Responsibly Rebuilding Alberta

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Responsibly Rebuilding AlbertaCTF Recommendations for Rebuilding

from the 2013 Floods

DerekFildebrandt

CanadianTaxpayersFederation

T:1-800-661-0187

E:[email protected]


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About the Canadian TaxpayersFederationTheCanadianTaxpayersFederation(CTF)isafederallyincorporated,non-profitandnon-partisan

advocacyorganizationdedicatedtolowertaxes,lesswasteandaccountablegovernment.TheCTF

wasfoundedin1990whentheAssociationofSaskatchewanTaxpayersandtheResolutionOne

AssociationofAlbertajoinedforcestocreateanationaltaxpayersorganization.Today,theCTFhas

morethan84,000supportersfromcoast-to-coast.

TheCTFmaintainsafederalofficeinOttawaaswellasprovincialandregionalofficesinBritish

Columbia,Alberta,thePrairies,OntarioandAtlanticCanada.Provincialandregionalofficesconduct

researchandadvocacyactivitiesspecifictotheirprovincesinadditiontoactingaslocalorganizersof

nation-wideinitiatives.

CTFofficesfieldhundredsofmediainterviewseachmonth,holdpressconferences,utilizesocial

medialiketwitter,Facebook,YouTubeandourownblog,aswellasissuingregularnewsreleases,

commentariesandpublicationstoadvocateonbehalfofCTFsupporters.TheCTFsflagship

publication,TheTaxpayermagazine,ispublishedfourtimesayear.ActionUpdate e-mailsoncurrent

issuesaresenttoCTFsupportersregularly.CTFofficesalsosendoutweekly LetsTalkTaxes

commentariestomorethan800mediaoutletsandpersonalitiesnationwide.

CTFrepresentativesspeakatfunctions,makepresentationstogovernment,meetwithpoliticiansand

organizepetitiondrives,eventsandcampaignstomobilizecitizenstoaffectpublicpolicychange.

AllCTFstaffandboarddirectorsareprohibitedfromholdingamembershipinanypoliticalparty.TheCTFisindependentofanyinstitutionalaffiliations.ContributionstotheCTFarenottaxdeductible.

CanadianTaxpayersFederation-AlbertaOffice

2625ShaganappiTrailNW,

POBox84171MarketMall

Calgary,AlbertaT3A5C4

Phone:1-800-661-0187

Email:[email protected]

Website:taxpayer.com

DerekFildebrandt

PublishedinAugustof2013


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Table of Contents

ABOUTTHECANADIANTAXPAYERSFEDERATION 1

TABLEOFCONTENTS 2

I-SUMMARYOFFACTS&RECOMMENDATIONS 4

SUMMARYOFFACTS 4

SUMMARYOFREBUILDINGRECOMMENDATIONS 4

SUMMARYOFFISCALRECOMMENDATIONS 5

CONDITIONSFORARESPONSIBLERECOVERY 5

II-INTRODUCTION 6

III-CONTEXT:PRE-FLOODFISCALSTATUS 7

BUDGET2013-14 7

TABLE1:PRE-FLOODFISCALOUTLOOK($MILLIONS) 8

SUSTAINABILITYFUND 9

TABLE2:SUSTAINABILITYFUNDBALANCE2008-09TO2013-14* 10

IV-RECOVERYPACKAGE 11

CTFSUPPORTERSURVEY 11CTFSUPPORTERSIMPACTED 11

REBUILDINGPRIVATEPROPERTY 12

CONDITIONSFORAID 12

CTFSUPPORTERVIEWSONAID 13

V-LONGTERMPROTECTION&INSURANCE 15

NOFUTUREAID? 15

CTFSUPPORTERATTITUDES 16

USEXPERIENCEWITHMANDATORYINSURANCE 17

BACKGROUND 17

PERCEPTIONSOFRISK 18

EXPECTATIONSOFGOVERNMENTAID 18

INSURANCEASDISCRETIONARYSPENDING 19

FAILUREOFTHEUSINSURANCEMODEL 19

FLOODINSURANCEFORALBERTANSANDCANADIANS 20

NOWATERTIGHTSOLUTION 20

MANDATINGFLOODINSURANCEFORAT-RISKOWNERS 21


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FEDERALNATURALDISASTERINSURANCEMANDATE 23

VI-PAYINGFORTHERECOVERY 24

MUNICIPALPUBLICINFRASTRUCTURE 24FEDERALANDPROVINCIALSUPPORT 24

CALGARYANDTHE$52MILLION 24

ALBERTA 25

PUBLICINFRASTRUCTURE 25

TOTALCOSTS 26

NEWDEFICITPROJECTION 26

TABLE3:UPDATEDFISCALOUTLOOK($MILLIONS) 27

TABLE4:SUMMARYOFPROPOSEDCHANGESTOBUDGETOVER2YEARS($MILLIONS) 28

REALLOCATINGSPENDING 30

TABLE5:RESPONSIBLYREBUILDINGALBERTAFISCALPLAN($MILLIONS) 30

VIII-BUDGETINGFORDISASTERS 32

DISASTERSPENDINGHISTORY 32

CHART2:DISASTER&EMERGENCYSPENDING,2003-04TO2012-13 32

VIII-CONCLUSION 34

APRAGMATICSOLUTION 34

IX-APPENDIX 35

EXTENDEDCTFSUPPORTERVIEWS 35


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I-Summary of Facts & RecommendationsSummary of Facts

Theconsolidateddeficitisestimatedtogrowfrom$5.1billionto$8.1billionduetotheflood.

Withoutmajorcorrectiveaction,Albertawillrunacumulativedeficitof$14billionoverthenext

threeyears.

TheSustainabilityFundisestimatedtobeentirelydepletedthisfiscalyearbasedonpre-flood

spendingplans.

Summary of Rebuilding Recommendations

InadditiontoMinisterGriffithssoftcaponaidforprivatepropertydamage,introduceahard

capbysettinganaidlimitof$100,000onbasicrepairs.

Mandatethatallat-riskpropertyownerspurchaseprivateoverlandfloodinsurance.Determining

whichpropertiesareat-riskshouldbebasedonclaimsundertheDRPwithinthelasttenyears.

Providerelocationassistancetoownersinhigh-riskareasuptothe2013taxassessedvalueuptoa

hardcapof$500,000.

Thegovernmentshouldindicateitsintentionstowardsaninsurancerequirementimmediatelyin

ordertoallowpropertyownerstomakedecisionsbetweenrebuildingandrelocating.

Workwiththefederalgovernmenttotowardstheestablishmentofafederalnaturaldisasterinsurancemandate.


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Summary of Fiscal Recommendations

Reducenon-disasterrelatedoperatingspendingby$2.7billionduringthe2013-14and2014-15fiscalyears,andfreezetheremainingoperatingspendingfor2014-15and2015-16.

Extendthe2014-15and2015-16CapitalPlanoverthreeyears.Operatingandcapitalspending

measureswillfreeupacumulative$4.4billionannuallyforemergencyfloodspending.

Calgaryshouldspendtheinitial$52millionoftaxroomonupgradesfromdamagedpublic

infrastructure,withthestrictconditionthatthetaxroomisreturnedtotaxpayersinfutureyears.

Budget$500millionfordisasterandemergencyspendingeachyear.

Conditions for a Responsible Recovery

1. Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting

spendingcommitmentstowardsthefloodtoensurethatthepre-flooddeficitof$5.1billiongrows

aslittleaspossible.

2. Thattherebereasonablelimitscommiseratewithpastdisasteraidontheamountthat

taxpayerswillbeliabletopayforindividualpropertyownersfacingdamages;and

3. Thattaxpayersandpropertyownersbeprotectedinthefuturetoensurethatpaymentsmadeto

privatepropertyownersareone-timeonly,withfuturepropertydamagecostsexternalizedtothe

propertyowner.


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II-Introduction

OnJune20th,2013,therealtiesoflifechangedforthousandsoffamiliesandbusinessesin

southernAlbertaasfloodsonascalerarelyseen.Thismeantthatnaturealteredtheirreality

andpeoplehadtoadapttonewcircumstances.

Afloodstrickenfamilymightcanceltheirplansforvacationortobuyanewcar.Asmall

businessmightcancelplanstobuynewcapitalitemslikemachinery.Alargebusinessmight

putoffplansforexpansion.Thisdoubtlesshappenedonalargescaleforthethousands

affected.

Thefinancialrealitiesofgovernmentshavealsobeenaffected.

Thefederal,provincialandmunicipalordersofgovernmentallreactedquicklytotheflood,

andfirstresponders,victims,volunteersandeverydayAlbertansstoodtogethertopull

throughtheinitialchallenges.

ButmajorproblemsawaitAlbertainthemedium-and-longterm.Withthenaturaldisaster

behindAlberta,afiscaldisasternowlooms.Whilesignificantspendinganddeficitswillbe

requiredtorebuild,demandthreatenstoturntheprovincialgovernmentsalreadyreckless

fiscalfootingintoanall-outdisaster.

Liketheflood-strickenfamilythathadtocancelitsvacationplans,sotoomustAlbertasgovernmentresponsiblyresetitsprioritiesinordertoensurethatthephysicaldamageofJune

2013doesnotbecomefiscaldamagelongintothefuture.

ThisistheCanadianTaxpayersFederationsplantoresponsiblyrebuildAlberta.


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III-Context: Pre-Flood Fiscal Status

Budget 2013-14

AlbertaFinanceMinisterDougHornertabledAlbertas2013-14budgetonMarch7th,2013,

titlingitResponsibleChange.ItwasacurioustitleforbudgetthatpromisedtoturnAlberta

backtoGetty-eradeficitsandobscurefinancialreporting.

Thebudgetitselfmovedmostcapitalspendingoffofthebooksandalteredwhatwas

traditionallymeasuredastheprovincesdeficit.Inthebudgetlockup,theCanadianTaxpayers

Federation(CTF),oppositionparties,mediaoutletsandstakeholdergroupswereuniversally

unabletopegthedeficitwithtotalconfidence.Asaresult,thereweredozensofestimatescalculatedbyallconcernedgroups,butnoonecouldsaywithtotalcertainly,justhowmuch

theprovincewascomingupshort.

