Saturday, May 11, 2013

The Election Web v1.0 - Who shall I vote for

Lots has been said and revealed throughout this election.  Often people miss those opportunities as they were not able to see or hear or read what was available.  Click on the graphic below and you will find links to many of the major developments over the election campaign and prior.   Hopefully this can help you make a decision regarding who to vote for.

The Tangled Web 2.0

Some time back I had created a graphic containing a myriad of links that was the result of significant reading on BC Poli.  The readings kept bringing things to light that were seemingly unconnected, hinted a connection, and were very connected. It has been enlightening to many.  I took the information I was viewing and linked it together visually.  I connect the dots better visually and hoped it would help others to do the same.  I called it "The Tangled Web of Intrigue 1.0".  At the center of it was Christy Clark.  Today we've moved forward in time but not much has changed.  In fact, problems have deepened, and scandals have worstened.

As I updated "the tangled web" (now "The Tangled Web 2.0") so much became clearer, and a broad perspective was revealed of the risk our province is under should the Liberals form government again (heaven forbid). The most telling of all is the way Christy Clark has conducted herself in the current BC Election.  In the words of Brian Hutchinson, columnist for the National Post, she has run an election campaign to "misinform, mislead and make up stuff".  It is beyond belief that in this day and age a politician of any stripe would attempt such a bold faced plan.  Yet it stands before us day after day as she presents these inventions from her mind to the public.  Are these the actions of a delusional individual?  Are they the actions of a pathelogical liar?  Or are they the actions of a cold, calculated individual who gives no thought whatsoever to the means they use, only caring what the end result will be, with a personal belief that the end justifies the means.  When one explores much of the recent scandals it really hits home.  We have been governed by a group of people for which the end justifies the means.  This is the saddest commentary on the state of affairs of those who are trying to control our government.

The word that comes to my mind was coined by the Phillipine community in their response to EthnicGate as they spoke of how they left their home country to escape the "Trapos" in government. [In the Philippines, a politician that engages in unsavoury conduct is known as a "trapo," a contraction of the words "traditional politician." Many Filipinos have fled the country to seek a better life as a direct result of the decisions and indiscretions these individuals have committed. They perpetuate systemic corruption in government which has led to the decay of aspects of Philippine society.]

Never in all my involvement in BC politics have I seen such a broad reaching failure of those from whom we expect good governmental leadership to "keep the faith". To place the citizens of BC first and foremost when actions are taken and decisions made.  The Government of British Columbia is not their private playpen.  From illegal legislation; to selve serving use of government staff, taxpayers money, and government resources; to blantant misinformation, and made up "stuff"; to the creation of legislation and direction of crown corporations to reward corporate entities; to the hidden mechanisms for pulling monies from hard working families and leaving massive debts; never have I seen the such.

I remember the NDP of the 1990's, there were good years for some and not so good for others.  I remember the "have you had enough" rallies, and the hard work to bring Reformers and Liberals together. The many meetings to unite the right.  Many worked hard to elect an individual they thought would represent the people of his riding.  I was one such.  Unfortunately, the first thing he tried to do after being elected was convince me why it was good to sell BCRail. Well the Liberals lied about BCRail.  They lied about the HST.  It's not hard to see how people disenfranchise themselves and say who cares if I vote.  When simple integrity is lacking on major commitments of that nature what is underneath.  What is driving the government?  Who is driving the government?  Who "owns" the government?

I've noticed a pattern in government - I call it the 12 year cycle.  The first 4 years are a honeymoon.  New MLA's are learning the ropes, establishing themselves, collectively the caucus is coming together and voices are heard.  The next 4 years, people are established, emboldened by the governments re-election, there is a certain level of disconnect from the voters, a desire to move forward philosophically, to modify the province, remake it over in a form that the "powers who be" are now promoting within the government.  Entrenchment is taking place.  It is not too long until entitlement will replace it.  Strong voices who have become well connected and entrenched are beginning to form the agenda.  And finally in the last 4 years, corruption sets in, scandals emerge, people choose their own paths, a sense of entitlement reigns, a view of "we can do whatever we want" it let loose.

That doesn't happen always I'm sure.. but the last 12 years have sure left that impression on me.

Tonight I have an opportunity to speak to a group of people to "raise awareness of the importance of voting".  One thing I do know.  It's important to vote.  In spite of its failing and flaws, our democratic system is the envy of most.  We are not tortured for our vocal opinions, we are not forced to conform to a specific way of thinking, we may choose freely our candidate and vote for them.  No one chases me away from the polling booth.  We are greatly blessed with these amazing freedoms.  It is important that we retain them and maintain them.  We do that by exercising our privilege to vote each and every time we have an opportunity. It's important to be as informed as I can.  We all have different reasons for voting the way we do.  I think that's the challenge and the magic of our electoral system.  We are free to choose and we may choose based on what we feel, believe, want, and know.  In the end, on Election Day some will have their fire snuffed out, while others will move forward.  In all, we'll say "the tribe has spoken" and move forward.

