After the deal was questioned on Twitter by the Canadian Taxpayers Federation, Premier Christy Clark's deputy chief of staff explained that the deal should generate $2 million profit for B.C. taxpayers over its three-year life. That's a return of roughly 0.67 per cent per year -- assuming everything goes right with the gamble.
Why bother for such a minuscule return? Why go $97.5 million into debt and put that money into India?
British Columbia Finance Minister Mike de Jong. (Photo: REUTERS/Chris Wattie)So why bother for such a minuscule return? Why go $97.5 million into debt and put that money into India? We know why India likes the deal: "This back-to-back issue... shows that B.C. and Canada continue to find imaginative ways to invest in India to help it achieve its core objectives of building needed infrastructure for this fast emerging economy," Canadian High Commissioner to India Nadir Patel said in the news release. British Columbians waiting in traffic, or passed up by a full bus, or sitting in a school portable might wonder about our own "needed infrastructure."
The government says the bond "adds to B.C.'s investor diversification and provides access to a new global source of liquidity." But there's no discussion on why B.C. should be contributing to funding the debt requirements of international corporations. The biggest motivator seems to be entrenching economic links to India, especially as a B.C. lumber buyer. Indeed, B.C. is spending $5 million over three years to promote B.C. wood in India. A noble cause, to be sure, but one that should be kept separate from B.C.'s investment decisions. A decision to risk $97.5 million should not depend on marketing aims. The debt taken on by B.C. is backstopped by taxpayers. The government news release is silent on whether our investment into the Indian corporation is secured by any of HDFC's assets if they can't pay it back. Make no mistake: the B.C. government is gambling with taxpayer assets. They stand a good chance of rolling the dice and adding $2 million to the $97.5 million they placed on the table. But eventually, every gambler rolls snake eyes and loses. When the government does, it's our money that's gone forever.
Eventually, every gambler rolls snake eyes and loses.
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