Vaughn Palmer
Sun

VICTORIA – The year began with the B.C. Liberals promising to get a handle on the Vancouver convention centre expansion project.

Yes, they’d promised to do that before. Vowed it could be built for $495 million. Swore up and down that $565 million, then $615 million was the absolute limit.

But this time they were serious. The cabinet minister for the project, Stan Hagen, was as firm as could be. “One number,” he demanded from the project managers.

Not a range. Not another estimate. One number.

Hagen soon learned there is no easy way to firm up costs on a project that was grounded from the outset in the budgetary equivalent of swampland.

The B.C. Liberals launched into the convention centre expansion with no reliable analysis of the cost of building something that size over water. No good sense of rising prices for labour and materials. No firm grasp of the scope of the project, which kept changing — to this day.

They also agreed to an open-ended construction contract, putting provincial taxpayers on the hook for every dollar of rapidly inflating costs.

One number? By the time the legislature convened for the spring session, the best Hagen could say was that the cost would be “in the range of $800 million,” a desperately vague estimate that drew well-deserved sneers.

Halfway through the session, with nothing new to to say about the quest for the one, true number, Hagen announced a shakeup at the board of directors of the convention centre expansion.

Shunted aside, Ken Dobell, Premier Gordon Campbell’s man of many hats. Incoming, David Podmore, fresh from the property development industry. Hagen also appointed a couple of other new directors, saying the government wanted “a little more construction experience” on the board.

Construction experience — on a board overseeing one of the biggest construction projects in the province? Where do the Liberals get these notions?

The session ended and spring gave way to summer, but still the rumours persisted that the Liberals were having to face up to one more overrun on the convention centre project.

Then came the press advisory for Wednesday’s fiscal double header — release of the public accounts for the most recent budget year at 10 a.m., release of an update on the convention centre finances at 11:30 a.m.

The public accounts dropped the first shoe. On April 11 of this year, the cabinet approved a revised budget of $771 million for the convention centre project.

But that decision came after the March 31 end of the budget year, so it was recorded in the public accounts as a “subsequent event.”

Nor was that the end of the saga. For, as Finance Minister Carole Taylor advised reporters, after the public accounts were completed and printed, she’d learned of another upward revision in the convention centre budget.

Call it a subsequent “subsequent event.”

The new number was $883 million, Taylor said. In the space of three months, the budget had climbed by another $112 million, to a level that (recalling Hagen’s earlier circumlocution) was more “in the range” of $900 million.

The provincial share (after deducting fixed contributions from the federal government, Tourism Vancouver and minor sources) is pegged at $541 million, up from $203 million when the project was announced.

Don’t reach for the calculator — the overrun is 167 per cent.

The Liberals had major concerns about how the latest numbers would go down with the public, judging from the way they staged the second of the two press conferences.

Hagen led off with an account of the project’s virtues that fell just short of suggesting it ought to displace the Taj Mahal from the list of the seven new wonders of the world. Podmore followed with a prediction that anyone seeing the finished product will say “Wow! that’s really something.”

Together they promised that the convention centre will be successful, wealth-producing and something British Columbians can embrace with pride.

Neither added “unlike the fast ferries,” but that is surely what they were thinking.

Both insisted Wednesday’s announcement also marked the end of the budget overruns.

Podmore said he locked down the budget by negotiating a fixed price on the main construction contract. It was “a tough negotiation,” he conceded, given that the builder, PCL construction, was holding most of the cards.

But the price was now fixed. “I’m putting my neck on the line here,” he told reporters. “I won’t be back for any more money.”

Almost lost in Wednesday’s announcement was the news that they’ve quietly increased the scope of the project by another $40 million — “enhancements” according to Podmore.

More evidence of the lack of discipline that has characterized this project from the outset. One more reason why I wouldn’t take the new number to the bank just yet.

© The Vancouver Sun 2007

 

Critic says convention centre overrun is ‘approaching fast-ferry fiasco in magnitude’

Derrick Penner
Province

The budget for the Vancouver convention centre expansion project has ballooned to $883.2 million, $83-million higher than the figure the provincial government used as recently as February, Tourism, Sports and Arts Minister Stan Hagen revealed Wednesday.