ThenextmorningtheGlobeandMailprojectedthedeficitwas$1.9billion1.Theopposition

Wildroseprojected$5.5billion2.TheEdmontonJournalandCalgarySunclaimeda$1.97billion

deficit,$4.3billioninborrowinganda$2.1billionwithdrawalfromtheSustainabilityFund3.

Theconfusionisunderstandablewitheveryonehavingtodothemathbackwardsandtryto

rebuildthebudgetbasedonearlieryears.

OnMarch13

th

,theCTFreleaseditspost-budgetanalysiswithadeficitprojectionforBudget2013-14:$5.1billion.

Theconfusionstemsfromadrasticchangeinaccountingpractices,thattheprovincesauditor

generalhascondemnedasextremelydifficultforAlbertansandhisownofficeto

understand4.Inshort,thegovernmentwentfromonebudgetandonedeficitnumber,to

threebudgetsandapileofdifferentnumbersrepresentingdeficits,borrowingand

adjustments.

1Wingrove,JoshandWalton,Dawn.CanadaswealthiestprovincecutsdeepasAlbertaembracesausterity.The

GlobeandMail.March72013.http://www.theglobeandmail.com/news/national/canadas-wealthiest-province-

cuts-deep-as-alberta-embraces-austerity/article9474700/ 2Budget2013:Backindebt.WildroseAllianceParty. http://www.wildrose.ca/feature/budget-2013-back-in-

debt/3Larson,Jackie.Albertagoingdeeperindebt,unveilsbudget.March7,2013.CalgarySun.

http://www.calgarysun.com/2013/03/07/alberta-releases-budget 4Henton,Darcy.EventheauditorgeneralhastroublefiguringoutAlbertascomplicatedfinances.Calgary

Herald.

http://www.calgaryherald.com/Even+auditor+general+trouble+figuring+Alberta+complicated+finances/8636505

/story.html


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Table 1: Pre-Flood Fiscal Outlook ($ millions)

Operating Budget 2013-14 2014-15 2015-16

Total Revenue $38,612 $41,911 $44,998Less

Revenue received for capital purposes $(522) $(464) $(389)

Investment income retained by the Heritage Fund $(297) $(379) $(651)

Savings of resource revenue - $(416) $(492)

Allocation for the Capital Plan debt servicing costs $(238) $(404) $(593)

Operational Revenue $37,555 $40,248 $42,873

Operational Expenses

Operating expenses (net of in-year savings) $36,422 $37,144 $37,904

Disaster / emergency assistance $200 $200 $200

Amortization / inventory consumption / loss on disposals $982 $1,000 $1,040

General debt servicing costs $402 $424 $437

Total Operational Expense $38,006 $38,768 $39,581

Operational Surplus / (Deficit) $(451) $1,480 $3,292

Capital Budget

Capital Plan Spending $5,209 $5,172 $4,660

Capital Plan Borrowing

Alternative financing (P3s) $344 $206 $114

Transfer from Contingency Account - - -

Direct borrowing $3,190 $4,379 $4,039

Withdrawal from Capital Plan financing account $1,067 - -

Deposit to Capital Plan financing account - - -

Total Capital Plan Borrowing $4,601 $4,585 $4,153

Funded Capital Plan

Revenue received for capital purposes $522 $464 $389Retained income of funds and agencies for capital purposes $84 $118 $118

Disposals of capital assets $2 $5 -

Total Funded Capital Plan $608 $587 $507

Capital Plan Surplus / (Deficit) $(4,601) $(4,585) $(4,153)

Consolidated Surplus / (Deficit) $(5,052) $(3,105) $(861)

Theoperatingdeficitin2013-14wasprojectedtobe$451million.Thatisacashshortfallfor

theday-to-dayexpensesofthegovernmentforthingslikegovernmentemployeesalariesand

runningMRIs.ThisisthefigurethatFinanceMinisterDougHornerclaimedwasthedeficit.

Yet,whilethegovernmentplannedtospend$38.6billiononoperations,thereisstillanother$5.2billionspentontheCapitalPlan,whichhasbeenrolledintoseparatebudgetentirely.

TheCapitalPlanwillnowbefundedalmostentirelybydebt(88%),inoneformoranother.

Thereasonthatthisisnotconsideredspending,isbecausethegovernmentnoweffectively

considersborrowedmoneytoberevenue.

TounderstandhowmuchoftheCapitalPlanisborrowed,onehastopeeloutseveralline

itemsthatarealreadycountedintheOperationalPlan.Thisincludesthingslikefederal


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transfersforcapitalfundingandself-generatedincomefromarms-lengthagencies.This

leavestheCapitalPlanwithafundingshortfallof$4.6billion.Thisismoneythatwillcome

fromtraditionaldebtandpublic-privatepartnerships.

ThefundingshortfallsfortheCapitalandOperationalplanstakentogetherproducea

consolidateddeficitof$5.1billion.ThisisthenumberthatAlbertasgovernmentis

obfuscating.

TheCTFscalculationofthereal,consolidateddeficitexcludesoneareaoftheoperational

budgetthatsomecalculationshaveincluded:cashadjustments.Forthemostpart,these

cashadjustmentsconsistofthingslikestudentloansandprofitsreturnedtotheAlberta

TreasuryBranch.Whileseveralmediaorganizationsandoppositionpartieshaveincluded

cashadjustmentsintheircalculationsofthedeficit,theCTFbelievesthattheseitems

shouldberightfullyexcluded.

Thepointbeing,beforeasingledropofrainfellinJune,Albertawasalreadyontracktoruna

$5.1billionconsolidateddeficitin2013-14.

Sustainability Fund

CTFSupporterSurveyComments

WhathappenedtotheSustainabilityFundthatwasdesignedtoassistAlbertansincasesofemergencies?

Whereisthe$16billionoftheSustainabilityFund?Thatshouldbeusedandonlythat.Answersneedtobe

givenonthis.

TheSustainabilityFundexistsorexistedasAlbertasrainydayfund.Establishedasaway

fortheprovincetosaveforshort-to-mediumtermdownturnsinrevenueorupticksin

emergencyspending,itwasintendedasavehicletosmoothfiscalvariances.Unfortunately,it

wasabusedasalong-termcrutchforoverspending.


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Table 2: Sustainability FundBalance 2008-09 to 2013-14*

Year Millions of $

2008-09 $16,8222009-10 $14,9832010-11 $11,1922011-12 $7,4972012-13 $3,3262013-14* $0

*CTFProjection

Injustfiveyears,theSustainabilityFundwillhavegonefromanimpressivesurplusof$16.8

billion,tobeingdrainedbytheendofthecurrentfiscalyearbasedontheCTFspre-flood

projections.Bytheendoffiscalyear2012-13,theSustainabilityFundhadbeendrawndown

tojust$3.3billion.

Chart 1: Sustainability Fund, 2008-09 to 2013-14*

*CTFProjection

Withapre-flooddeficitprojectedof$5.1billionfor2013-14,thiswillleavetheSustainability

Fundentirelyeliminated,andafurther$1.7billioninborrowingrequirements.WhileFinance

MinisterDougHornermaytechnicallyleavesomecashinthefund,itwillbemorethanborrowedagainsttothepointwhereitwillbeeffectivelyliquated.

Forallintentsandpurposes,theSustainabilityFundisgone.Asaresult,theprovincedoesnot

havethemoneynecessarytofundanyfloodreliefprogram.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

MillionsofDollars


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IV-Recovery Package

CTF Supporter Survey

InJulyof2013,theCTFsentanonlinesurveytoover21,000Albertasupporters.1,476

respondedtothesurveys11questions,includinghundredsofpersonalized

recommendations.Thisreportanditsrecommendationsareguidedbythesurveysresults.

CTF Supporters Impacted

FourpercentofCTFsupportersdirectlysufferedpropertydamagefromthefloodsinSouthernAlberta,andanother6%wereevacuatedfromtheirhomes.Twenty-sevenpercent

hadfamilyorclosefriendswithpropertydamageand19%hadfamilyorfriendswhowere

evacuated.

CTFsupportersandfamilyaffected

4%ofsuffereddamage

6%wereevacuated

27%hadfamilyorclosefriendssuffer

damage

19%hadfamilyorfriendsevacuated

Ofthosewhosufferedpropertydamage,38%estimatedtheirlossestobelessthan$10,000,

31%estimatedtheirlossestobebetween$10,000and$50,000,15%between$50,000and

$100,000,andanother15%between$100,000and$500,000.Norespondentsreported

damagesover$500,000.

DamagessufferedbyCTFsupporters

38%lessthan$10,000

31%between$10,000and$50,000

15%between$50,000and$100,000

15%between$100,000and$500,000


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Rebuilding Private Property

Conditions for Aid

Theissueoftaxpayerspayingtorebuildandrepairprivatepropertyhasinitiatedsome

discussionsincePremierAlisonRedfordpledgedtodoso.Sincethefirstdaysoftheflood,the

CTFhasrecognizedthatgovernmentassistancewillberequiredintherebuildingprocess,

albeitwithconditions.TheCTFsConditionsforaResponsibleRecoveryare:

1. Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting


aslittleaspossible.

2. Thattherebereasonablelimitscommiseratewithpastdisasteraidontheamountthat

taxpayerswillbeliabletopayforindividualpropertyownersfacingdamages;and

3. Thattaxpayersandpropertyownersbeprotectedinthefuturetoensurethatpaymentsmadeto

privatepropertyownersareone-timeonly,withfuturepropertydamagecostsexternalizedtothe

propertyowner.

Thisreportwilldealwithconditiononeensuringthattheprogramisresponsiblyfundedin

SectionVIofthisreport.

Theprovincewentatleastsomewaytosatisfyingconditiontwo(reasonablelimits)when

MunicipalAffairsMinisterDougGriffithservednoticeonJune28thatprivateproperties

wouldonlyreceivefundingtoabasicleveloffinish.Inpractice,thismeansthattaxpayers

willpaytorebuildpeopleshomes,butthattheywillnotpayforupgradeslikehardwood

floorsandgranitecountertops.Nonetheless,largeluxuryhomeswillpotentiallyleave

taxpayersonthehookforsimilarlylargebillsthatgobeyondwhatisnecessarytomakea

homelivableagain.