It is good to keep in mind, the day after the election: the sun will still shine; our families will still love us, the water will still flow in the tap, there will still be food at the grocery store, you may make a little more or have a little less and perhaps you'll find your children are happier at school, and you got your broken ankle set in 1 day instead of 4 days.  Hopefully if we've collectively made the wisest decision, our lives will improve and we will prosper greater.

To help you with that decision here is the Tangled Web Version 2.0:

I'm Richard Giroday and that's my ramblings.

BCHydro - Deferred Accounting shifting Liberal Budget Deficits to BCHydro accounts

I was asked the other day to explain how deferred accounts in BC Hydro are transferring vast Budget Deficits of the BC Liberal Government to the books of BC Hydro.

I'm no accountant but I think the following explains it sufficiently.  I've also provided some additional resources that are important for people to have access to.  So let's get started:

There are many companies/corporations that operate under direct regulation of the rates they can charge.  You could call these Rate Regulated corporations.  There is an accounting procedure called Rate-Regulated Accounting (short form referred to by Deferred Expenses) where a rate regulated corporate entity can make a decision to push expenses  (or income) into a future year from the current year. The objective is to smooth out income and expenses from year to year. Under certain circumstances it is good and under others it is bad.

An example of how it can be used is the development planning for the BC Hydro Site C dam.  The expense occurred this year, but a decision is made to deferr that expense into future years.  A more interesting example is the cost of the new smart meters pushed into future years.  The expense has been paid, but pushed forward (crazy as it seems)

The beauty and excitement of doing this by the BC Liberal government is that corporations like BC Hydro can be made to show massive profits when profits never occurred and then the government can suck the money out to use to balance a budget.  In actual fact they have transferred a massive short fall in provincial income onto the corporation's balance sheet.  An example can help us see it.  I've created some fictitious numbers to work with so we can get a sense of what takes place.  Think of the numbers below in Millions.... so 1 000 is a billion dollars.

Eventually the money must be paid and it will be paid by the users of BCHyrdo services in rate increases. 

The Auditor General is raising alarm flags because of the massive amounts of money being diverted this way into government accounts to balance budgets by the BC Liberals.  Which are in truth not balanced budgets but massive deficits.  And people are not aware of these amounts being "robbed" from Crown Corporations, adding these huge deficits to the agencies debt loads.  It is expected this year the amount from BCHydro will reach $5.5 Billion dollars.  We the rate payers are going to be paying that $5.5 billion off.  Or they will do what they did to BCRail, and sell it off.

This is the most devious way I have ever seen to claim so called "balanced budgets", when in fact they aren't balanced, and at the same time impinge additional taxes onto future taxpayers while being able to claim "we kept tax rates the same".  The taxation is offloaded in the most devious way onto people.

A more straight forward devious one was the transfer of $750 Million from ICBC into government accounts to help balance a budget at the same time they raised the rates by 11%.  You tell me who paid for the balancing of that part of the budget.  Anyone who buys car insurance did.  It is a devious way of offloading taxation to the people of the province and say "we have low taxes".  It's a falacy and the use of these mechanisms is reaching critical mass for the province.  The auditor general is waving red flags.  But few people are aware of it or understand its significance for the future of the people of the province.

More on Rate Regulated Accounting:

Rate Regulated Accounting is used by specific corporations/industries:

Rate-regulated sectors are characterized by large upfront investments and regulatory restrictions regarding the prices that can be charged to customers for services or products. Under Canadian GAAP, rate-regulated entities were entitled to account for the uncertain impact of rate regulation through the recognition of regulatory assets and liabilities (which were generally presented in the financial statements of Canadian GAAP issuers as deferred charges and credits).

As the BC Auditor General Doyle pointed out:
"Rate-regulated accounts must be managed carefully," said Doyle. "While the use of rate-regulated accounting is acceptable under existing Canadian generally accepted accounting standards, it can mask the true cost of doing business, create the appearance of profitability where none actually exists, and place undue burdens on future ratepayers."

What scared me was his statement in Oct 2011 and the subsequent continuation by the Liberals with Rate Regulated Accounting:

"Canada will be adopting international financial reporting standards (IFRS) in the coming year, which does not allow for deferral accounts. As such, expenses that are currently being deferred under rate regulation would be shown each year, bringing to the forefront the financial consequences of management decisions and highlighting the challenges that lie ahead. "Unfortunately, government is considering not moving BC Hydro to IFRS," said Doyle. "It is requiring BC Hydro to adopt part of an American accounting standard that allows rate regulation, abandoning the transparency that will be required by Canadian GAAP."