Hagen said the cost is being driven higher by a challenging construction site, unprecedented cost inflation and a late request to add more artwork and finishings to make it more of a landmark.

Hagen and developer David Podmore, who was hand-picked by the government to take over the project and its dramatically escalating cost in April, unveiled the new figure at a news conference.

The province’s contribution to the project will be $541 million. The rest will be paid for by the federal government and Tourism Vancouver, and with revenue from leasing retail space in the building.

Podmore said the government agreed to his request to increase the project’s budget to add more local artwork and other finishings that will make it a local landmark similar to the new international terminal at Vancouver International Airport.

“When people walk into this building, I tell you, their jaws are going to drop,” Podmore said.

He added that he was “pleased cabinet supported me in a very substantial budget to finish the interior of the building.”

Hagen said the new figure is the project’s final budget. It is more than 10-per-cent higher than the $800 million the province used as recently as February, 43-per-cent higher than the $615 million cited by the province in 2005, and 56-per-cent more than the $565-million budget Premier Gordon Campbell said would be the price tag when he and then federal industry minister David Emerson broke ground on the project in November 2004.

It is 78-per-cent higher than the $495 million cost when the project was first devised prior to 2001.

However, Hagen characterized the expansion project as one of the province’s most important economic-development initiatives, which will generate billions of dollars in new tourism.

He added that the expanded centre has booked 54 events for after it opens in 2009, 29 of which would not have been accommodated in the existing centre, and which will generate $1 billion in economic activity.

“The cost of not building this project would have been far greater,” Hagen said.

Harry Bains, the NDP’s Olympics critic and MLA for Surrey Newton, expressed confidence in Podmore but said Wednesday announcement was meant to deflect attention away from mismanagement of the project.

“These are just another [set] of numbers,” Bains said of the project’s latest budget.

Bains said government ministers, including Campbell, have assured the public that previous budget figures would be the final cost and “I don’t believe the public will trust these numbers.”

“I think what we’ve seen today is a clear display of mismanagement and incompetency of this government and the last board of this [convention centre expansion company],” Bains said.

Bains added he was most disappointed that “no one has been held accountable.”

Maureen Bader, B.C. director of the Canadian Taxpayers Federation, said mismanagement of taxpayer dollars has defined the convention centre expansion from the start, and the cost overrun “is approaching the fast-ferry fiasco in magnitude.”

Podmore said 80 per cent of the new budget is now set, including a $537-million set-price contract that he reached with the expansion’s main contractor, PCL Constructors Westcoast Inc., in late May.

He added that the only major contracts that have not been awarded are an upgrade for the existing Vancouver Convention and Exhibition Centre and final finishing for the new building, which he said will open March 15, 2009.

He said those items will not further increase the cost.

“I’m putting my neck on the line,” Podmore said. “I don’t expect to be back, I don’t want to be back. I won’t be back to ask for more money.”

Podmore said it was always the project corporation’s intent to reach a set-price contract with PCL, which was initially hired as a fee-for-service construction manager.

Negotiations were protracted because of complications with the waterfront site. Anibal Valente, PCL’s vice-president and district manager, said the project was “kind of a moving target” because it was being designed as it was being built.

He said that fixed-price contracts add a natural incentive to complete projects on time because the contractor keeps any money that is saved by finishing early. If it is late, however, Valente said “it will be on our nickel.”

© The Vancouver Sun 2007

 

Gregory Thomas
Sun

U.S. markets took a beating Tuesday and the U.S. dollar dropped to a record low against the euro as Moody’s Investors Service slashed its ratings on 399 bond issues backed by residential mortgages, and Standard & Poors said it may cut ratings on $12 billion US in mortgage-backed securities.

Home Depot, the parent company of Sears, and D.R. Horton, the largest U.S. homebuilder, slashed earnings and revenue forecasts, blaming the housing slowdown in the U.S. for falling consumer spending.

With rising levels of delinquencies and late payments on mortgages in the U.S., S&P says it has “further evidence of lower underwriting standards and misrepresentations in the mortgage market.” Mortgage bonds moved lower on the news, with an index of the lowest-rated issues, known as subprime, falling to nearly 50 cents on the dollar.

