The Legislature Raids

The premier says that our railway has lost $860 million.

The truth: BC Rail has paid $137.7 million in dividends to its shareholders – the citizens of British Columbia – over the past 15 years. In 1999 they paid out $40 million. The $860 million is a writedown or reassessment of the value of the company and has not affected its profitability at all. There is no cost to the taxpayers of a writedown, and it hasn’t affected BC Rail’s profitability.

Campbell says BC Rail is $500 million in debt.

The truth: Yes, BC Rail is $500 million in debt. They are in debt because they bought assets, just like you would likely be in debt if you bought a car. CN Rail, which just bought BC Rail, is financing the purchase with debt. It has about $6 billion of it.

B.C. taxpayers don’t finance BC Rail’s debt. The interest on it is paid by BC Rail as an expense each year. The dividend, or profit, comes after the interest is paid. The debt does not show up in B.C.’s public accounts. And to put it in perspective, B.C.’s total debt is $36.5 billion.

In fact, B.C. taxpayers will be paying more in taxes after the sale, because they will not be getting the annual dividend that BC Rail has been paying.

Campbell: The B.C. government is getting “$1 billion in cash”.

The truth: The first $500 million will pay off the BC Rail debt. The government will get the other half, but only if Canada Customs and Revenue Authority agrees that it can transfer BC Rail’s past losses and debt to CN. If not, taxpayers will have to indemnify CN to the tune of about $250 million.

If they do agree, CN will get the tax writeoffs, which will mean that they don’t have to pay, in their own estimates, $250 million in taxes, of which $10 million would have gone to BC. Therefore, there is a potential $10 million loss in taxes to British Columbians.

Campbell: Selling BC Rail could give rail line municipalities tax payments of $8.3 million a year compared to the $1.8 million paid now as an annual grant in lieu of taxes.

The truth: The Liberals promised to give municipalities the right to tax Crown corporations. If they had kept that promise, the municipalities would have had the right to the $8.3 million in taxes without selling BC Rail.

Campbell: The sell-off is a great deal that will increase investment.

The truth: CN, in pitching the deal to financial market analysts, says the company will begin recovering its investment by disposing of “redundant assets”. That means selling 35 per cent of the locomotives, 15 per cent of the rail cars, closure of rail yards in North Vancouver and Squamish, and the merger of the two yards in Prince George. There will be a 35 per cent reduction in the workforce.