"The B.C. government has taken it upon itself to define BC GAAP, rather than following the standards set by the Canadian Accounting Standards Board," said the Auditor General. "It concerns me that government is willing to override the due process that is involved in the setting of Canadian accounting standards, and instead legislate an accounting result that will have a significant impact on both the financial statements of BC Hydro and the Province." [ -BC Auditor General Doyle - ]

Understanding Deferral and Regulatory Accounts - exerts from a good backgrounder

The purpose of a regulatory account is to defer for potential future recovery or refund costs or revenues that under GAAP would otherwise be recorded in the current accounting period.

There are three situations in which a regulatory account could be appropriate:

1. To better match costs and benefits for different generations of customers;
2. To smooth out the rate impact of a large non-recurring cost; and
3. To defer to a future period differences between forecast and actual costs or revenues.

The Site C regulatory account is an example of a regulatory account established to provide a better matching of costs and benefits for different generations of customers. If the Site C investigation costs were expensed as required under GAAP, it could cause an unfair rate impact on existing customers, considering the long development period before Site C could be placed into service.

Even though expenses paid in the present year.. they are carried forward into future years.  Paid expenses are deferred.  This is very different than the deferred expenses we see in a small business situation being deferred into the next reporting period.  This is Rate Regulated Accounting that allows rate regulated corporations to do interesting things with expenses.  [ Read the entire backgrounder ]

I'm Richard Giroday and that's my rant.

Sunday, July 8, 2012

A New Perspective on NYT op-ed regarding BC's Carbon Tax

There has been a lot of activity on the #bcpoli twitter sphere around an article that was published in the New York Times (NYT) regarding BC's Carbon Tax.

The fact the article was published in the New York Times really catches the attention of many. But it also begs the question: Why would the New York Times publish an article on BC's Carbon Tax? Are there journalist at the NYT that follow events in British Columbia? After all we are a world away from New York. Are there economist that have been following the implementation of the BC Carbon Tax with due diligence? Why this attention to the BC Carbon Tax? And the timing of the article is most interesting. Tax increase on July 1st, and article published on July 4th. What is the publication's/article's connection to BC? Perhaps time to dig a little deeper as to what this article is all about and why the article appeared there? It just strikes me as strange that a publication a world away from BC would publish an article holding the BC Carbon tax up as a shiny beacon to the world, at the time of the BC Carbon tax increase is being announced. As they say timing is everything. Something just doesn't seem right.

The article is published in the OPINION PAGES section and is identified as an Op-Ed article. So it is an opinion submitted by the authors under the conditions set by the NYT for opinion articles.  Op-Ed articles are like letters to the editor.  You send your article in and it might get printed.  The co-authors, Yorum Bauman and Shi-Ling Tsu submitted their opinion article with exceptional timing to have the article published only three days after the tax increase.

So who are these authors? Of what relevance is their opinion if any? And what is the BC connection in all this?

Yorum Bauman is "the World's First Stand Up Economist". Kind of like a stand up comedian only ... better. And he "really does have an economics PhD".  He is the co-author of the 1998 book Tax Shift which advocates switching taxation from income and property to resource consumption.  That perspective would add a lot of bias to his opinion I think.  He is an environmental economist and a fellow at Sightline Institute in Seattle, an independent, non-profit organization whose mission is to "make the Northwest a global model of sustainabiltiy".  I have to confess, I'm not feeling a lot of confidence in Mr. Bauman's opinion on the BC Carbon Tax.  It's just that - his opinion.  The fact Mr. Bauman lives in Seattle and his current relationship with Sightline Institute explains why he would be aware of the increase in the BC Carbon Tax.

Shi-Ling Tsu is a law professor in the Faculty of Law at UBC. He will be a law professor at Florida State University effective September 2012.  Now we can see the BC connection finally. Professor Hsu has a B.S. in Electrical Engineering from Columbia University, a J.D., from Columbia Law School, and a M.S. in Ecology and Ph.D. in Agricultural and Resource Economics, both from the University of California, Davis. It is his recent publications that draw my attention. It is obvious that Mr. Tsu has had a keen interest in Environmental Taxation since 2008 and Gasoline Taxes (read that BC Carbon Tax) in particular.  Mr. Tsu is the author of "The Case for a Carbon Tax".

Representative Published Works

So where does that leave us. It leaves us with an opinion article that is interesting and well written at best by two proponents of gasonline taxes. The liberal shills on #bcpoli have referred to this article time and time again as if it somehow substantiates the BC Carbon Tax and the Liberal government's decision to impliment it. They have pinned it to their tattered flag to prop up their government's standing, while trying to imply "how insightful the Liberal government is". After all, the Liberal government implemented a tax that is now being suggested as good for all of the United States. And that claim was made in no less than the New York Times. There seems to be an attempt to capitalize on the very existence of an opinion article in the "New York Times" to somehow gives added weight to its statement as if it were fact. When in actual fact it is merely an opinion article co-authored by "the Stand Up Economist" and a law professor from UBC who believes gasoline taxes are the next best thing to sliced bread.

I'm Richard Giroday and that's my musing.