The Dow Jones industrial average dropped 148.27, or 1.1 per cent, to 2,639.16. The S&P 500 fell 21.73, or 1.4 per cent, to 1510.12. The Nasdaq composite moved lower by 30.86, or 1.2 per cent, to 2,639.16. The U.S. dollar fell to $1.3729 against the euro.

Shares of Sears Holding Corp., parent company of Sears and Kmart, had their biggest drop in four years, plunging $17.20, or 10 per cent, to $154.21. Sears now expects second-quarter earnings to fall as much as 46 per cent from a year ago. Same-store sales fell four per cent, with appliance sales the hardest hit.

Home Depot slashed its full-year earnings forecast, saying it expects profits to fall as as much as 18 per cent from last year, while sales drop one to two per cent. The big-box retailer also announced the first half of a $22 billion US share buyback. Shares rose two cents to $40.25 US.

Shares of D.R. Horton fell 39 cents to $19.40 US after the company sold 8,559 homes in the third quarter, down from 14,316 a year ago. Revenue dropped 48 per cent to $2 billion and 38 per cent of sales orders were cancelled.

The S&P homebuilders group fell three per cent to its lowest level since October 2003. Financials lost 2.2 per cent, accounting for nearly a third of the decline in the S&P 500. Retailers ended lower by 2.4 per cent.

Canadian markets performed better Tuesday, buoyed by rising energy prices. The Bank of Canada raised its key lending rate a quarter point, as expected, to 4.75 per cent, but a softer tone from the central bank on inflation sent longer-term yields lower. The Canadian dollar fell 0.19 cents to 95.04 US cents, down from Monday’s 30-year high of 95.74 US.

The S&P/TSX composite shed 45.59, or 0.3 per cent, to 14,131.93, from Monday’s record high. The S&P/TSX venture composite gained 23.59, or 0.7 per cent, to 3,248.29.

The Standard & Poor’s/TSX Composite Index slipped 45.59 from a record, or 0.3 per cent, to 14,131.93 in Toronto. It rose in four of the previous five sessions.

In New York, the August gold contract rose $1.90, or 0.3 per cent, to $664.40 US an ounce, while August crude climbed 62 cents, or 0.8 per cent, to $72.81 US a barrel. Hot summer weather in the northeastern U.S. helped send August natural gas up 29 cents, or 4.5 per cent, to $6.70 US per million Btu. Next day gas at Spectra Energy’s Huntingdon tolling station sold for $5.75 US per million Btu.

– – –

Gregory Thomas is an investment adviser and Certified Financial Planner. His market commentary is broadcast on all-news radio News1130. Views expressed are the author’s alone, and not necessarily those of his employer, BMO Nesbitt Burns Inc., member CIPF. [email protected] Tel 604-631-2693 www.gregorythomas.ca

© The Vancouver Sun 2007

 

Peter Birnie
Sun

A dream came true yesterday when the $20-million, 111-unit, mixed-income housing complex for seniors and disabled people in the professional performing arts was officially opened in Vancouver’s Coal Harbour.

Jane Heyman, president of Performing Arts Lodge, said the eight-storey facility was a response to “the urgent situation of Vancouver’s pioneer performing arts professionals and how it was met with tremendous generosity of spirit and imagination.”

The lodge raised $5.2 million from the sale of life-lease units and contributions from societies and unions while the federal, provincial and civic governments contributed funds and grants.

“It’s a dream come true,” said Heyman. “Our residents now enjoy secure, affordable housing, with the rooftop studio theatre providing a venue for their passion and creativity.”

The complex is already fully occupied.

© The Vancouver Province 2007

 

Curtain rises at Vancouver’s Performing Arts Lodge

Premier Gordon Campbell officially opens home for retired and disabled performing artists

Peter Birnie, Vancouver Sun

Published: Tuesday, July 10, 2007

VANCOUVER – Premier Gordon Campbell officially opened Vancouver’s Performing Arts Lodge on Monday by asking for a show of hands about PAL’s unofficial theme song: When I’m 64, written by Paul McCartney and John Lennon and first released in 1967.

“The first time you heard it,” said the premier, “how many of you thought, ‘God, that’s a long way off!’ I’m almost 64 now, and so are a lot of people in the performing arts who have helped provide entertainment, understanding and, frankly, a lot of creative talent.

