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How big things could get done—even in Canada

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6 minute read

From the Fraser Institute

By Philip Cross

From Newfoundland’s Muskrat Falls hydro project, to Ottawa’s Firearms Registry and the Phoenix pay system, to Montreal’s 1976 Olympics, Canada is a gold medal winner when it comes to wasting tax payer dollars.  It doesn’t have to be this way.

Last year, Bent Flyvbjerg, a Danish professor of economic geography specializing in megaprojects, and Canadian journalist Dan Gardner co-authored a book How Big Things Get Done. They investigate what they coin the “Iron Law of Megaprojects,” which holds they routinely come in well over budget, far past projected deadlines, and without the projected benefits.

Unfortunately for taxpayers, the book contains numerous examples of Canadian megaprojects that follow this Law of Megaprojects. The federal government’s infamous firearms registry is a textbook template for how IT projects can go terribly wrong, ending up 590 per cent over budget. The Muskrat Falls hydro project in Newfoundland is cited as a classic demonstration of what happens when hiring a firm with little direct experience managing such a large complex project. Most famously, the 1976 Montreal Olympic Games wins the title for the largest cost overrun in Olympic history, finishing 720 per cent over budget. The authors suggest Montreal’s “Big Owe” stadium “should be considered the unofficial mascot of the modern Olympic Games.”

One thing all these Canadian examples have in common is extensive government involvement. Not that governments learned from their past mistakes. The federal government’s Phoenix pay system fiasco demonstrates that IT remains a black hole, with the government recently announcing it would abandon Phoenix after spending $3.5 billion trying to implement it. Several light train projects across the country have gone off the rails, the poster boy being the system in Ottawa, which is years behind schedule and already $2.5 billion over budget.

There are several reasons why government projects are chronically prone to failure. One is that politicians, especially late in their careers, want legacies in the form of monumental tangible projects irrespective of whether they effectively meet a public need. You can see this dynamic clearly at work today in Canada, as the Trudeau government pushes for a prohibitively expensive (probably more than $100 billion) high-speed rail connection between Windsor and Quebec City. Meanwhile, Ontario Premier Doug Ford promotes a traffic tunnel underneath Highway 401 between Brampton and Scarborough, and Quebec Premier Francois Legault revives plans for a third link connecting Quebec City to the south shore of the St. Lawrence River. While Canada clearly needs more transportation infrastructure, these projects are not the most cost-effective way of meeting the needs of commuters.

Governments deceptively deploy several tricks to help get uneconomic projects built. They routinely produce unrealistically low-cost estimates to make wasteful ego-driven projects appear affordable. Another tried and true tactic is to just “start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in,” as former San Francisco mayor Willie Brown admitted. This approach preys on the mistaken belief that large sunk costs mean scrapping a project “would be interpreted by the public as ‘throwing away’ the billions of dollars already spent” when it is actually a textbook example of throwing good money after bad.

Unlike other studies of how major infrastructure projects typically are over budget, Flyvbjerg and Gardner have some concrete recommendations on how to manage large projects that respect deadlines and budgets.

These steps include careful consideration of the actual goals of the project (airlines can meet the need for fast transport in the Windsor-Quebec corridor without the expense of high-speed rail), detailed planning and preparation followed by swift execution to minimize costly surprises (summarized by their advice to “think slow, act fast”), accounting for the cost of similar projects in the past, and breaking large projects into smaller modules to allow projects to scale back when they run into trouble. A good example of these principles at work in Canada were several oilsands projects built before 2015, when severe shortages were addressed by firms using modularity and synchronizing their work schedules to free up scarce labour and materials.

However, one major flaw in Flyvbjerg and Gardner’s analysis is their failure to understand the economics of renewable energy. They cite solar and wind projects as examples of projects that routinely finish under budget, a major factor in their declining cost. But building renewable energy is not their only cost to the energy grid, as back-up plants must be maintained for those periods when the sun is not shining or the wind is not blowing, as noted in a recent article by Bjorn Lomborg. The expense of maintaining plants that often are idle raises overall costs. This is why jurisdictions that rely extensively on renewable energy, such as Germany and California, have high energy costs that must be paid either by customers or taxpayers.

However, apart from this mistake, there is much governments and taxpayers can learn from How Big Things Get Done.

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UN climate conference—it’s all about money

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From the Fraser Institute

By Kenneth P. Green

This year’s COP wants to fast-track the world’s transition to “clean” energy, help vulnerable communities adapt to climate change, work on “mobilizing inclusivity” (whatever that means) and “delivering on climate finance,” which is shorthand for having wealthier developed countries such as Canada transfer massive amounts of wealth to developing countries.

Every year, the United Nations convenes a Conferences of Parties to set the world’s agenda to reduce greenhouse gas (GHG) emissions. It’s the biggest event of the year for the climate industry. This year’s conference (COP29), which ends on Sunday, drew an army of government officials, NGOs, celebrities and journalists (many flying on GHG-emitting jet aircraft) to Baku, Azerbaijan.

The COP follows a similar narrative every year. It opens with a set of ambitious goals for climate policies, followed by days of negotiating as countries jockey to carve out agreements that most favour their goals. In the last two days, they invariably reach a sticking point when it appears the countries might fail to reach agreement. But they burn some midnight oil, some charismatic actors intervene (in the past, this included people such as Al Gore), and with great drama, an agreement is struck in time for the most important event of the year, flying off to their protracted winter holidays.

This year’s COP wants to fast-track the world’s transition to “clean” energy, help vulnerable communities adapt to climate change, work on “mobilizing inclusivity” (whatever that means) and “delivering on climate finance,” which is shorthand for having wealthier developed countries such as Canada transfer massive amounts of wealth to developing countries.

