Business
How big things could get done—even in Canada
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.
Author:
Business
CBC’s business model is trapped in a very dark place
I Testified Before a Senate Committee About the CBC
I recently testified before the Senate Committee for Transport and Communications. You can view that session here. Even though the official topic was CBC’s local programming in Ontario, everyone quickly shifted the discussion to CBC’s big-picture problems and how their existential struggles were urgent and immediate. The idea that deep and fundamental changes within the corporation were unavoidable seemed to enjoy complete agreement.
I’ll use this post as background to some of the points I raised during the hearing.
You might recall how my recent post on CBC funding described a corporation shedding audience share like dandruff while spending hundreds of millions of dollars producing drama and comedy programming few Canadians consume. There are so few viewers left that I suspect they’re now identified by first name rather than as a percentage of the population.
Since then I’ve learned a lot more about CBC performance and about the broadcast industry in general.
For instance, it’ll surprise exactly no one to learn that fewer Canadians get their audio from traditional radio broadcasters. But how steep is the decline? According to the CRTC’s Annual Highlights of the Broadcasting Sector 2022-2023, since 2015, “hours spent listening to traditional broadcasting has decreased at a CAGR of 4.8 percent”. CAGR, by the way, stands for compound annual growth rate.
Dropping 4.8 percent each year means audience numbers aren’t just “falling”; they’re not even “falling off the edge of a cliff”; they’re already close enough to the bottom of the cliff to smell the trees. Looking for context? Between English and French-language radio, the CBC spends around $240 million each year.
Those listeners aren’t just disappearing without a trace. the CRTC also tells us that Canadians are increasingly migrating to Digital Media Broadcasting Units (DMBUs) – with numbers growing by more than nine percent annually since 2015.
The CBC’s problem here is that they’re not a serious player in the DMBU world, so they’re simply losing digital listeners. For example, of the top 200 Spotify podcasts ranked by popularity in Canada, only four are from the CBC.
Another interesting data point I ran into related to that billion dollar plus annual parliamentary allocation CBC enjoys. It turns out that that’s not the whole story. You may recall how the government added another $42 million in their most recent budget.
But wait! That’s not all! Between CBC and SRC, the Canada Media Fund (CMF) ponied up another $97 million for fiscal 2023-2024 to cover specific programming production budgets.
Technically, Canada Media Fund grants target individual projects planned by independent production companies. But those projects are usually associated with the “envelope” of one of the big broadcasters – of which CBC is by far the largest. 2023-2024 CMF funding totaled $786 million, and CBC’s take was nearly double that of their nearest competitor (Bell).
But there’s more! Back in 2016, the federal budget included an extra $150 million each year as a “new investment in Canadian arts and culture”. It’s entirely possible that no one turned off the tap and that extra government cheque is still showing up each year in the CBC’s mailbox. There was also a $93 million item for infrastructure and technological upgrades back in the 2017-2018 fiscal year. Who knows whether that one wasn’t also carried over.
So CBC’s share of government funding keeps growing while its share of Canadian media consumers shrinks. How do you suppose that’ll end?
We make content free for you but we require support to create journalism. Please consider a free subscription to our newsletter, or donate an amount of your choice.
ESG
Can’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!
Watch Canada’s Prime Minister tell an anti-poverty group, your ability to buy “groceries for my kids” is less important than sacrificing to pay his carbon tax.
In case you still thought there might be even the tiniest chance Justin Trudeau might come around.. well this settles it. He is as they say, ‘beyond the pale’.
Sure we’ve pieced this together over the last number of years, but it’s still SHOCKING to see him say it directly, proclaim it proudly. This week Trudeau received applause from an audience of the intellectually suffering at something called the “Global Citizen Now” panel discussion on the sidelines of the G20 Leaders’ Summit in Rio.
Much appreciation for the first short video below to Opposition Leader Pierre Poilievre who shared his ferocious reaction to Trudeau’s anti-human comments, challenging the current PM to call an immediate election.
Or course there will be no quick election call. To Justin, it’s more important to cling to the undercarriage of a taxpayer funded jet so he can fly the globe stunning audiences unfortunately already stunned by their utter terror of losing the planet.
In their horror at their inability to turn the switch off and let us all freeze/starve to death this winter, they applaud lovingly for their intellectual leader/sock model as he describes how hard it is to convince angry, hungry people they really need to suck it up.
If only he read a history book.. any history book.. apologies, any book at all. Truly even spending some time with the literary version of an Al Gore video rant would at lest keep JT occupied so he couldn’t speak for a few moments. I’m pretty sure every time he opens his mouth, the temperature in Canada rises as millions of frustrated hotheads (hello there) explode, spewing steam high up into the upper atmosphere where water particles do much more damage to our planet than the final exhaling of a non grocery-eating-planet-loving-Canadian.
Watch Pierre Poilievre’s video and assuage the ensuing headache by mapping out your route to a polling booth. If this doesn’t sell a couple of those ‘Axe the Tax’ shirts for the Poilievre team, well.. enjoy your stroll to the foodbank.
Here’s a link to his entire discussion. If you have a strong stomach and 20 minutes of your life to donate to a higher cause… No silly, not the intended cause of the anti-poverty group… But to the intellectual cause of understanding just how twisted the logic has become for those who fly around the world to wine and dine, only to break long enough to tell us they think it’s perfectly fine if we can’t buy groceries for our kids.
By the way, please save a bit of your shock and disappointment for the hapless host of the ‘anti-poverty’ Global Citizen. This was apparently on the sidelines of a G20 Summit. I would expect this drivel to be called out at a respectable middle school debate. Apparently the ‘anti-poverty’ Global Citizen people aren’t overly concerned with poverty. Do we need to say that not being able to afford groceries is in fact THE definition of poverty? Or course not. It would be much easier for them to change their name to Former Global Citizens.
You were warned.
-
Business1 day ago
Carbon tax bureaucracy costs taxpayers $800 million
-
Brownstone Institute1 day ago
The Most Devastating Report So Far
-
Alberta1 day ago
Province considering new Red Deer River reservoir east of Red Deer
-
John Stossel1 day ago
Green Energy Needs Minerals, Yet America Blocks New Mines
-
Alberta22 hours ago
Early Success: 33 Nurse Practitioners already working independently across Alberta
-
Business2 days ago
From ‘brilliant’ to ‘aghast’: Reactions to RFK Jr.’s nomination for HHS secretary run the gamut
-
MAiD2 days ago
Over 40% of people euthanized in Ontario lived in poorest parts of the province: government data
-
ESG1 day ago
Can’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!