerships (P3s or PPPs) for the building of the Port Mann bridge which we just found out is over budget and even though forecast to make a profit by 2017 is still in the red.
These deals affect us all and the effect is that whoever takes the reigns after May 9 will have to deal with all of this and see if we can bring down the future costs of living in a province that is buying a whole bunch of nothing for a lot of money.
Well have to go but will see you again real soon,