Some of these agenda items are actually improvements over previous COPs. For example, they’re actually talking about “climate adaptation”—the unwanted stepchild of climate policies—more this year. But as usual, money remains a number one priority. As reported in the Associated Press, “negotiators are working on a new amount of cash for developing nations to transition to clean energy, adapt to climate change and deal with weather disasters. It’ll replace the current goal of $100 billion (USD) annually—a goal set in 2009.” Moreover, “experts” claim the world needs between $1 trillion and $1.3 trillion (yes, trillion) in “climate finance” annually. Not to be outdone, according to an article in the Euro News, other experts want $9 trillion per year by 2030. Clearly, the global edifice that is climate change activism is all about the money.

Reportedly, COP29 is in its final section of the meta-narrative, with much shouting over getting to a final agreement. One headline in Voice of America reads “Slow progress on climate finance fuels anger as COP29 winds down.” And Argus News says “climate finance talks to halt, parties fail to cut options.” We only await the flying in of this year’s crop of climate megafauna to seal the deal.

This year’s conference in Baku shows more clearly than ever before that the real goal of the global climate cognoscenti is a giant wealth transfer from developed to developing countries. Previous climate conferences, whatever their faults, focused more on setting emission reduction targets and timelines and less about how the UN can extract more money from developed countries. The final conflict of COP29 isn’t about advancing clean energy targets or helping vulnerable countries adapt to climate change technologically, it’s all about show me the money.

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Canada’s department of government efficiency: A blueprint

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From the Canadian Taxpayers Federation

By Franco Terrazzano 

Average compensation for a federal bureaucrat is $125,300. Cutting back the bureaucracy to population growth would save taxpayers $9 billion every year

Dumb government spending doesn’t stop at the 49th parallel.

U.S. President-elect Donald Trump announced the creation of a Department of Government Efficiency, with a mandate to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies.”

Those marching orders sure would sound good in a prime minister’s mandate letter to a finance minister. And here’s the blueprint they should follow.

Begin with crazy research Canadian taxpayers are forced to subsidize.

The Social Sciences and Humanities Research Council spends $1 billion a year supporting “research and research training in the social sciences and humanities.”

Here’s a little taste of the reports it funds with your tax dollars:

  • Gender Politics in Peruvian Rock Music ($20,000)
  • Cart-ography: tracking the birth, life and death of an urban grocery cart, from work product to work tool ($105,000)
  • My Paw in Yours: Dead Pets and Transcendence of Species Divides in Experimental Art-Making Practice ($17,500)
  • Playing for Pleasure: The Affective Experience of Sexual and Erotic Video Games ($50,000)

And that’s just the tip of the iceberg.

Parks Canada put Mr. Magoo in charge of its hunting operations. It spent four years and $10,000 capturing a single bullfrog and dropped $800,000 hunting 84 deer on a B.C. Island. How can a simple hunt cost $10,000 per deer?

Well, hunting gets more expensive when instead of your grandpa’s old rifle, you use prohibited semi-automatic weapons, instead of a box of shells, you get a crate of ammo, and instead of your buddy’s old pickup, you rent a helicopter for $67,000.

Or how about the $8-million barn at Rideau Hall. Or $12,500 live senior citizen sex story shows. Or the $8,800 sex toy show in Germany. Or the millions wasted producing government podcasts no one listens to.

Then there’s government officials living high on the hog.

Governor General Mary Simon spent $71,000 on limo services in Iceland. Bureaucrats spend $76,000 a month renting art. Global Affairs Canada spends $51,000 on booze a month.

Now, the big stuff.

The size and cost of the government is out of control. Prime Minister Justin Trudeau hired 108,000 new bureaucrats. That’s a 42 per cent increase in less than a decade.

Had the bureaucracy only increased with population growth, there would be 72,491 fewer bureaucrats today.

Average compensation for a federal bureaucrat is $125,300. Cutting back the bureaucracy to population growth would save taxpayers $9 billion every year.

It’s time to stop rewarding failure with bonuses.

The feds dished out $1.5 billion in bonuses since 2015.

And the bonuses flow despite federal departments only managing to hit half of their performance targets once in the past five years.

Government executives overseeing ArriveSCAM took $340,000 in bonuses.

The Canada Mortgage and Housing Corporation rubberstamped $102 million in bonuses amid the worst housing crisis in Canadian history.

The Bank of Canada printed $20 million in bonus cheques in 2022, as inflation reached a 40-year high.

The CBC dished out $132 million in bonuses since 2015.

The next thing on the chopping block? Corporate welfare.

Trudeau put taxpayers on the hook for $30 billion in subsidies to multinational corporations like Honda,Volkswagen, Stellantis and Northvolt.

Federal corporate subsidies totalled $11.2 billion in 2022 alone.

Shutting down the federal government’s seven regional development agencies would save taxpayers an estimated $1.5 billion annually.

True efficiency would also mean eliminating failing government operations altogether. The feds should sell any Crown corporation that can, or should, be left to the private sector.

Here are a few examples.

The CBC, which takes more than $1 billion from taxpayers annually.

Canada Post, which lost $1.2 billion in the last two years and forecasts “larger, unsustainable losses in future years.”

VIA Rail, took $1.8 billion in taxpayer cash during the past five years just to cover operating losses.

The bad news for taxpayers is we pay too much tax because the government wastes too money. The list of wasteful spending in this article is far from exhaustive.

Other examples include the multi-billion dollar gun confiscation that police officers say won’t work, the $25-billion equalization scheme and taxpayer-funded media bailouts, among others.

The good news is a champion of taxpayers could make massive cuts and barely anyone outside the Ottawa bubble would notice.

This is the blueprint to slash Ottawa’s wasteful, bloated bureaucracy. All we need now is a prime minister with the guts to pick up the scissors.

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