There are many problems with the provincial government’s decision to license BC rivers and their energy-generating capacity to private interests, but the impact this will have on poor British Columbians will be particularly devastating.
Until now, hydro energy has been publicly generated, which has kept our energy costs very low. BC Hydro has also contributed about $750 million annually in dividends, water rentals, and “taxes in lieu” to the public coffers. With privatization, this revenue will be lost, and license holders will be able charge exorbitant rates for energy.
Currently, it costs BC ratepayers $1.08 per megawatt hour for the energy generated by our rivers. Under BC Hydro’s 2006 Tender Call decision, BC Hydro will have to purchase this power from private suppliers at a cost of $87 per megawatt hour, a price that will be indexed to inflation. The province will only receive 3% to 4% of the revenue from these projects. At the end of their contracts, the license owners will have full ownership over the resources and they’ll be able to sell the power they produce to anyone in North America, where energy prices are often four to five times higher than in BC. As rivers are sold off, government revenues will decline and energy prices will rapidly rise.
Rising energy costs will impose severe hardships on the poor. Besides raising their Hydro bills through the roof, this will also make it very difficult for our government to maintain the revenue necessary to preserve our already meager social infrastructure.
To understand what this will mean for impoverished British Columbians, we need to look at the current state of poverty in BC, and then try to imagine what will happen as funds dry up for income assistance and other social initiatives. To profile poverty in our province, I’ll use statistics gathered by First Call, BC’s Child and Youth Advocacy Coalition (firstcallbc.org).
Between 2000 and 2004, the richest 10% of families with children in British Columbia saw their annual incomes go up by 47%, from $143,338 to $211,195. Average families saw their incomes rise by 6%, from $69,595 to $73,434. The poorest 10% of families saw their incomes drop 2%, from $14,824 to $14,475. In 1993, the top 10% of families made just over 10 times as much money as the bottom 10%. By 2004, the top 10% were making just under 15 times as much as the bottom 10%.
This growing inequality is reflected in our child poverty rates. In 1989 BC’s child poverty rate was 14.3%, while the national rate was 15.1%. By 2004, BC’s child poverty rate stood at 23.5%, far above the national rate of 17.6%. Currently, BC has the highest child poverty rate in Canada, with Newfoundland and Labrador coming in as a close second. Even these bleak figures underestimate the level of poverty among BC’s children, because Statistics Canada doesn’t include reserve communities in its poverty statistics. Aboriginal children have a poverty rate almost double that of non-aboriginal children, and there are over 20,000 aboriginal children living on reserves in BC.
Of course, for every poor child there’s at least one poor caregiver. These caregivers are usually working parents: 67.6% of BC’s poor children live in families where there’s at least some earned income. That income, however, is not enough to raise them above the poverty line. Low wages, inadequate hours of work, and child care problems are largely to blame for this. In Canada, one in four workers makes less than $10 an hour. In Vancouver, a person without any dependents who works 40 hours a week for 52 weeks a year would need to earn $9.78 to reach the poverty line. People with children need to make even more, and they need affordable and accessible childcare. Despite this, the minimum wage in Vancouver is only $8, new workers receive a “training wage” of $6, most minimum-wage jobs come without benefits or guaranteed hours, and daycare spaces are expensive and limited.
Other caregivers depend on welfare, and for them it’s getting more difficult all the time. BC’s income assistance levels fell to a 16-year low in 2005. This translates into a grossly reduced standard of living compared to other Canadians.
The average monthly disposable income of a family of four in BC is $4,290. As much as 28% of this income goes to pay for shelter, 15% goes for food, and 57% is left over for all other costs involved in running a household. In comparison, the average low-income family of four has only $2,243 in monthly disposable income, of which they spend 42% on shelter, 29% on food, and 29% for other costs. A family of four on welfare, meanwhile, has a monthly disposable income of $1,601. Up to 58% of this money goes to shelter, 41% goes to food, and 1%, or $14, goes to everything else.
These statistics tell only part of the story. People on welfare can’t afford to move out of poor and unhealthy housing, they can’t escape unsafe neighborhoods, they don’t have enough money to buy nutritious food, and they have poorer health and die younger than their more affluent counterparts. The many people incapable of navigating the Ministry of Employment and Income Assistance’s Byzantine bureaucracy are in even worse straits than this.
The psychological and social costs incurred by widespread economic marginalization are incalculable. Addiction, domestic violence, child abuse, and debilitating psychological trauma can easily infect people who are forced to live in such spiritually toxic conditions, tragically compromising their ability to participate in a highly competitive marketplace.
To escape this misery, people usually need a post-secondary education, but that education is becoming extremely expensive. Tuitions are rising quickly across Canada, and student grants are drying up. As a result, student debt load has increased 76% since 1990. Post-secondary education is again becoming a privilege enjoyed by the well-to-do, rather than a right shared by the many. Compare Canada’s treatment of its students with the example of Finland and Ireland, where governments, aware that economic productivity requires a very well-educated workforce, cover the full costs of post-secondary education.
Such rampant poverty isn’t an inevitable consequence of market forces. Governments can dramatically reduce poverty without compromising their economies. For example, government intervention has lowered child poverty rates in Denmark, Finland, Norway, and Sweden, which had previously hovered between 11.8% and 18.1%, to between 2.5% and 4.2%. A 2006 World Economic Forum report on global competitiveness ranked all of these countries in the top 10.
With sufficient political will, the provincial government could reduce many of BC’s most glaring inequities. First Call is pressuring the province to implement a three-part poverty-reduction strategy. First, the coalition wants the government to create good jobs with decent wages and working conditions by increasing the minimum wage to $10 an hour, eliminating the $6 an hour training wage, raising the minimum call-out from two hours to four hours, and repealing legislation that reduced the work start age from 15 to 12. Second, First Call is demanding reasonable and realistic income support to people on welfare by indexing welfare rates to inflation and by raising welfare rates by 50%—a move that would cost only 25% of BC’s $3.1 billion-dollar surplus. Third, the coalition is asking for legislation that commits BC to building a high-quality, accessible, publicly-funded child care system, and for the burden of child care costs to be shifted from user fees to public funding.
The current government is unlikely to undertake any of these initiatives. With the privatization of BC’s power generation, not only will it be impossible for any future government to implement them, but what few supports are currently in place for the poor will inevitably wither for lack of funding.
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