“What PAL really represents to all of us is a place that says as you get older, that means nothing except that you’re adding years. You’re still creative, you’re still thoughtful, you still have something to contribute.”

PAL Vancouver, which first welcomed tenants a year ago, features 111 suites (99 one-bedroom and 12 two-bedroom units) offered to members of the performing arts community who are retired and/or disabled. Six years of fundraising, led by veteran actor Joy Coghill and PAL board president Jane Heyman, not only saw the building successfully finished but fully 80 per cent of the rents subsidized according to need.

In a packed studio theatre on the eighth floor of the building at Cardero and Hastings, Campbell also read a note from Coghill, who could not attend because her husband was having surgery.

“Nothing but Jack’s operation could have kept me from being with you today,” Coghill said in her note. “We’re all very proud of what we’ve created here, but let us be very clear — we could not have done it without the help of every person present today. Take any one person away and it would not have happened.”

The federal government provided $250,000 under the Canada-BC Affordable Housing Agreement and the province ponied up $385,000.

James Moore, Conservative MP for Port Moody-Westwood-Port Coquitlam, acknowledged the presence of Vancouver Centre Liberal MP Hedy Fry as he noted that funding for PAL crossed lines of party and partisanship.

“We all recognize the need for creative solutions to important needs for the City of Vancouver,” Moore said, “and we’re all doing our best to ensure that the City of Vancouver remains one of the greatest cities in the world.”

Vancouver Mayor Sam Sullivan pointed out the presence of four city councillors: Kim Capri, Peter Ladner, Raymond Louie and Elizabeth Ball, the last a “ferocious advocate for the arts at city hall,” Sullivan noted.

Sullivan says the city’s largesse in helping build PAL, including $1 million in matching grants and a gift of city-owned “air space parcel” zoning, came to approximately $6 million.

“But this is such a small contribution compared to the joy and the wonderful addition to our quality of life that the people who are in our arts and culture industry have made to us,” Sullivan added.

Heyman told the audience that when the process to build PAL began more than six years ago, everyone thought it would just be a home for retired actors.

“One of the most exciting aspects of living here,” she countered, “is that people range in age from their late 30s to over 90. Musicians, dancers, actors, writers, producers, publicists, carpenters or technicians — name a profession in the performing arts and you’ll likely find them here.”

Veteran actress and singer Ann Warn Pegg described for the crowd what she loved about living at PAL.

“The artistic souls can gather and enrich each other’s lives,” she said. “Most artists are not rich monetarily — the average actor’s salary is about $12,000 a year — but we are rich in the ability to create family, live life to the fullest, listen and respond — that’s what we do as actors — care for each other, share and encourage. Here at PAL, we’re able to do that a hundredfold.

“In the words of Martha Stewart, this is a very good thing.”

Arts Club Theatre artistic managing director Bill Millerd cast an admiring glance at PAL’s studio theatre, but says he certainly wouldn’t move into the building until he’s retired.

“Can you imagine? People hammering on my door, I’d open it and there’d be an audition!” Millerd said with a laugh.

Don’t worry, counters legendary impresario David Y.H. Lui, whose co-production with the Arts Club of Jacques Brel is Alive and Well and Living in Paris in the 1970s is still noted as a watershed in Vancouver theatre.

“The thing I was most worried about is that all my neighbours would be people I rejected at auditions,” Lui said, “but that has not happened.

“This is not a building for retiring, grey-haired 90-year-olds waiting to push each other’s swing. It’s very dynamic, with a lot of energy, and people are really charged up about doing new things in that theatre.”

© The Vancouver Sun 2007

Clothing optional resort a darn good eye opener

Sandra Thomas
Van. Courier

“Well I’ll be darned.”

That was my first thought as my partner and I wandered out to the pool area of Desire Resort and Spa, located 30 minutes outside Cabo San Lucas, Mexico.

We had arrived at the couples-only resort just minutes before and, champagne glass in hand, we toured the resort while our luggage was being delivered to our room. Although I was aware the resort was “clothing optional,” seeing an entire pool full of naked people caught me a little off guard. We had previously been to a clothing optional resort on the Mayan Riviera, but there it was a mixed bag of full-on bathing suits and topless women with a sprinkling of naked folk.

