Stephen Rees's blog

Vancouver Sun

Joe Trasolini is worried: he is the Mayor of Port Moody and he has already seen this project deferred, delayed and reconfigured more than once. It was supposed to have been the region’s number one transit priority until the Liberals got into power and the Richmond line took over that slot. Charlie Smith has more on the politics in his Straight blog.

The reason is that the whole thing depends on private sector participation, and that is doubtful because of the present market. Moreover, Richmond has been faced with developers not conforming to the timetable set for a major development on the Canada Line that would have seen another station built at Capstan Way. Currently they have decided to defer a decision but it is also complicated by the fact that Translink is also relying on its new property division to produce new revenue to cover some of its commitments.

The present problems are the result of the previously over heated property market. The sudden drop in the US economy was initially brought about by subprime mortgage backed securities – but the spreading ripples of that disturbance have had severe effects on the way the private sector gets finance. We have covered that ground here more than once, and its potential effect on P3 fund raising. The property market in this region is now seeing a long overdue correction – buyers are few and far between and prices have started dropping as few deals are being completed. A number of development projects are being put on hold. Although Craig McInnes is saying that this is still a good way to go for transit.

The great push has now been to get governments to ride to the rescue. All of a sudden, there is a line up of capitalists with their hands out – the banks and the automotive industry being just the first in line. The great wisdom of the hidden hand of the market is remarkably absent from these discussions. Though tax cuts remain popular with conservatives – and are in the Obama package to ensure Republican support to speed its progres through Congress. The reality is that tax cuts have not worked in the way they were supposed to – and do not produce a dollar for dollar rise in GDP. Public spending on capital projects is favoured because it has a multiplier effect. But that is also based on the ability of governments to produce money out of thin air. And that also seems to be a less certain proposition – because the people who used to be willing to lend the US government money are becoming much less willing to lose money on dollar denominated deals. Canada is perhaps not in quite such a desperate position but it is noticeable that the US dollar is now stronger than the Canadian dollar again. Which is a bit odd but perhaps off topic for this post.

If we did not have a shaky, minority Conservative government in Ottawa and a rigidly doctrinaire conservative government in BC (even if it does call itself Liberal and likes to think its is green it is neither) then now would be the time for both to do a straightforward deal to get this project rolling. But as long as there is the commitment to a P3, that is not possible. Unfortunately conservatives have made a virtue out of sticking to policies that no longer match  the circumstances. The recent shift in the matter of deficits in Ottawa is a notable exception.

Is it too much to expect some further shifts at both federal and provincial levels? The Evergreen Line is long overdue – and would be a very good way to show that there is a serious commitment to transit investment and public investment as a way of fighting the recession.  I am with Joe on this one. Alarms do need to be be raised – because procrastination is always the easier path than commitment. Until governments start to take positive steps, the private sector will continue to hold back. Fear is what is now ruling the market place and the most common piece of current wisdom is that it will get worse before it gets better.

UPDATE Friday January 9, 2009 6:39pm

Coquitlam mayor Richard Stewart is wholly confident that the Evergreen Line will soon break ground.

“This is the one that is going ahead next and I have no hesitation in staking my reputation,” Stewart told the Straight in a telephone interview. “This one will be next, the funding will be in place this spring, and we are working on it right now.”