TheCanadianTaxpayersFederationsupportsrebuildinghomesandbusinesses,butonlyif

thisistrulyaone-timeventure.


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CTF Supporter Views on Aid

CTFsupportersexpressedawillingnesstoopenthepublicpursetohelprebuildprivate

properties,butwithavarietyofstrongcaveats.

Shouldtherebyamaximumcapontheamountoffloodreliefpaid?

7%No,governmentshouldcoveralldamagesentirely.

78%Yes,thereshouldbeamaximumamountthatthegovernmentwillcover.

15%Thereshouldbenofundingtoprivateownerswhatsoever.

At84%,theoverwhelmingmajorityofCTFsupportersbelievethatthereshouldbe

governmentaidtoflooded-outpropertyowners,with7%believingthatalldamagesshould

becoveredregardlessofcost,and78%supportingaid,butwithamaximumcap.Fifteenpercentbelievethatthereshouldbenofundingforprivatepropertyowners.

Ifthereisamaximumcaponassistance,atwhatlevelshoulditbe?

42%.Upto$100,000

23%.Upto$100,000and50%beyondthat

11%.Upto$500,000

5%.Upto$500,000and50%beyondthat

1%.Upto$1million

2%.Upto$1millionand50%beyondthat


Thegovernmentshouldprovideallhabitablehomeswithnewfurnaces,hotwatertanks,electricalpanels,

fridges,freezers,stoves,appliances,etc.forthingsthatarethenecessityoflife.Ifthehomesarenolonger

habitable,thegov'tshouldpaytotearthemdownandremovethemandthehomeownershouldnotpay

anypropertytaxesuntilanewhouseisacquired.

Capthepaymentsandthenadvisenofutureassistance,everifyouremaininafloodplain.

MostCTFsupporterswereinfavorofeithersettingahardcapof$100,000(42%),orahard

capof$100,000and50%ofdamagesbeyondthat(23%).Acapof$100,000wasalsoapplied

tovictimsofthe2005floods.


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Recommendation

InadditiontoMinisterGriffithssoftcaponaidforprivateproperty

damage,introduceahardcapbysettinganaidlimitof$100,000on

basicrepairs.


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V-Long Term Protection & Insurance

No Future Aid?

PremierRedfordhasstatedthatwhilethegovernmentwillbethereforprivateproperty

ownersthistime,aidinthefuturewillhavestringsattached.Anypropertyownerwhomakesa

claimundertheDisasterRecoveryProgram(DRP)andchoosestostaywheretheyarewill

haveanotationattachedtotheirpropertytitleindicatingthattheirlandwasflooded.For

propertyownersinfloodways,thiswillcomewithanadditionalwarningthattheywillnotbe

eligibleforfutureaid.Forpropertyownersinthestilldangerousbutslightlylessinundated

floodfringes,theywillbeeligibleforfuturefloodaid,butonlyiftheytakeprescribedflood

mitigationmeasures,whichthegovernmentwillalsosubsidize.Thosewhodosowillalso

havetheflood-warningnotationremovedfromtheirpropertytitle.

Thesearepositivemeasures,howeverfewAlbertanstrulybelievethatiftheprovincefaced

anothermajorfloodin20to40yearsthatthegovernmentwouldallowfamiliesand

businessestofacefinancialruin.Theresultmostsurelywouldbeanotherroundof

governmentaidforownersinbothfloodplainsandfloodways.Thisisexposingbothproperty

ownersandtaxpayerstounnecessaryrisk.

Thepremiersstatementthatthisroundofaidisone-time-only(forfloodways)is

commendable,butdifficulttobelieveifitisnotbackedwithasetofpoliciesthatbuildsin

protection.Furthertothis,thegovernmenthasalreadystatedthatownersinfloodfringeswill

beeligibleforfutureaidsolongastheytakemitigationmeasures.

OnJuly25th,PremierRedfordmetwiththeInsuranceBureauofCanadaandseveralCEOsof

insurancecompanies5.Whilesomebusinesseshadcoverage,thevastmajorityofAlbertans

wereunabletopurchaseoverlandfloodinsurance6.Thismeantthatevenresponsiblehome

andbusinessownersthatfeltthemselvesatriskoffloodinghadlittleabilitytoprotect

themselveswithinsurance.ThisisacriticalpointinthewillingnessofAlbertanstoopenthepublicpursetoaidthesefamiliesandbusinesses.

5AlisonRedfordMeetswithInsuranceCompaniestoTalkFlooding.TheCanadianPress.July25

th,2013.

http://www.huffingtonpost.ca/2013/07/25/alberta-flooding-insurance_n_3653867.html 6Albertafloodvictimsmostlyoutofluckwithinsurance.TheCanadianPress.June21,2013.

http://www.cbc.ca/news/business/story/2013/06/21/business-flood-insurance-alberta.html


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CTF Supporter Attitudes

Howshouldthegovernmentprotectpropertyowners&taxpayersinthefuture?

4%.Createagovernment-runinsuranceagencyforoverlandflooding.Purchaseshould

bemandatory.

23%.Createagovernment-runinsuranceagencyforoverlandflooding.Purchaseshould

bevoluntary,butownersmustsignawaivermakingclearnogovernmentaidwillbe

availableinthefuture.

5%.Requiremandatoryinsuranceforallpropertyowners,buthaveprivatecompanies

provideit.

30%.Requiremandatoryinsuranceforallpropertyownersinat-riskorfloodproneareas,

buthaveprivatecompaniesprovideit.

39%.Nothing.Insurancecompaniesdontinsureoverlandfloodingforareason.

CTFsupportersweredividedontheissueoffloodinsurance.Twenty-sevenpercent

supportedthecreationofagovernment-runinsurancecompany,withmostofthosebelieving

thatthepurchaseofsuchinsuranceshouldbevoluntary,butthatthoserefusingtobuyshould

havetosignawaiverforgoingfutureaid.


Donotallowbuildingonfloodplainsunlesstheownersexceptfullresponsibilityandhaveprivate

insurancecoverage.

Introducemandatoryprivatehomeownerinsurancetocoverfloodinsuranceassoonaspossibleandmake

thisfloodmoneyaonetimedealthiswaytheresponsibilityfallsontothehomeownerifyouchoosetolive

inahighriskareathecostofyourinsurancewillreflectit.

Ifinsurancecompaniesdon'tcoverthistypeofdamage,startagovernmentinsuranceprogramthat

insuresproperty.Insurancecompaniesareinitforprofit.Givethemtheultimatum,eithercoverthecostor

wewillstartagovernmentprovincialinsurance.

Ensurethatthere'sa'notification'onthepropertyregistrationwhenthehomeinafloodplainsoproperty

ownersknowwhattheyarebuying.Undernocircumstancesshouldthegovernmentgetintoflood

insurance.Therearecompanieswithactuariesthatcandothat.Onlythoseinpostalcodeswithrisks

shouldhavemandatorycoveragerequired.

Anynewdevelopmentwithina200-yearfloodplainwithintheprovincemustbeleviedafeeequalto1/3of

thevalueoftheconstructiontobepaidintoafloodinsuranceaccount.


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Thirty-fivepercentsupportedthegovernmentmandatingthatprivatepropertyownershave

insuranceprovidedbyprivateinsurancecompanies.Mostofthesebelievedthatitshould

onlyapplytothoseinareasthatareat-riskofflooding.

Thirty-ninepercentsupportednopushforinsuranceintheprovince,believingthatinsurance

companiesdontprovideoverlandfloodinsuranceforareason.

While61%ofCTFsupporterswantedtoseesomegovernmentactiontomakeoverland

floodinginsuranceeitheravailableormandatory,theywerequitedividedaboutthebestway

togoaboutit.

US Experience with Mandatory Insurance

Background

LikeCanada,theUnitedStateshasstruggledwiththechallengeofexternalizingtheriskof

livinginflood-pronelands.TheUnitedStateshasexperimentedmuchfurtherthanCanada

however,leavingexamplesandlessonstobelearnedfromitsmistakesandsuccesses.

Privatesectorfloodinsurancewasofferedbeginninginthe1890s,howeverthelosses

incurredbyinsurersinthe1927Mississippifloodsledtothewithdrawalofcoveragebythe

endof19287.Fromthenon,floodinsurancewasrarelyofferedbytheprivatesectoruntilthe

USCongresspassedtheNationalFloodInsuranceProgramin1938.ThismadetheUSfederalgovernmenttheprimaryfloodinsuranceproviderforhomeownersandsmallbusinesses.This

stillinvolvedprivateinsurerswhowouldmarketpoliciesundertheirownnamesandretaina

percentageofthepremiumstocovercosts,butwasbackedbytheUSfederalgovernment.

Communitiesthattookpartintheprogramwererequiredtofollowlanduseregulationsand

buildingcodestoreducerisk8.Whileprivateinsurersrefusedtoprovidefloodinsuranceto

homeownersandsmallbusinesseswithoutfederalbacking,theyoftenwerewillingtoinsure

largecommercialproperties.

HowardKunreutherandMarkPaulyoftheUniversityofPennsylvaniaconductedanextensive

studyonthedifficultyofinsuringagainstcatastrophiceventsliketerroristattacks,floodsand

hurricanes.Thereasonsforthiswerenumerous,includingthedifficultyofinsurance

7Insurance:FactsandProblems.Manes,Alfred.HarperBrothers.19388TheNationalFloodInsuranceProgram.Pasterick,EdwardT.ApartofHowardKunnreutherandRichardJ.

RothSr.sPayingthePrince:TheStatusandRoleofInsuranceAgainstNaturalDisastersintheUnitedStates.

1998.


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companiesstayingsolventafteracatastrophiceventinwhichithasmanypolicyholders

affected.

Perceptions of Risk

PhilDaviesoftheFederalReserveBankofMinneapolisarguesthatmostpeopledonot

accuratelyunderstandtherisksthatfloodsrepresent9.