Here the dress code was pretty much straw cowboy hats and earrings for the women and baseball caps for the guys.

We had only been standing for a moment when we heard a friendly “Hi y’all, you must have just arrived. I can tell by the champagne glass.” (Champagne and cold washcloths are handed to new guests as they check in.)

I looked over and saw that our friendly greeter was a naked woman lounging in a deck chair. Introducing herself, Reana told us in a soft southern drawl that she and her husband had also just arrived.

Reana pretty much set the tone for the next 10 days because never in all our travels have we met such friendly people. It seems the shedding of clothes was a metaphor for the shedding of attitudes, despite the Manolo Blahnik shoes I saw strewn casually on the pool deck. For the record, I kept my bathing suit on and there was never any pressure to do otherwise. This adults-only resort is all about relaxation and having fun and we did plenty of both.

Guests can take part in (naked) water aerobics and beach volleyball, but it was “Desire Time” at about 3 p.m. each day that got everyone laughing. Desire time was when the entertainment staff would get volunteers from the pool, usually newcomers, to take part in sexy activities like body painting competitions or naked twister. “Left foot on blue” takes on a whole new meaning when the participants are starkers. Hats off to the entertainment staff Sylvia, Russell and Rocio, who do a great job, while ignoring the fact everyone around them is buck-naked.

The only clothing-optional areas of the resort are the swimming pool and rooftop hot tub, where everyone congregated in the evening before dinner to watch the sunset and enjoy a cocktail. Palapa beds with flowing white gauze curtains surround both the pool and hot tub, adding to the luxuriously tropical d‚cor of Desire. The outside courtyard between the pool and the Melange Lounge is landscaped with cacti of all kinds, paying homage to Cabo’s dry climate.

Speaking of the Melange Lounge, each night as the sun goes down, small fire pits are lit and marble sculptures are filled with ice and champagne for guests to help themselves. There are several bars and restaurants located within the resort and unlike our last trip to Mexico, when I lost weight, the food was so good it was a real effort not to pack on the pounds.

In fact, we were enjoying ourselves so much that in the 10 days we spent at Desire, we only went on one tour-the naked boat cruise. Because the catamaran left from the very public harbour at Cabo San Lucas, boaters were asked to keep their clothes on until we were out of sight.

Cabo San Lucas is located at the southern end of the Baja Peninsula where the Sea of Cortez meets the Pacific Ocean. Its most southern tip is called Land’s End, which is home to a large sea lion colony. After slowing down to let us take pictures of the spectacular scenery, our captain headed further out to sea and in no time everyone, except me and the crew, were naked and drinking mai tais. As we cruised along, I saw a fin clear the water near our boat. My partner suggested it had to be a dolphin, but having grown up on the West Coast, I know my dolphin fins. Soon another fin appeared and this time we all got a good look at the shark it was attached to. In total, we saw about a dozen sharks, and being absolutely addicted to Shark Week on the Discovery Channel, I was thrilled. It cut short my plans for an ocean swim, but the sacrifice was worth it.

After several hours, our boat turned and headed back to shore, and my shipmates reluctantly donned their shorts and T-shirts. Arriving back in Cabo, it became clear just how much my time at Desire had affected me.

“Well I’ll be darned,” I thought to myself. “All those people have their clothes on.”

The Ontario Provincial Police- run Phonebusters in North Bay is Canada

Critics debate safety of debit-card system as rise of electronic transactions spawns new breed of thieves

Sun

TORONTO – The problem of theft in Canada is no longer about teenage shoplifters, black-masked bank robbers or purse-snatchers. The rise of the electronic payments system has spawned a new breed of thieves who can clean out the bank accounts of unsuspecting victims with a simple swipe of a card.

The profits from these crimes frequently fund organized criminal networks, according to police forces across the country, which are grappling with the growing problem.

Often referred to under the broad category of “identity theft,” payment card fraud in its various forms presents a growing threat to Canadians — one the country’s banks, card issuers and retailers aren’t eager to talk about.

In some cases, hackers steal piles of customer information that companies store electronically, as was the case earlier this year with the high-profile security breaches at the Canadian Imperial Bank of Commerce and TJX Cos., the parent company of Winners and HomeSense.

