Wednesday, October 18, 2017

Transportation & Housing Affordability – Odd bedfellows


There are a number of factors affecting housing affordability in the lower mainland. Certainly, speculation is playing a part, and foreign speculation is a large part of as well. There are other factors at play. The geophysical realities of the lower mainland, especially Vancouver proper constrain the supply of land. The unwillingness for government to bring more Crownland into play constrains the supply of land. The ALR has constrained the supply of land. Affordability for housing is affected by either a decrease in demand or an increase in supply. Seeking solutions related to increasing supply can be pursued absent any dramatic intrusion on market functionality, which it must be said, has served us quite well.



The solution lies in managing the development of the region in a manner that disperses the population in a healthy way and gives access to a larger land base.  So as I like to do, let us begin with the end in mind. I read a book when I was 17 years old called Small is Beautiful, my take away from that book is, that when it comes to community, small is beautiful. Small communities give people a place to live where everyone knows your name. As Schumacher said, in a community of 300 people, if you take someone’s shirt they’ll see you wearing it. Conversely, it is also true, that if you have something happening in your life, someone will know. The modern urban-scape tends to generate a multitude of ills that slices, dices and isolates members of the population in a number of ways. The built environment matters and everything I’ve learned about the built environment indicates it is healthiest to design human contact into the built environment.


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The first solution is to take a larger area and make it closer in time and in a manner that makes economic and environmental sense. This would be accomplished by building a rapid transit line from Vancouver to Hope, a rapid transit facility in the nature of Japan’s bullet trains – speeds up to 220 mph – Hope in under an hour. Primary terminals placed along the route will feed and be fed existing infrastructure. Cost for the project would come in at about 6 or 7 Billion. The government would open up the use of low-cost Crownland for the development of a number of communities that fit the overall regional plan or that permit modern and adjunctive development to the existing communities.  Cost recovery would come from fairs, a regional tax levied on new development and the sale of Crownland.

This is more than a housing affordability proposal, this is region-wide development proposal that fixes a number of things, one of which is housing affordability. It would also put us on a track that, over time, would build healthier communities and have people living in a way that permits connectedness and security without having a “bobby on every corner”.  It would bring people out of a geophysically constrained area, to a place where land is abundant and provisions a quasi-rural living experience. I would be very happy to leave my car in Hope and ride the bullet train into downtown Vancouver as a visitor from the interior, as would many people who commute every day from outlying areas near Vancouver.

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We have played long enough at attempting to make a patchwork of transportation solutions work, we have played long enough at finding a solution for the full gambit of housing options in the province’s busiest and most populated region.  While we have “cheap” money these sorts of infrastructure programs make sense, it is an investment in British Columbia’s future that will pay dividends in quality of life, air quality and an overall prosperous region.   


      

Tuesday, October 3, 2017

Fiscal Policy - Three Critical Elements

Fiscal Policy

Proposition

Whereas we are managing the province for today and tomorrow Balanced Budgets are necessary for the long-term health of the government.



Whereas we have resource wealth that represents a massive collective asset, and we are liquating said asset with every tree cut, every mineral extracted it behoves us to convert this asset to assets and avoid spending the proceeds from their sale on operations.

Solution

To satisfy this requirement we must trend toward clear delineation of resource revenue and ensure it is earmarked for capital acquisitions and new asset development – AND - effect a trend toward clear delineation of “operational revenue” and it being earmarked for “operational spending”.

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Whereas, prosperity builds prosperity, in BC we should seek to move the provincial growth to the top performing region in the G20 by aggressive use of region-specific stimulative policies that seed entrepreneurialism, provide a regional advantage and build the economy from the ground up.

Whereas in British Columbia, like many western economies, we are ageing and with an ageing population comes economic stagnation and to counter this trend we must initiate a stimulative policy that is executed at minimum cost to the government.

Whereas, the move of many into retirement has people seeking a safe place for their retirement funds and this is causing a massive amount of latent capital to sit in RRSPs generating very little good for capital’s holders and failing to find its way to the people that really need capital, entrepreneurs. Given this reality, it is necessary to engage in a form of quantitative easing that benefits in a significant way the retirees, builds out business opportunity and represents a limited cost to the government.

Region Specific Stimulative Policy

I propose the development of three bonds, BC Forestry Bonds, BC Municipal Bonds and BC Venture Capital Bonds.

The BC Forestry Bonds will be based on returns to the government gained through more aggressive forest management. There is a basket of silviculture practices that effect a 5% to 7% annual return by hastening the forest cycle to viable fibre. The proposal is to augment this return to sufficient degree that the bond offering competes effectively from the perspective of return and security. Cost recoveries come from the volume gained AND spin-off from forest improvement activity.

BC Municipal Bonds will provide a platform whereby, municipalities can at their own initiative, issue bonds to attain capital for infrastructure improvement. The Provincial government’s role here will be to supply the platform and to secure and augment returns to sufficient degree to permit the bonds to be completive in the investment space. Cost recovery is garnered to a degree through an immediate spinoff from increased economic activity and medium and long-term improvements to vital infrastructure.

BC Venture Capital Bonds will be a means by which people can issue bonds to raise capital for business start-ups. The Provincial government’s role here will be to supply the platform and to secure and augment returns to sufficient degree to permit the bonds to be completive in the investment space. Cost recovery in the short term comes from increased economic activity and regional advantage (an in-migration of capital) and in the medium and long term an innovation-based economy with a larger tax base.

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