“You can earn a million dollars working from your home in 12 weeks!” Ifadvertising sounds too good to be true, it probably is. And when agovernment tries to sell a privatization announcement such as their sell-offof B.C. Rail with a press release entitled “Legislation ensures publicownership of rail assets,” you know they are taking the electorate for aride.
How did Premier Gordon Campbell and the Liberal government spin machine tryto mislead the public last week on B.C. Rail? Let’s count the ways.
First, the government claims it is not a privatization. The premier made anexplicit promise in the years leading up to the 2001 election not toprivatize B.C. Rail. He made it in writing. He is selling all of the sharesin B.C. Rail to CN. He is providing a 90-year lease to CN. The premier brokehis promise.
Second, the premier claims the $500 million proceeds from the privatizationwill eventually be invested in the North and listed off some projects thegovernment plans to support. This is misdirection. This sale simply givesthe government more short-term money to do what they are supposed to do,including invest in infrastructure in the regions of the province. Thismoney will be used to pay for government services or reduce the deficit justlike all other revenue, contrary to Gary Collins’ protestations.
Third, the government suggests that the $1-billion price tag is a good deal.It is not. The government will actually receive $500 million from B.C. Railonce its current debt is paid off. In exchange, CN is getting the B.C. Railassets that the taxpayers paid for, and the right to earn profits over thenext 90 years and beyond.
Fourth, contrary to what the premier and newspaper headlines said,CN is not paying $1 billion. In a subsequent press conference with thefinancial press, CN confirmed that the real cost to them is $750 million.Why the difference? The deal involves the sale of a tax credit to CanadianNational worth $250 million dollars. If the federal government refuses toaccord the tax credit, B.C. has agreed to be on the hook for all of it. So afull quarter of the price — $250 million — will actually be paid byCanadian (including B.C.) taxpayers or B.C. taxpayers alone.
So, excluding the tax credits, we are getting $250 million for theassets we own. If your realtor sold your $300,000 house for $200,000, youwould be considering legal action. This is precisely what the government isdoing with B.C. Rail.
Fifth, the premier suggests that B.C. Rail is a money-loser. This is simplynot true. Over the past 20 years, B.C. Rail has consistently paid dividendsback to the province to support health care and education — since 1985, $150million, an impressive result that helps support health care, education andother public services. In fact, CN is borrowing the money to pay thegovernment up front based on receiving these profits in the future.
Sixth, according to the premier, the deal “will protect taxpayers fromfinancial losses by B.C. Rail that have cost $860 million over 15 years.”This is political spin at its worst. B.C. Rail was paying dividends togovernment in this period. Asset write-downs are accounting measures used toensure that the Crown corporation’s accounts accurately reflect the value ofassets. However, these write-downs did not cost the taxpayers anything interms of real losses or new debt, as the premier would have you believe.
Seventh, the province will not release information about the other bids toallow taxpayers to fairly assess this deal as a shareholder might if twocompanies were bidding to take over a private company. The government’sinternal documents suggest that the long-term job loss will be considerablymore than the 460 full-time jobs touted by the government. This is a hugeloss to communities that will not be replaced by temporary construction jobson specific projects.
Finally, the government is selling off a tool of economic development thatremains vital to the economic survival of Northern B.C. They have putcritical public assets in the hands of a company whose first responsibilityis to its shareholders, not to the Interior of British Columbia. For themoment, those interests may coincide. Remember, however, that this is acompany that recently banned employees from using the word “Canadian” in thecompany name.
The premier declared this week — in a macho moment — that he would proudlycampaign on this issue in the next election. That is entirely beside thepoint. The B.C. Rail issue figured prominently in both the 1996 and 2001election campaigns. Contrary to their commitment, the Liberal government isselling the asset — and to one of B.C. Liberals’ largest campaigncontributors ($25,000 in 2001 alone). The way the deal is structured, evenif voters kick the Liberals out of office, a new government cannot reversethe premier’s decision.
If Campbell is interested in respecting democracy and truly believes he isdoing the right thing, he has two options. Delay implementation of the dealuntil after the next provincial election, or call a referendum on the sale.That would require some political courage. For once, he should let thepeople decide.