ThisissupportedbyKunreutherandPaulywhofoundthat,

Individualsfacedwiththepossibilityofacatastrophiclosstendtoignorethe

eventuntilafteritoccurs,atwhichpointtheyareextremelyinterestedin

protectingthemselvesMostresidentsinareaswiththepotentialfor

catastrophiclosseshavelimitedknowledgeofthehazard.Thereisconsiderable

evidencefromfieldstudiesandcontrolledexperimentsthatpriortoacatastropheindividualsunderestimatethechancesofsuchadisasteroccurring.

Infact,manypotentialvictimsperceivethecostsofgettinginformationabout

thehazardandcostsofprotectiontobesohighrelativetotheexpected

benefitsthattheydonotobtainsuchinformation,andthereforedonotconsider

investinginlossreductionmeasuresorpurchasinginsurance10.

KunreutherandPaulypointoutthatintimesofshort-termbudgetconstraints,insurance

coverageisoftenoneofthefirstspendingitemsdroppedbyfamiliesandsmall-businesses,

especiallyforlowerincomehouseholds.Formanyfamilies,insuranceisconsidereda

discretionaryexpense.

Expectations of Government Aid


Let'shelpthosewhoabsolutelyneedittosatisfytheirbasicneeds,buttherewasalevelofriskpeople

took,andaffordedtotake.Wecan'tsetaprecedenceofbailingpeopleoutbecause100yearsfromnow,

you'llbeonthehookagain.

KunreutherandPaulyemphasizethatanothermajorfactordepressingthedemandfromhomeownersforcatastrophicdisasterinsuranceisanexpectationofliberalgovernment

assistance.Theyarguethat,

9FlawsintheOintment,Davies,Phil.FederalReserveBankofMinnesota.2006.

http://www.minneapolisfed.org/research/pub_display.cfm?id=3192 10Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.

https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703


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FederaldisasterassistancecreatesatypeofSamaritansdilemma:providing

assistanceexpost(afterhardship)reducespartiesincentivestomanageriskex

ante(beforehardshipoccurs)Totheextentthatpartiesexpecttoreceive

governmentassistanceafteralossaformoffreeorlowcostinsurancethey

mighthavelessincentivetoengageinmitigationorbuyinsurancebeforea

disasteroccurs.Becauselessinsuranceispurchased,thegovernmentsincentive

toprovideassistanceafteradisasterisreinforcedoramplified11.

Inthisrespect,governmentsacrossCanadaareunintentionallyguiltyofdepressingany

possiblecatastrophicinsurancemarket.

Insurance as Discretionary Spending

Empiricalevidencealsoshowsthathomeownerswithinsurancepoliciesarelikelytocancel

themiftheymakenoclaimafterthefirstyearsofholdingit.Thiswaseventhecasein

designatedSpecialFloodHazardAreaswherehomeownersarerequiredtopurchase

insuranceasaconditionforfederallybackedmortgages.Aftermajorfloods,many

homeownerswerefoundtobenon-compliant12.

Failure of the US Insurance Model

MandatoryinsuranceintheUnitedStateshaslargelybeenafailureinitscurrentform.As

statedpreviously,manyhomeownersarenon-compliantandarenotfoundtobesountilafter

adisasterhasoccurred.

ThisoccursdespitethefactthatfloodinsuranceintheUnitedStatesisheavilysubsidizedbytaxpayersandactslargelyasawealthtransfertoaffluentAmericans13.KennethGreenofthe

USnon-profitEnvironmentalTrendsarguesthatsubsidizedfloodinsuranceencourageseven

moredevelopmentinriskyareasthanwouldotherwiseoccur.

AccordingtoErwannMichel-KerjanintheUSNationalTaxJournal,

Highlysubsidizedpremiumsorpremiumsartificiallycompressedbyregulations,

withoutclearcommunicationontheactualriskfacingindividualsand

businesses,encouragedevelopmentofhazard-proneareasinwaysthatare

costlytoboththeindividualswholocatethere(whenthedisasterstrikes)aswellasotherswhoarelikelytoincursomeofthecostsofbailingoutvictims

11Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.

https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703 12Kunreuther,HowardandPauly,Mark.InsuringAgainstCatastrophes.December29,2006.

https://hcmg.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=1703 13Stossel,John.TaxpayersGetSoakedbyGovernmentsFloodInsurance.ABCNews.September20,2012.

http://abcnews.go.com/Business/Insurance/story?id=94181


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followingthenextdisaster,eitheratastatelevelthroughexpostresidual

marketassessmentsorthroughfederaltaxesinthecaseoffederalreliefortax

breaks14.

TheCatoInstituteadstothedamningevidenceagainstsubsidizedfloodinsurance.

Defendersofgovernmentinsuranceprogramsclaimthattheyreduce

dependenceonfreedisasterassistanceandpromoteefficientrisk

managementbypropertyownersandfarmers.Butgovernmentpoliciesarethe

causeof,notthecurefor,thelimitedsupplyandnarrowscopeofprivate-sector

disasterinsurance.Demandforprivatecoverageislowinpartbecauseofthe

availabilityofdisasterassistance,whichsubstitutesforbothpublicandprivate

insurance.Moreover,agovernmentthatcannotsaynotogenerousdisaster

assistanceisunlikelytoimplementaninsuranceprogramwithstrongincentivesforriskmanagement.Thesubsidizedratesandlimitedunderwritingandrisk

classificationoffederalgovernmentinsuranceprogramsaggravateadverse

selection,discourageefficientriskmanagement,andcrowdoutmarket-based

alternativesStategovernmentsalsointrudeoninsurancemarketsbycapping

rates,mandatingsupplyofparticulartypesofinsurance,andcreatingstate

poolstoprovidecatastropheinsuranceorreinsurancecoverageatsubsidized

rates.Byreducingboththesupplyanddemandsidesofprivateinsurance

protection,governmentinterventionleadstogreaterrelianceonpolitically

controlleddisasterassistanceandhighercostsfortaxpayers

15

.

SeniorplayersinCanadasinsuranceindustrytoldtheCTFthatthedesignationofSpecial

FloodHazardAreasishighlypoliticized,asUSCongressmeninflood-proneareaslobbyto

redrawmapstoincludeareaswithlittletonoriskoffloodinginordertoeasethepremiums

onthoseactuallyatrisk.

Flood Insurance for Albertans and Canadians

No Watertight Solution

TheCTFsthirdconditionforaresponsiblerecoveryisthattaxpayersandpropertyownersbe

protectedinthefuturetoensurethatpaymentsmadetoprivatepropertyownersareone-

timeonly,withfuturepropertydamagecostsexternalizedtothepropertyowner.

14Michel-Kerjan,Erwann.DisastersandPublicPolicy:CanMarketLessonsHelpAddressGovernmentFailures?

TheNationalTaxJournal.2008. http://opim.wharton.upenn.edu/risk/library/07-04.pdf 15TheCatoInstitute.CatoHandbooktoCongress:PolicyRecommendationsforthe107

thCongress.September

9,2009.http://www.cato.org/pubs/handbook/hb107/hb107-40.pdf


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Thestatusquoofthegovernmentdefacto-insuringpropertyattheexpenseofthetaxpayer

clearlydoesnotmeetthiscondition,wellintentionedbutunbelievablestatementsaboutthe

currentaroundofaidaside.

Asdiscussedabove,theAmericanmodelofheavysubsidizedandpoliticizedfloodinsuranceis

rifewithproblems.Nonetheless,insuranceremainstheonlypracticalwayofexternalizingthe

costofpropertydamagefromnaturaldisasters.

Mandating Flood Insurance for At-Risk Owners

Greenarguesthatifitisimpossibletoentirelyabolishtaxpayersubsidiesfordisasters,thenit

shouldbeminimizedthroughrisk-basedinsurancepremiums.

MarkBrowneandMartinHalekproposeseveraloptionsthattheyconsidercapableofsolving

theproblemsofinsurancecompaniesnotofferingpoliciesortaxpayersbeingforcedto

subsidizedamages.Theyrecommendasthebestpossibleoptionthatthe(US)federal

governmentmandatethatprivatepropertyownerspurchasefloodinsuranceontheprivate

marketwithpremiumsthatreflectthefullrisk16.

SimilartotheUnitedStatesNationalFloodInsuranceProgram,thiswouldrequirethe

governmenttodesignatewhichareasareatriskandthereforesubjecttothemandatory

purchaseofinsurance.AsevidencedbytheAmericanexperience,agovernmentbody

responsibleforthisdesignationwouldinevitablybesubjecttopoliticalpressuresand

interference,regardlessofstatedsafeguards.ItwouldfurtherrequirethegovernmenttoestablishandfundalargenewbureaucracysimilartotheAutomobileInsuranceRateBoard.

Iffloodinsuranceforat-riskpropertyownersistobemademandatory,thebestwayto

safeguardagainstpoliticalinterferenceandthecreationofnewbureaucraciesistobase

mandatesonpropertieswhichhavemadeclaimsundertheDisasterRecoveryProgram

(DRP).

BasinginsurancemandatesonwhichpropertieshavemadefloodclaimsundertheDRPwithin

thelasttenyearswouldsuccessfullyincludemostat-riskproperties,andsafelyexcludethose

propertiesnotindanger.Thiswouldeliminatepoliticalinterferenceentirelyandrequire

minimalbureaucracytoadminister.Inshort,ifyouvereceivedfloodassistanceinthepastten

years,youneedtohaveinsurance;ifyouhavent,youdont.

16Browne,MarkandHelek,Martin.Managingfloodrisk:adiscussiononthenationalfloodinsuranceprogram

andalternatives,inPublicInsuranceandPrivateMarkets.2010.

http://www.environmentaltrends.org/single/article/managing-flood-risk.html#sthash.vaCXLxtX.dpuf


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Asdiscussedabove,therehavebeenmajorissueswithinducingprivateinsurersintothe

marketforfloodcoverage;chiefamongthesebeingthatdemandforinsuranceisverylimited,

evenwhenheavilysubsidized.