Criminals also tamper with bank machines and debit card machines to electronically record a customer’s account information and make counterfeit payment cards. In other cases, employees — particularly at restaurants, gas stations and convenience stores — swipe a customer’s card through a small magnetic strip reader that records account information, and use it to make fake payment cards.

“What we’ve found is that the criminals involved in this are involved in a wide spectrum of criminal activity,” said Insp. Barry Baxter of the RCMP’s commercial crime branch. “The profits generated from this go to drugs, weapons, prostitution, loan-sharking, lifestyle.”

But compared to company profits, fraud losses are minuscule. Less than half of one per cent of all payment cards were hit with fraud last year, according to Caroline Hubberstey, director of public and community affairs at the Canadian Bankers Association.

Losses represented one-10th of one per cent of the sales volumes of credit card companies, said Gord Jamieson, Visa Canada’s director of risk and security.

But if the problem of payment card fraud is under control, why is the financial industry so resistant to informing Canadians about how and when frauds occur?

In most cases, banks, payment card companies and businesses do not tell Canadians who fall victim to payment card fraud how and where their personal information was lost or stolen. Part of the rationale is that disclosing such information could jeopardize a police investigation, according to the bankers association.

But a major reason the industry wants to keep vital details from Canadians is they’re worried consumers will boycott the stores or banks where they got ripped off.

“What it could do is have an adverse impact on that merchant and future sales, their business and everything else,” Jamieson said. Banks and card issuers say consumers are more interested in knowing they’ll be compensated for losses than finding out where and how their personal information was lost or stolen by criminals.

Canadian banks, card companies and businesses say they should be able to decide whether to tell customers when their information is lost or stolen. Although the industry follows a voluntary code that encourages disclosure when the risk of fraud is high or imminent, there is currently no obligation to inform consumers when they suffer a security breach.

The industry’s complete discretion over breach notification, however, has raised serious alarm. Earlier this year, federal privacy commissioner Jennifer Stoddart urged a parliamentary committee to make breach notification part of federal privacy law. This would bring “increased attention on the part of organizations to the security in which they keep personal information and then to their duty to act swiftly and appropriately to help people,” she said.

Critics, however, say that argument is proof the banking, payment card and retail industry would like to keep the growing threat of fraud as quiet as possible to avoid scaring consumers away.

“Banks have their image and they would like to preserve it, so it’s not in their best interests for a major Canadian bank to go on the news and say they’ve been a victim of identity fraud,” said RCMP Cpl. Louis Robertson, head of the criminal intelligence unit at Phonebusters, a national anti-fraud call centre.

In the coming months, credit card companies will begin rolling out new cards that combine a secure microchip and personal identification number to reduce fraud. It’s a multimillion-dollar investment that will take several years to implement.

Many of the country’s major banks have also upgraded bank machines and online banking systems to reduce the incidence of fraud.

“You’ll see new strategies on [bank] machines — some obvious, some not so,” Hubberstey said. “This is a constant effort.”

© The Vancouver Sun 2007

 

Sun

A key part of the future of British Columbia’s meetings and conventions industry – the expansion of the Vancouver Convention & Exhibition Centre – continues to progress on the city’s harbourfront. And every day, it gets closer to resembling the world-class facility design rendering that residents and visitors have been admiring since our groundbreaking in November 2004.

Upon completion of the expansion, the VCEC will form one of the largest public facilities in BC – comprising four city blocks – and will enable the VCEC to maximize business opportunities and benefits. Combine that with the centre’s pivotal role in the 2010 Olympic and Paralympic Winter Games and it all adds up to one of BC’s most important economic development projects.

And while the building is going up, the business is rolling in! A worldwide marketing campaign has been underway for more than three years, reflecting the often lengthy decision period – sometimes up to eight years – for larger conventions. As a result, the VCEC expansion has a high level of market awareness which has driven strong sales results.

54 events are already contracted or confirmed from the centre’s projected opening date onward and 29 of these are expansion events that wouldn’t have been able to fit into the existing facility. Together, these events will deliver a forecasted 738,624 non-resident delegate days and an estimated $1.1 billion in overall economic impact.

