In blathering on about the NDP keeping an election promise, the media once again fails to ask important questions. For example: is the removal of the bridge tolls a promise that should ever have been made, much less kept.
That the NDP are keeping an election promise will not make paying the consequences of Horgan’s Folly any less costly or painful.
The public adulation the removal of the bridge tolls received is more evidence that, despite all the denial, finger-pointing and whining that will occur when the consequences of removing the Port Mann tolls extract their pound of flesh – year after year after year – BC citizens get the government their behaviours earn and deserve.
In order to remove the tolls from the Port Mann Bridge BC must first buy the bridge.
The Port Mann debt is not currently counted as part of BC’s provincial debt and there is a crown corporation, the Transportation Investment Corporation, specifically overseeing the Port Mann Bridge operations because the Port Mann does not belong to the province.
The province did not borrow money and build the Port Mann. A consortium put up money and built the Port Mann.
The tolls on the Port Mann were the repayments to the consortium of the mortgage. Like any mortgage ownership does not pass to the mortgagee until the mortgage is paid out.
It appears, unless some very important information was left out of the announcement, Premier Horgan has unilaterally ripped up the mortgage [financing and building agreement] on the Port Mann.
If there is no agreement to buy out the financing agreement does the consortium have the right to close [repossess] the bridge in the same manner a bank repossesses a house if the mortgage agreement is violated?
That could be messy, not to mention expensive.
And as anyone who has gotten out of a mortgage with a financial institution can tell you it involves not just the repayment of the debt but fees and penalties. What fees and penalties are involved in buying out the agreement with the consortium that built the Port Mann?
Even if the process goes smoothly and the penalties and fees to buy out the financing/building agreement are not large or onerous, the NDP’s removal of the tolls adds a $300 million yearly expense to BC’s budget.
$300 million because the ‘losses’ suffered by the Port Mann and added to the debt were the difference between the payments that should have been made and the tolls actually collected. With the tolls eliminated the shortfall won’t be added to the debt but paid out of taxpayers pockets.
Simple mathematics makes it clear that cutting $300 million from BC’s budget will require cutting healthcare and/or education because there are not enough dollars in the rest of the provincial budget to cover a $300 million cut. Assuming one is unwilling to cut ministries such as Justice [courts, incarceration etc] entirely out of the budget.
Given the NDP’s clear and repeated demonstration that they are even less in touch with the reality of the fundamental shift in BC’s economy than the Liberal’s are, any NDP claim of a ‘new revenue source’ to cover the $300 million will have no more substance than smoke or any other false claims and promises made to appease those preferring the comfort of a fairy tale over dealing with reality that were never realized.
And while it appears from CKNW’s conversation with Michael Yake, a Vice President and Senior Analyst with Moody’s [currently giving BC a AAA credit rating] that the NDP will be fortunate and debt from purchasing the Port Mann bridge will not result in BC’s credit rating falling, it is clear from Mr. Yake’s comments that any further increase in debt will result in the lowering of BC’s credit rating.
In borrowing and buying the Port Mann the NDP have shot themselves in the foot when it comes to adding any additional debt.
Forcing the NDP to either live within their means [spend only the revenue they take in] or increase the cost of servicing BC’s provincial debt by borrowing, lowering BC’s credit rating and increasing the interest rate on debt.
The bottom line is that, while at this point one cannot determine exactly what the costs and consequences will be, it is clear Premier Horgan’s purchase of popularity by removing the tolls on the Port Mann Bridge will be imposing a painful burden and cost on BC citizens for decades to come.
Part II of III: Premier Horgan Buys a Folly…er…Bridge
Part III of III: Santa Horgan Gifts TransLink