Thiswouldlikelybesolvedintheeventthatinsurancewasmademandatoryforat-risk

properties,andenforced.Likeautomobileinsurance,makingaproductmandatorycreatesa

marketwhereonewouldotherwisenotexist.

Insurancepremiumsshouldbedeterminedstrictlybyactuarialcalculationsthatreflectrisk.

Ownersinhigh-riskareaswouldpayinsurancepremiumscommiseratewiththatrisk,while

ownersinsaferareaswouldpayless.

Aninsuranceprogrambasedonactuarialcalculationsofriskwillinevitablymeanthatthe

pricesignalwillbetoogreatforsomeownersinhigh-riskareas.Wherethisisthecase,one-

timegovernmentassistanceshouldhelptheseownerstorelocate.Thecostofrelocation

howevermeansthattheprovincemustmovequicklytoindicateitsintensionstowardan

insuranceprogram.Financiallyincentivizinghomeownerstorelocateaftertheyhaverebuilt

wouldbeinefficientandunreasonablyhardonfamilies.

Thegovernmentsplantoincentivizehomeownersinfloodwaystomovebyprovidingthem

withthefull,propertytaxassessedvalueoftheirhomesisgenerous,buteffectivelywithout

limit.Therefore,ahardandstillgenerouscapof$500,000shouldbeplacedonany

relocationassistance.

Recommendation

Mandatethatallat-riskpropertyownerspurchaseprivateoverlandfloodinsurance

withpremiumsbasedonactuarialcalculationsofrisk.Determiningat-risk

propertiesshouldbebasedonclaimsundertheDRPwithinthelasttenyears.

Providerelocationassistancetoownersinhigh-riskareasuptothe2013tax

assessedvalueuptoahardcapof$500,000.

Thegovernmentshouldindicateitsintentionstowardsaninsuranceprogram

immediatelyinordertoallowpropertyownerstomakedecisionsbetweenrebuildingandrelocating.


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Federal Natural Disaster Insurance Mandate

Thefederalgovernmentprovidesalargemeasureofaidintheeventofnaturaldisastersfor

bothpublicandprivateproperty.ShouldAlbertabetheonlyprovinceinCanadatoputin

placearesponsibleinsuranceprogramtoexternalizedisastercosts,Albertanswouldfind

themselvespayingintotheprogram,whiledrawingmuchlessthantaxpayersinother

provinces.Furthertothis,taxpayersandpropertyownersinotherprovinceshavejustasmuch

needoffinancialprotectionfrommajornaturaldisastersasareAlbertans.

Therefore,thefederalgovernmentshouldimmediatelybeginworktowardsthe

establishmentofafederalnaturaldisasterinsurancemandate.

Recommendation

Workwiththefederalgovernmenttotowardstheestablishment

ofafederalnaturaldisasterinsurancemandate.


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VI-Paying for the Recovery

Municipal Public Infrastructure

Federal and Provincial Support

Inadditiontomassivedamagedonetoprivateproperty,publicinfrastructurehassuffered

millionsindamages.TheCityofCalgaryestimatesthepreliminarycostofdamagestobe

$256.5million17.HighRiver,Canmoreandmanyothersmallcommunitiesfacesignificant

publicinfrastructurerepairbills.

UnderthefederalgovernmentsDisasterFinancialAssistanceArrangements(DFAA),boththe

provinceandmunicipalitieswillbeabletorecoup90%ofpublicinfrastructurecosts18.While

thefederalgovernmentwillnotreimbursethecostsuntilthefinalcostistallied,the

remainingtabwillbeonly10%.

However,Calgaryandothermunicipalitieswilllikelynotfaceanydirectcosts.Premier

RedfordhasbeenclearthattheCityofCalgaryandothermunicipalitieswillnothavetopick

upthebillforinfrastructuredamagesandthecostsofcityemployeeovertime19.Additionally,

theCityhas$295millioninitsFiscalStabilityReservetohelpitcoveranytemporaryoutlays

beforebeingreimbursedbythefederalorprovincialgovernments.Inshort,Calgaryhasorwill

havethemoneynecessaryforrebuildinginitsareasofresponsibility.

Calgary and the $52 Million

TheCityofCalgarymayfinditprudenttorebuildsomepiecesofpublicinfrastructuretoa

betterstatethantheywerebeforetheflood.Anysuchadditionalcostswouldlikelyhavetobe

bornbytheCity.

TheCanadianTaxpayersFederationhassteadfastlyopposedattemptsbytheCalgaryCity

Counciltokeeptheover-collectionoftaxesmadeavailablebytheprovincenotraisingtheir

portionasmuchaswasexpectedbytheCity.Theremayhoweverbemeritinimprovingsome

infrastructureoveritspre-floodcondition.Assuch,theCTFhassupportedspendingthe$52milliononone-timeimprovementsinpublicinfrastructure,butwiththestrictconditionthatit

17CalgaryCantHandleFloodBillsAlone,NenshiSays.CBC.July3,2013.

http://www.huffingtonpost.ca/2013/07/03/calgary-flood-cost-nenshi_n_3541928.html 18DisasterFinancialAssistanceArrangementsRevisedGuidelines.PublicSafetyCanada.

http://www.publicsafety.gc.ca/prg/em/dfaa/ 19AlbertaPremierAlisonRedfordsatstaxesshouldntbehikedtopayforfloodrelief.CalgarySun,RickBell.July

7,2013.http://www.calgarysun.com/2013/07/07/alberta-premier-alison-redford-says-taxes-shouldnt-be-hiked-

to-pay-for-flood-relief


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isreturnedtotaxpayersin2014.Thatis,thatthe$52milliondoesnotbecomeapermanent

sourceofrevenueinthebudget,butratherbetreatedasaone-timeemergencylevy.

MayorNenshisinitialplanwastokeepthe$52millioninCityhandsfortwoyearstoneta

totalof$104million.Thiswascommendablyreducedtoone-yearasrecommendedbythe

CTF,butwithastronghintthattheCitywillpermanentlygrabthismoneyinfutureyears20.It

appearsthattakingonly$52millionnowbutleavingtherestonthetablewithnopromise

thatitwillbereturnedinfutureyearswasamovetoneutertheissuetemporarilyuntilthe

October2013municipalelectionsareover.

Recommendation

Calgaryshouldspendtheinitial$52milliononupgradesfrom

damagedpublicinfrastructure,withthestrictconditionthat

thetaxroomisreturnedtotaxpayersinfutureyears

Alberta

Public Infrastructure

Asstatedabove,thefederalgovernmentsDFAAislikelytocover90%ofAlbertasdamaged

publicandprivateinfrastructure.TheamountreimbursedtoAlbertawillnotbepaiduntilthe

finalbillisknown,soAlbertawillhavetocarrythesecoststemporarily.Forexample,thefederalgovernmentprovided$129millionforfloodrecoveryfollowingthe2005floods,but

theprovincedidnotreceivethismoneyuntilApril201321.Forthemostpart,thefederal

governmentwillonlyreimburseaprovincialgovernmentoncethefinalbillisknown.

Inthemeantime,thisleavesAlbertawithamassivefundingshortfallthatitmustmakeup.

Albertamustfindthemoneytobeginrebuildingforbothpublicinfrastructureandprivate

propertywithoutdelay.

20BallisinyourcourtCalgary,aftercitycounciltakes$52milliontaxbreakforfloodcosts.CalgarySun,Rick

Bell.July29,2013.http://www.calgarysun.com/2013/07/29/ball-is-in-your-court-calgary-after-city-council-takes-

52-million-tax-break-for-flood-costs 21AlbertaFloodunlikelytostymiefederalplanstoslaydeficit.June27,2013.

http://www.canada.com/news/Alberta+flooding+unlikely+stymie+federal+plans+slay+deficit/8589407/story.htm

l


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Total Costs

BMONesbittBurnsandtheAlbertaTreasuryBranchbothestimatetotaldamagesbetween$3

billionand$5billion.PremierRedfordherselfsaidthatthefinalbillwouldbewellover$5

billion22.

Thepercentagebreakbetweenpublicandprivatepropertyisnotyetknown23.Eventhough

thefederalgovernmentwillcovermuchofthecost,theprovincewillstillneedtofindatleast

$5billion.

WhileitisyetunknownhowfastthegovernmentofAlbertawillbeabletogetthemoneyout

thedoor,theCTFhasbuiltafiscalmodelontheassumptionthatAlbertawillspend

approximately$3billionin2013-14,$1billionin2014-15and$1billionin2015-16.Thisisin

additiontothe$200millionthattheprovincealreadybudgetsfordisasterspendingeach

year.AsMinisterHornerhimselfsaid,Itsnotanexactscienceatthispoint,butweregettingthere.24Thisfiscalmodelcanberefinedasmoredetailsemergeonthegovernments

disasterspendingplans.

New Deficit Projection

Sofar,theprovincedoesnothaveaplantopayforthis.Unlesstheprovincesgetsonesoon,

theentirecostwillbecarriedbyyetmoredebt.AsdiscussedpreviouslyinSectionIIIofthis

report,theprovincewasalreadyontracktoruna$5.1billiondeficitin2013-14beforethe

floodandspendthelastoftheSustainabilityFund.

InTable3,theCTFprojectsthatunlessthereisamajorreallocationofspendingresourcesto

payforfloodrecovery,thattheconsolidateddeficitwillballoonfromanalreadymassive$5.1

billionin2013-14,toamassive$8.1billion.Withoutmajorcorrectiveaction,thesesky-high

deficitswillremainfortheforeseeablefutureat$4.1billionin2014-15and$1.9billionin2015-

16.