Expansion would simply not have happened without the tremendous success that the facility has enjoyed in the diversity of markets it has pursued over the past 20 years. Turning away business due to lack of both space and dates for so many years was a strong indicator of the size of the business opportunity that expansion would address.

The VCEC’s expansion will attract a much larger number of delegates to BC and will help grow the size and quality of the province’s overall convention business. It will enable the VCEC to host multiple, simultaneous events as well as larger events that the existing facility cannot currently accommodate. It will also enable BC to take advantage of the global exposure it will receive from events like the 2010 Olympic and Paralympic Winter Games.

The VCEC is well on its way to realizing all of the features and function spaces it needs to move into a new level of market opportunity. Expansion will not only create a new landmark, it will also deliver an array of economic and business benefits to the province. At the same time, it will provide a “people” place for the entire community, completing the conversion of Coal Harbour from an industrial site to one of the most spectacular urban waterfront venues in the world.

Thank you British Columbia, for your past support and your continued commitment as we move ahead to this new and exciting phase!

© The Vancouver Sun 2007

 

Sun

But years compound

Jim Yih
Province

EDMONTON — Janet is turning 60 and wondering about the two basic conundrums of the Canada Pension Plan.

She would like to know if she should consider taking CPP early and if she should split her CPP with her 67-year-old husband, Will.

Her first instinct is to wait to take CPP because, unlike her husband, she does not have a pension plan. While she does not need much income while Will is alive, she feels she will need more income when Will passes away, because his pension will drop 40 per cent.

Canada Pension Plan is normally taken at age 65. However, Janet, like everyone else, can take CPP as early as age 60 and as late as age 70.

To evaluate this, let’s introduce you to Janet’s twin sister, Beth.

Let’s assume they both qualify for the same CPP of $502 per month at age 65.

Let’s further assume Beth decides to take CPP now at age 60 at a reduced amount, while Janet decides she wants to wait till 65 because she will get more income by deferring the income for five years.

Under CPP benefits, Beth can take CPP at age 60 based on a reduction factor of 0.5 per cent for each month prior to her 65th birthday. Thus, Beth’s CPP will be reduced by 30 per cent (0.5 per cent times 60 months) for a reduced monthly income of $351 starting on her 60th birthday.

Let’s fast-forward five years. Now, Beth and Janet are both 65. Over the last five years, Beth has collected $351 per month, totalling $21,060.

In other words, Beth has made $21,060 before Janet has collected a single CPP cheque.

That being said, Janet is now going to get $502 per month for CPP, or $151 per month more than Beth’s $351. The question is, how many months does Janet need to collect more pension than Beth to make up the $21,060 Beth is ahead? It will take Janet 140 months to make up the $21,060 at $151 per month. In other words, before age 77, Beth is ahead of Janet and after age 77, Janet is ahead of Beth.

From a lifestyle perspective, it can be argued that Beth is likely to enjoy the cash flow from age 60 to 77 a lot more than Janet will enjoy the extra cash flow after the age of 77.

Furthermore, this example is very simplistic. It does not take into account taxes, investment returns on Beth’s early payments or indexing of CPP benefits.

Regardless, taking CPP early is simply about getting more money sooner. Waiting just means you have to live longer to make up the lost income.

After debating taking CPP early, the next step for Janet is to figure out if she should split her CPP benefits with her husband.

Let’s assume Janet takes CPP early and gets the $351 per month. Her total income is quite low and she only pays tax at the 25-per-cent marginal tax rate. Will, on the other hand, makes $800 per month in CPP and his total income is much higher, in the 32-per-cent marginal tax bracket with $50,000 of annual retirement income.

As a result of the sharing, Will’s CPP amount will drop from $800 per month to $575 per month. Janet’s income will increase from $251 per month to $575 per month. The outcome is that $225 per month of income will move from being taxed at 32 per cent to being taxed only at 25 per cent.

The key to determining if CPP sharing is feasible is to look at whether the higher CPP earner is in a higher marginal tax rate than the lower CPP earner.

Remember, it’s not just about the higher income-earner making more money but rather whether they are in a higher tax bracket.

CPP remains one of the cornerstones of creating retirement income. Planning ahead will help you to know when to take CPP and whether to split benefits with a spouse.

© The Vancouver Province 2007