THE BLOG

You're Losing Your Shirt On These Publicly Funded Projects

03/12/2014 12:55 EDT | Updated 05/11/2014 05:59 EDT
Nanaimo Port Authority
Five years after governments poured billions of dollars into economic stimulus projects, we are beginning to see how foolish many of those so-called "investments" really are.

At the time, both the federal Conservatives and B.C. Liberals felt they needed to prop up the economy by taking on huge debt and funding virtually any "shovel-ready" government project they could find. Unfortunately, this rush to build meant prudent business plans were missing for many of the projects.

Now many of these projects, lumped under Ottawa's Economic Action Plan umbrella, are delivering far less than advertised -- even as more tax dollars flow to run them.

Take Nanaimo's $24-million cruise ship terminal, for example. In early 2008, the province announced it would kick in $5 million for a new cruise dock. A year later, federal taxpayers matched with another $8.5 million, while the provincially-funded Island Coastal Economic Trust added $3.5 million. The Nanaimo Port Authority paid the final $7 million, and the terminal opened in 2011.

Great things were foreseen: the Nanaimo Port Authority promised "25-30 large cruise calls per season with [an] estimate of 45,000 to 55,000 passengers," and an estimated economic impact of $5 million a year.

This has proven to be grossly exaggerated. In 2014, only two large cruise ships are expected to visit Nanaimo, for a grand total of 24 hours. Last year, only six ships used the dock. Needless to say, taxpayers are losing their shirts on this cruise ship terminal.

It's unfortunate Nanaimo didn't heed the cautionary tale that is Campbell River, which also lost big in the cruise ship business. Taxpayers spent $18 million on that terminal, which opened in 2007, and hasn't seen a boat since 2009 -- despite promises of up to 30 ships per year, and $7 million in annual spinoffs.

Lest Mainlanders get too smug at Islanders' misfortune, Metro Vancouver has provided its own textbook example of wasted infrastructure spending.

The $9-million Annacis Wastewater Centre opened in 2011, with a third of the construction money coming from each of the three levels of government. The centre is losing hundreds of thousands of dollars a year, and often its only occupants are a handful of University of B.C. sewage researchers huddled in the back of the 18,300 sq. ft. building.

Metro's error was one of hubris: they wanted a shiny showcase, instead of a focusing on function. It would have been simple and relatively inexpensive to add a modest space onto the Annacis sewage plant for the UBC researchers to work, rather than this $9-million edifice.

Now Metro wants to "aggressively" promote the centre, located next to the Annacis sewage treatment plant in the middle of an industrial park, to conference and convention planners. It's an idea doomed to fail, as White Rock Mayor Wayne Baldwin pointed out: "A sewage treatment plant is not really the best place for conventions."

As the new car smell wears off these shiny projects, it is likely we'll find more examples of Economic Action Plan projects that over-promised and under-delivered for taxpayers.  

Already, several of these "investments" have popped up as nominees for the Canadian Taxpayers Federation's prestigious Teddy Waste Awards, including $190,000 for a New Brunswick donut maker's freezer, $826,000 for an Ontario company to create burst-free sausages, and $5 million for a Manitoba hemp processing company that went under nine months later.

Too often, these Economic Action Plan projects seemed like giant lottery tickets, bought with our money, and failing to pay off. Government -- federal, provincial and local -- should stay out of the way, and let investors take the risk on these "easy" money economic development schemes. If the investors stay away, it could be for very good reason.

When it comes to tax money, prudence is usually the best economic action plan of all.

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