22Wellover$5-billionneededtoreverseAlbertaflooddamage,Redfordsays.TheGlobeandMail.The

CanadianPress.August19,2013. http://www.theglobeandmail.com/news/national/well-over-5-billion-needed-

to-reverse-alberta-flood-damage-redford-says/article13862748/ 23Costsmount,devastationrises:thefloodinnumbers.TheGlobeandMail,JustinGiovannetti.June24,2013.

http://www.theglobeandmail.com/news/national/costs-mount-devastation-rises-the-flood-in-

numbers/article12792247/24Wellover$3Binfloodcostsfacingprovince.CalgaryHerald,JamesWood.July31,2013.

http://www2.canada.com/calgaryherald/news/story.html?id=28cdbd5a-9821-4691-81d1-4431704091a2


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Table 3: Updated Fiscal Outlook ($ millions)

Fiscal Plan Summary: Operating Budget 2013-14 2014-15 2015-16

Budget Updated Budget Updated Budget UpdatedTotal Revenue $38,612 $38,612 $41,911 $41,911 $44,998 $44,998

Less

Revenue received for capital purposes ($522) ($522) ($464) ($464) ($389) ($389)Investment income retained by the HeritageFund ($297) ($297) ($379) ($379) ($651) ($651)

Savings of resource revenue - - ($416) ($416) ($492) ($492)Allocation for the Capital Plan debt servicingcosts ($238) ($238) ($404) ($404) ($593) ($593)

Operational Revenue $37,555 $37,555 $40,248 $40,248 $42,873 $42,873

Operational Expenses

Operating expenses (net of in-year savings) $36,422 $36,422 $37,144 $37,144 $37,904 $37,904

Disaster / emergency assistance $200 $3,200 $200 $1,200 $200 $1,200

Amortization / inventory consumption / losson disposals $982 $982 $1,000 $1,000 $1,040 $1,040

General debt servicing costs $402 $402 $424 $424 $437 $437

Total Operational Expense $38,006 $41,006 $38,768 $39,768 $39,581 $40,581

Operational Surplus / (Deficit) ($451) ($3,451) $1,480 $480 $3,292 $2,292

Fiscal Plan Summary: Capital Budget

Capital Plan Spending $5,209 $5,209 $5,172 $5,172 $4,660 $4,660

Capital Plan Borrowing

Alternative financing (P3s) $344 $344 $206 $206 $114 $114

Direct borrowing $3,190 $3,190 $4,379 $4,379 $4,039 $4,039Withdrawal from Capital Plan financing

account $1,067 $1,067 - - - -Total Capital Plan Borrowing $4,601 $4,601 $4,585 $4,585 $4,153 $4,153

Funded Capital Plan

Revenue received for capital purposes $522 $522 $464 $464 $389 $389Retained income of funds and agencies forcapital purposes $84 $84 $118 $118 $118 $118

Disposals of capital assets $2 $2 $5 $5 - -

Total Funded Capital Plan $608 $608 $587 $587 $507 $507

Capital Plan Surplus / (Deficit) ($4,601) ($4,601) ($4,585) ($4,585) ($4,153) ($4,153)

Consolidated Surplus / (Deficit) ($5,052) ($8,052) ($3,105) ($4,105) ($861) ($1,861)

RebuildingAlbertaiscriticalhowever,andthemoneymustcomefromsomewhere.TheCTFsfirstconditionforresponsiblyrebuildingAlbertawas,

Thatthegovernmenthaveaplantopayfortherebuildingprogrambyredirectingexisting


aslittleaspossible.

Tothisend,theCTFrecommendstheadoptionofits2013-14pre-budgetrecommendations

initsreport,RestoringtheAlbertaAdvantage.WhileRestoringtheAlbertaAdvantagehad


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theintentionofeliminatingtheprovincesdeficitthroughprudentspendingreductions,the

applicationoftheCTFsrecommendationswouldnowhavetheeffectofminimizingthe

inevitablegrowthinthedeficittoallowforabalancedbudgetinthefuture,withoutincurring

unnecessarydebt.Ratherthancutnetspending,thisplanwouldnowseespendingreallocated.

AsdetailedinTable5,thiswouldbeaccomplishedbya$2.7billionreductioninplanned

operatingfollowedbyatwo-yearfreeze,one-timeproceedsfromthesaleoftheAlberta

EnterpriseCorporation,andextendingthe2014-15and2015-16CapitalPlanoverthreeyears.

The$2.7billionreductioninoperatingspendingwouldbehalfimplementedovertheduration

ofthe2013-14fiscalyearwiththeotherhalfimplementedduring2014-15.Thiswouldbe

nettedagainsta$300millionpermanentincreasetothedisasterbudget.

Table 4: Summary of Proposed Changes to Budget Over 2 Years ($ millions)

Reducing Public Sector Employee Costs $1,570

10% wage rollback in Public Service, school boards & AHS $1,420

5% reduction in Public Service employees $150

Ending Corporate Welfare & Other Business Subsidies $141Eliminate bioenergy programs $66

Eliminate funding for carbon capture and storage programs $60

Eliminating the Alberta Multimedia Development Fund $15

Other Reductions $119

Eliminate the GreenTRIP funding $93

Eliminate Alberta promotion programs $10

Eliminate the Alberta Human Rights Commission $810% reduction in Legislative Assembly spending $7

Eliminate the Francophone Secretariat $1

Other Operating Reductions $882

Total Operating Reductions $2,711

Increase in Disaster/Emergency Assistance $300

Net Operating Reductions $2,411

One Time Savings $99

Eliminate the Alberta Enterprise Corporation $99

Savings from extending the Capital Plan $1,895

Net Spending Reductions $4,405

Table5outlinestheResponsiblyRebuildingAlbertafiscalplanwithanet$4.4billion

reductioninpost-floodspending.Thisisexcludinganincreaseinone-timefloodspendingof

$3billionin2013-14,andanother$2billionover2014-15and2015-16.Theresultisstilla$1.8

billionnetincreaseinspendingrelativetothepre-flood2013-14budget,withanetdecreaseof

$3billionin2014-15and$3.3billionin2015-16relativetoplannedspending.


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Thiswouldseetheconsolidateddeficitreducedfromanestimated$8.1billionto$6.9billion

thisfiscalyear.ExtendingtheCapitalPlan,implementingthesecondhalfofoperating

reductionsandfreezingoperatingspendingforafurthertwoyearswouldseeabelatedreturn

todeficitin2015-16.


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Reallocating Spending

Table 5: Responsibly Rebuilding Alberta Fiscal Plan ($ millions)Fiscal Plan Summary: Operating Budget 2013-14 2014-15 2015-16

Projection CTF Projection CTF Projection CTF

Total Revenue $38,612 $38,612 $41,911 $41,911 $44,998 $44,998

Less

Revenue received for capital purposes ($522) ($522) ($464) ($464) ($389) ($389)Investment income retained by the HeritageFund ($297) ($297) ($379) ($379) ($651) ($651)

Savings of resource revenue - - ($416) ($416) ($492) ($492)Allocation for the Capital Plan debt servicingcosts ($238) ($238) ($404) ($404) ($593) ($593)

Operational Revenue $37,555 $37,555 $40,248 $40,248 $42,873 $42,873

Operational ExpensesOperating expenses (net of in-year savings) $36,422 $36,422 $37,144 $37,144 $37,904 $37,904

Disaster / emergency assistance $3,200 $3,500 $1,200 $2,500 $1,200 $2,500Amortization / inventory consumption / losson disposals $982 $982 $1,000 $1,000 $1,040 $1,040

General debt servicing costs $402 $402 $424 $424 $437 $437

Savings from Operating reductions & freeze - ($1,356) - ($3,433) - ($4,193)

One-time savings - ($99) - - - -

Total Operational Expense $41,006 $39,852 $39,768 $37,635 $40,581 $37,688

Operational Surplus / (Deficit) ($3,451) ($2,297) $480 $2,613 $2,292 $5,185

Fiscal Plan Summary: Capital Budget

Capital Plan Spending $5,209 $5,209 $5,172 $5,172 $4,660 $4,660Capital Plan Borrowing

Alternative financing (P3s) $344 $344 $206 $206 $114 $114

Transfer from Contingency Account - - - - - -

Direct borrowing $3,190 $3,190 $4,379 $4,379 $4,039 $4,039Withdrawal from Capital Plan financingaccount $1,067 $1,067 - - - -

Deposit to Capital Plan financing account - - - - - -Extending the 3 year Capital Plan over 4years - - - ($1,895) - ($1,383)

Total Capital Plan Borrowing $4,601 $4,601 $4,585 $2,690 $4,153 $2,770

Funded Capital Plan

Revenue received for capital purposes $522 $522 $464 $464 $389 $389Retained income of funds and agencies forcapital purposes $84 $84 $118 $118 $118 $118

Disposals of capital assets $2 $2 $5 $5 - -

Total Funded Capital Plan $608 $608 $587 $587 $507 $507

Capital Plan Surplus / (Deficit) ($4,601) ($4,601) ($4,585) ($2,690) ($4,153) ($2,770)

Consolidated Surplus / (Deficit) ($8,052) ($6,898) ($4,105) ($77) ($1,861) $2,415


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TheCTFsrecommendationsforareastoreallocatespendinginTable5arebothspecificand

broad-based.Theseincludespecificprogramsandfundingitems,aswellasacross-theboard

actions.

EveryitemlistedinTable5isexplainedandelaboratedintheCTFsbalancedbudgetplan,

RestoringtheAlbertaAdvantageonpages21to41.

Asstatedabove,theitemslistedinRestoringtheAlbertaAdvantagewereintendedasaway

tobalancethebudgetbytheendoffiscalyear2013-14.TheCTFiscallingfortheapplication

ofthisplanasmuchasispossibleasawayofnowmitigatingtheinevitableincreaseinthe

deficit.

Recommendation

Reducenon-disasterrelatedoperatingspendingby$2.7billionduringthe2013-14and

2014-15fiscalyears,andfreezeremainingoperatingspendingfor2014-15and2015-16.

Extendthe2014-15and2015-16CapitalPlanoverthreeyears

Thiswillfreeupacumulative$4.4billionannuallyforemergencyfloodspendinganda

belatedreturntobalancedbudgets.


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VIII-Budgeting for Disasters

Disaster Spending History

Albertaspendsaconsiderablesumofmoneyeveryyearondisastersandemergencies,yetthe

vastmajorityofthosefundsareunbudgetedfor.Between2003-04and2011-12,Albertaspent

anaverageof$502millionondisasterandemergencyrelief,mostofwhichwasunbudgeted.

In2012-13,thegovernmentbudgetedjust$44millionfordisasters,butclosedtheyear

spending$596million.

