In the years leading up to the 2001 election, the BC Liberals spent a great deal of time talking about the cost overrun for the fast
ferries.
Indeed, the perceived government waste lead to rallies such as the Have you had enough? event at the Civic Centre in Prince George.
I heard from many colleagues and acquaintances that this was a critical issue for them in the 2001 election. Government mishandling of public finance was a hot button item. And the BC Liberals promised to do better.
But their record over the past dozen years isn't really any better. One could make the argument that it has, in fact, been much worse. And not without a touch of irony.
Take the Vancouver Convention Centre expansion and renovation. The centre is run by B.C. Pavillion Corporation (PavCo) - a Crown corporation - that has access to government funding for major projects. The expansion was
originally budgeted at $495 million.
The final cost was $883 million - a cost overrun just shy of $400 million dollars. That was the total cost of the fast ferry project! Or about twice the cost overrun on the ferries.
Where was the massive media coverage? The daily stories about the huge cost overrun? The outraged rallies about government expense? Strange that the story was, at best, low key.
But the argument that was put forth by the minister in charge is that we actually have a convention centre and it works as opposed to the fast ferries.
Well, that is a little disingenuous as the fast ferries also worked - just not quite the way that they were supposed to.
And the Vancouver Convention Centre is in exactly the same category. It hasn't garnered the massive increase in large conventions that it was intended to attract.
The net increase in PavCo revenues, upon completion of the $883 million expansion, was on the order of $20 million in its first year according to the publicly available documents. Not exactly the world beater that we were sold.
In addition, the Vancouver Convention Centre is a Vancouver entity. What economic activity it generates tends to benefit businesses in Vancouver. What jobs were created benefit Vancouver.
And yet the revenues to pay for it are generated by in the north and interior - the bread basket of the province.
Ditto the renovations to B.C. Place. I suppose if I lived in Vancouver, I might actually use the facility. But living in the north? In the past 30 years, I have been to B.C. Place twice and both times were for concerts.
What could possibly justify the expense? And more to the point, what could justify the cost overruns in the
refurbishing?
When the renovation was first proposed, the estimated cost was $365 million. By the time the contract was tendered, the cost had risen to $485 million. But this was a "fixed cost" contract. The price that would be paid was stipulated. Not a penny more.
Of course, we now know that the final price tag is $563 million. A hugely expensive renovation on a building that according to PavCo had a book value of $155 million. Still, as PavCo Chairman David Padmore pointed out, "You could not build this facility for $563 million."
Fair enough. So what is the pay off?
The provincial government estimates that it will generate some $40 million per year in economic activity. Note that is not revenue to the government but economic activity in the province. Both the government's and PavCo's share will be much smaller.
As a consequence, to pay off the new roof, PavCo took out a 40 year loan. We will be paying for the roof long after the building is gone. Or does anyone really think that the building is going to
withstand another 40 years of use?
In the end, hundreds of millions of dollars will be spent and to what end?
Sure, we have a stadium but a colleague of mine who was down there last week pointed out that the new roof leaks. The seats around the field were being rained upon as a result of having a retractable roof. Looks good but in Vancouver? Where it rains the whole year through?
There are other government projects with cost overruns. Most are for the lower mainland. The Putallo Bridge is not finished yet but already rumours are circulating that it will be significantly over budget. And let's not mention the additional costs for hosting the
Olympics.
As I said, it is ironic that a government that came to power on a promise of controlling government spending has not managed to do so.
I also find it somewhat ironic that the government is so excited about a federal contract that will revitalize our
shipbuilding industry.
Seems to me that they thought it was bad idea to use government money to support shipbuilding a decade ago.