InRestoringtheAlbertaAdvantage,theCTFrecommendedthattheprovinceofAlberta

annuallybudget$500millionfordisasterandemergencyspending.While2013-14willstandasananomalousspikeindisasterspendingthatcouldnothavebeenbudgetedfor(putting

theSustainabilityFundaside),itdoesaccentuatetheproblemofnotbudgetingforspending

thatissuretotakeplace.

ThegovernmentpartiallyacceptedtheCTFsrecommendationsinthisarea,increasingits

disasterbudgetfor2013-14fromitsplanned$17millionto$200million.

Chart 2: Disaster & Emergency Spending, 2003-04 to 2012-13

DisastersonthescaleoftheJune2013floodscannotbereasonablybudgetfor,butmostcan

be.DisastersonthisscalecouldbepaidforbydrawingdowntheSustainabilityFund,butas

notedabove,itwasallbutdepletedbeforetheflood.

Inordertoensurethatmostnaturaldisasterscanbebudgetedfor,theprovinceshouldbudget

atleast$500millionayearfordisasterandemergencyspending.

$0

$100

$200

$300

$400

$500

$600

$700$800

$900

MillionsofDollars


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Recommendation

Budget$500millionfordisasterandemergencyspending.


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VIII-Conclusion

A Pragmatic Solution

TheCTFhasseldominitshistorybeensupportiveofadeficit,believingstronglythattheyare

onlyeverjustifiedintimesofmajornaturaldisasterorwar.ThisisjustsuchacaseandtheCTF

recognizesthatthenecessityofrebuildingmakesabalancedbudgetintheshorttermmore

difficult.ThisisnottoexcuseAlbertasgovernmentfromwastingawaythe$16.8

SustainabilityFundduringgoodandfair-weatherdays,butitisrecognitionoftherealitythat

wearein,regardlessofhowwegothere.

ThisreportisanchoredintheCTFsmissionofLowerTaxes,LessWaste,andAccountable

Government,butitrecognizesthatintimesofmajorupheaval,governmentsliketheCTF

mustbepragmatic,andsometimeschangetheirplans.

JustastheCTFrecognizesdeficitstoinevitableintheshorttermasaresultofthistragedy,so

toomustthegovernmentcometotermswiththerealityofitsspendingtominimizean

alreadyburgeoningdeficit.


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IX-Appendix

Extended CTF Supporter Views

ThecommentsbelowareselectivelydrawnfromtheCTFssupportersurveyconductedinJuly

2013.TheyarenotintendedtoberepresentativeofCTFsupporterviews,buttoexpressa

broadrangeofopinions.

Thesearetheopinionsof64individualCTFsupportersandarenotnecessarily

representativeofotherCTFsupporters,CTFspokespeopleortheCTFasanorganization.

Livingnearfloodplainsmaybescenicandattractivebutshouldcomewithacost.Thehomeowner's

cost,notacosttohighanddrycommunities.Havingsaidthat,howisitthatasubdivisionwasever

allowedthereinthefirstplace?Theseareasshoulddesignatedparks,alwaysandforever. Capthepaymentsandthenadvisenofutureassistance,everifyouremaininafloodplain.

Disallowanybuildingorrebuildingonmajorfloodplains.Wherepossible(suchasHighRiver)construct

afloodwayliketheoneinWinnipeg.

Relocatethewholetownifanotherdisasterlikethatshouldhappenagain.

Helppeoplethatneedaroofovertheirhead,onconditionthattheyrelocate.Weneedtomitigate

futurerisktoallAlbertans,andthiswouldbemostresponsible.RebuildingaCEO'smulti-milliondollar

padisnotwhatthesocialsafetynetshouldbeusedfor(unlessyou'rebuyingtheirvotes).Let'shelp

thosewhoabsolutelyneedittosatisfytheirbasicneeds,buttherewasalevelofriskpeopletook,andaffordedtotake.Wecan'tsetaprecedenceofbailingpeopleout-because100yearsfromnow,you'll

beonthehookagain.

Introducelegislation-nomorebuildingofhomesorbusinessonfloodplane.Bebetterpreparedfor

emergencyandtakeactionsooner-beproactiveratherthenreactive.Createemergencydisasterfund

foranyfutureproblems.

Permanentlyevacuateallcitizensandremoveallstructuresthatarepresentlyonfloodplainsand

prohibitanyfuturedevelopmentsotheriverscanfloodnaturallyontotheseplains.Thisshouldhave

beendone40yearsagoifourgovernmentwasinanywayresponsible.

Turnfloodzonesintoparksonly.Somelimitedassistancebutonlyiftheymoveoffthefloodplains

Anounceofpreventionisworthapoundofcure...theyknowtheimpactareasfromthelastmajorflood

andtheyshouldnowbeproactiveininstitutingmeasuresorprogramstoprecludeanysimilardisasterin

thefuturebybuildingstructuresorwhatotherthingwouldlessenorremoveanythreatstolifeand

property.

Mandatefloodinsurancecoveragebytheinsurancecompaniesforthosethatliveinfloodplainareas.

Donotapprovebuildinginthesesareas;it'sjustataxgrabtodevelophigh-endhousinginanotherwise

verydesirableareatolive.


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Provideinformationtocitizensregardingpotentialfloodzones,etc.,andsuggestprivateinsuranceto

homeowners(there'sprobablyanopportunitynowforinsurancecompaniestostartofferingthat

service).

Wemustquitbuildinginvulnerableareas,stoprebuildinginvulnerableareasandmakeitmandatory

thatallresidentshaveabackflowvalvetopreventsewagebackup.Itisridiculoushowmanybusinesses

andhomesrepeatedlyfloodwithbackupandtheresidentsdonothavethatvalvewhenithappens

againthesecondorthirdtime.

Improvefloodwarningprocedures-whywasn'ttheresoonerwarnings?Eitherprohibitbuildingnear

possiblefloodareasorintroducea'buildatyourownriskbylaw.

Onlycoverhomeownersuptoaveragereplacementcostsforaveragehomesforexampleupto

$250,000.Expensivehomesonlyuptoaforementionedmaximums.

WhathappenedtotheSustainabilityFundthatwasdesignedtoassistAlbertansincasesof

emergencies?

Preventionisessential.Developmentmustnotbeallowedonafloodplain!Whyshouldwepayfor

damagewhenthisisanareathatweknowwillfloodinthefuture?

Iwouldprovidesomereliefforthoseaffectedbutwouldmakethemsignawaiverstatingthatinfuture

eventssuchasthistherewillbenogovernmentreliefforthoselivingwithin5070or100yearflood

areas.Thiswaivershouldbeattachedtothehomesothatsubsequentbuyersmustsignaswell.

NotsurewhatRedfordshoulddo,andwhileIfeelbadlyforthoseaffected,Ifeelverystronglythat

neithermytaxesnormyowninsuranceshouldbeincreasedtosubsidizecostsforanyonewhochooses

(andtheydidchoose)toliveinafloodplain.OnethingthatRedfordshoulddoisensurethat

municipalities(orprovincialorfederalagencies)cannotselllandforprivatedevelopmentinareasthat

areboundtobeaffectedbynaturalevents,suchasfloodingorerosion(Iamthinkingofthemillionaires'

homesinEdmontonthatsliddownthebanksafewyearago.)WhydidtheCityofEdmontonsellland

forprivatedevelopmentwhenthegeologicalreportstoldthemitwasinevitableanylargestructures

builtwithinacertaindistanceofthebankwouldinevitablyandeventuallyslide?Sameformunicipalitiessellinglandinfloodzones.

Amimmediatebanonbuildingpermitswithinhistoricalandpredictedfloodplainareasutilizingthe

mostscientificmethodologycurrentlyavailable.Historical(100year)eventswouldbethe'default'if

differingstudieswerepresented.

Holdlanddevelopersaccountablesomewhatforbuildinginthoseareas.Ithinkmunicipalitieswhogrant

permitsforbuildinginthoseareasshouldbeheldaccountableaswell.Iamtiredofpayingforthe

stupidityorpoorplanningofothers.Thesamethinghashappenedinothermunicipalitiesallowing

buildingpermitsnearwaterways.Edmontonhadhomesfallingintotheriverduetoriverbankerosion!

Doesanyonelearnanything?

Worktowardseliminatingtherisk.Quitsprinklingtaxpayer'smoneyonrecurringsymptoms.Either

stopdevelopment(andredevelopment)onfloodplains,orbuildsufficientdamsorwaterdiversionchannelstoeliminatethepossibilityoffutureflooding.

Donotfundthecostofrebuildinginplacesthatarepronetoflooding,donotraisetaxes,cutspending

andinvestigatetheactionsoftheRCMPinHighRiver.

Theyneedtopayforalldamagesbecausetheyalloweddeveloperstobuildonknownfloodplains.

Provideassistancetothosewhoagreetomoveawayfromthefloodplains,butonlytothelevel

providedinfederallegislation.Ihavenoquarrelwithpeoplechoosingtoliveonrivers;justdon'taskme

asataxpayertobailthemoutwhentheygetwet.Hundredsofmillionshavebeenpaidto'riverdwellers'

inrecentdecadesanditmakesnosensetocontinuesuchsupport.


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Donotallowbuildingonfloodplainsunlesstheownersexceptfullresponsibilityandhaveprivate

insurancecoverage.

Thefirstthingthatcomestomindisbuyerbeware.Peoplegravitatetoowningriversideproperties.

Whatisneededhereisthattheyarewellinformedthattheydosoattheirrisk.

Stopspendingmoneyoutofourrainydayfund.

Iwouldseriouslyconsidersomekindofflowmitigationontherivers(Highwood,Elbow),whichcaused

mostofthedamage.TheHighwoodhasnoflowmitigation(dams)anywhereandtheElbowonlyhas

theGlenmore,whichislocatedinsidethecitylimits.TheBowhastwodamsupstreamfromCalgaryand

itappearsthatthesemayhavehadapositiveeffectbylimitingdownstreamflow.

Insteadofspendingbillionsonrebuildinghomesonfloodplainsornearrivers,considerationshouldbe

giventomakingitmandatorytobuildfloodproofhomese.g.builtuponpillarslikeinFloridaorNew

Orleans.

Considerpeople'sincomeandchoicestheyhavemadetoliveinthesefloodplainsoratriskareas.The

affluentshouldnotreceiveeverything.Alsomaybeanassessmentontheirpropertyforthemoney

giventhatsomeoftheproceedsofthesaleoftheirhousegoestopayingbackthegovernmentor

insurancecompany.

Introducemandatoryprivatehomeownerinsurancetocoverfloodinsuranceassoonaspossibleand

makethisfloodmoneyaonetimedealthiswaytheresponsibilityfallsontothehomeownerifyou

choosetoliveinahighriskareathecostofyourinsurancewillreflectit.

Legislatenohomesorbusinessestobebuiltonfloodplains.

WhathappenedtotheSustainabilityFund?Thegovernmentshouldprovideallhabitablehomeswith

newfurnaces,hotwatertanks,electricalpanels,fridges,freezers,stoves,appliances,etcforthingsthat

arethenecessityoflife.Ifthehomesarenolongerhabitable,thegov'tshouldpaytotearthemdown

andremovethemandthehomeownershouldnotpayanypropertytaxesuntilanewhouseisacquired.

Thereshouldbenobuildingallowedonfloodplains;movepeopleoffthefloodplains;offermaximumof

$250,000forfloodlosesandofferitasaonetimepayoutastheyalreadyknewtheylivedonafloodplain.Peoplewholiveinanareathatisconsideredhigherriskforfloodingshouldbemadetopurchase

floodinsuranceandsignoffthattheyknowtheyareinanareaofrisk.Idon'tthinkallAlbertansshould

payforthefewwhodecidedtoputmilliondollarhomesonafloodplainand$250,000wouldatleast

givepeopleaffectedaroofovertheirheadtostartagain.

Don'tgetmewrong,Idofeelsorryforeveryoneinvolvedwiththefloods,(Ihavehadmanydisastersin

mylifewithnogovernmentaid)butbecausetheCityofCalgaryisbuiltbytwomainrivers,theyareon

thefloodplainandyesthatiswhytheinsurancecompaniesdon'tcoverthefloods.Don'tbuyaproperty

inthefloodplains;itisgoingtofloodsoonerorlater.

Assistancelevelforpropertydamageshouldberelatedtoincome.

Ifinsurancecompaniesdon'tcoverthistypeofdamage,startagovernmentinsuranceprogramthat

insuresproperty.Insurancecompaniesareinitforprofit.Givethemtheultimatum,eithercoverthecostorwewillstartagovernmentprovincialinsurance.

BuildingpermitsshouldnotbegiventoanyonewhowishestobuildintheFloodPlainareasandifthey

dotheyareresponsibleforeithergettingInsurancefortheirownproperties.Thegovernmentshould

notcoveranydamagesintheseareas.

Thisisaseriousissueconsideringourprovincesunfortunatemisuseofthe'rainydayfund'.Ourspending

isoutofcontrolandnowthisisshiftingtheissuetofloodassistanceandthatisbecomingan'issueof

theheart'.Andunfortunatelywhenthegovernmentisinvolvedthecostskyrockets.Redfordwillhaveto


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drawaspendinglineandhopefullynotputusfurtherindebt.Itmayunfortunatelybecomethegreat

excuse.

Givepeoplethefreedomtotakenecessarymeasurestosafeguardtheirownpropertyagainstflooding

aslongasitdoesnotaffectothers.Suchmeasuresmightbecementwallsasfencestoholdbackwater.

Thosewhochoosetoliveinfloodproneareasdosobytheirownchoiceandshouldbeartheirown

responsibility.Ifthefloodingisduetoimproperorpoorlydesignedlocalinfrastructure,thelocal

municipalityordevelopersshouldbearpartoftheresponsibility.Propercityandinfrastructureplanning

iscrucial.

IwouldhavefollowedtherecommendationsfromtheProvincialTaskForcethatwasformedafterthe

2005flood!

Buildproperdykesetc.infloodplainareas.Youwillnotstoppeoplefromlivingintheseareas.Forthe

lastseveralhundredyearscommunitieshavedevelopedclosetoawatersource,probablyoriginallyfor

theconvenienceofnothavingtocarrywatersofar.Thatmaynotbetheissueanymorebutthose

originalcommunitiesdidnotdryupandblowaway,thenexpandedtothecitieswecallhometoday.

Passlegislationtopreventdevelopmentonfloodplainsandtorequirepeoplealreadyonfloodplainsto

providefortheirownlosses

LimitthecoverageprovidedbytheAlbertagovernmentforpeoplewhobuiltonafloodplainbutcover

thosewhowereaffectedbythe3rd(mostrecent)andmostdevastating100yearfloodintwodecades.

ForceCalgaryandEdmontonaswellasallothermunicipalitiestoinsureforortakestepstomitigate

floodissuesinareaswheretheyhavebuiltonknownflood-plains

FirstorderofbusinessshouldbeeliminatingtheEmergencyOperationsAct.Damagesfromtheflood

wereaggravatedbytheinterferenceofvariousgovernmentagenciesnotallowingresidentsbackinto

theirhomestomitigateflooddamageinHighRiver.Totalcostofdamageswillbemanytimeswhatit

wouldhavebeenhadhomeownersbeenallowedaccesstotheirhomestopumpwateroutof

basementswithindaysoftheflood,asopposedtobeingforciblykeptfromtheirhomesforweeks.The

fewhomeownerswhochosetostayintown,andpumptheirbasements,endedupwithverylittledamage.Theresultofgovernmentoversteppingitsboundarieswillendupbeingaverycostlybilltothe

taxpayer.

ThisshouldbeconsideredanactofGod.Somepeopledoneedhelp,butlooktoseniors,invalids,

childrenandsinglemothersbeforeallelse.

Thegovernmentneedstostopsellinglandalongcreeks,rivers,etc,sopeoplearenotbuildingthere,

theyalsoneedtoputsomethinginplacetonotallowanyfuturebuildingalongcreeks,riversetc.

Ensurethatthere'sa'notification'onthepropertyregistrationwhenthehomeinafloodplainso

propertyownersknowwhattheyarebuying.Undernocircumstancesshouldthegovernmentgetinto

floodinsurance.Therearecompanieswithactuariesthatcandothat.Onlythoseinpostalcodeswith

risksshouldhavemandatorycoveragerequired.

Whereisthe$16billionoftheSustainabilityFund?Thatshouldbeusedandonlythat.Answersneedto

begivenonthis.

Ithinktherhetorichascastthedie-therewillhavetobepayments.Theyshouldonlygotothosewho

aremeanstestedandtoafixedamount.Anyonewhorebuildswithinthe200-yearfloodlevelmustsign

awaiversayingtheywillnevergetanythingagainandthewaivermustbeonthepropertyregistration

sothatanyonesubsequentlybuyingthepropertyisawareandmustalsosignthewaiverinorderforthe

transfertobemade.Anynewdevelopmentwithina200-yearfloodplainwithintheprovincemustbe

leviedafeeequalto1/3ofthevalueoftheconstructiontobepaidintoafloodinsuranceaccount.


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Helpthefolksaffectedtogetmortgagesfornewhomes,loanstogetrestarted,andthingsofthat

nature.Therearemanypeoplethatlosestuffinsituationsotherthanfloodsthatdonotgetfinancial

helpfromtheGovernment.It'snicetobuildontheedgeofthelakeoroverlookingarivervalleybutjust

becauseweareheregeologyisnotgoingtostop.LikewhenthehousessliddownthehillinEdmonton

andweareexpectedtopickupthetabforsomeonesniceview.

Allhomesbuiltonthefloodplainsshouldnotbecovered;thereisnoreasontobuildonanyfloodplains

inAlberta.

AlthoughIfeelbadforthoseaffectedbythefloodsifwekeepcoveringsuchthingsthereisnoincentive

forpeopletostopbuildingintheseareas.

Iwouldhelpthepeoplewhowereinsuredbutthattheinsurancewouldn'tcoverthecostsofsewer

backupduetooverlandflooding.$1billiondollarsforfloodvictimsistoomuchmoneytogiveaway

whenwearelosingteachersandotherservicesarebeingcut.Inmyhouse,wedonatemoneywhenwe

haveextramoneynowhenwearegoingfurtherintodebt.

Personswithhomesorbusinessesinoldplainsmustacceptthattheymaybesubjecttoaflood.Itislike

earthquakeinsuranceorhurricaneinsurancepoliciesofsuchgovernments.Asataxpayer,whyshouldI

havetopaytorebuildamilliondollarhome!Instituteameanstestontherebuildoffloodedhomes.

Californiadoesthatwithearthquakedamages.Idonotsupportatemporarytaxastheytendtoremain

inplace.Thegovernmenthastotakeastandofmoderaterelieftothosewhohavethemeanstorebuild

orrelocate.Sorry,butthetaxpayerscannotpayalltherebuildcosts.

Makethecitieshavetopayforaportionoftheirownrebuild.Mytaxdollarsshouldnotgotofixa

probleminaknownfloodplainwhenIdonotliveonone.

Provideprovincialassistancewithamaximumlimittoallthoseaffected;inthefuture,peoplewho

continuetoliveinorpurchasehomesinhigh-riskareas(byriversorinfloodplains)shouldnotbegiven

governmentassistance.Whyshouldallthecitizenspayfortheirfoolishness?Mostofthosehomeswere

valuedatorover$1million;theyarenotworththatnow.

Ibelievemajorstepsneedtobetakeninseveralarea'ssuchas;relocationoutoffloodzoneswherepossible,introductionofnewprivatefloodinsurance,(tryingasmuchaspossibletokeepthe

governmentoutofit),andnewlongtermcivilengineeringflooddiversionstepsneedtobetakenin

ordertolimitdamagethenexttimearound.

Letsseeadetailedbudgetofwherethismoneyiscomingfrom,whatisbeingcut,andwherewillthe

fundsbespent.Governmentshouldalsogetbacktoarainydayfund,andquitsendingourrevenues

downeast.

Forbidpeopleand/orbusinessesbuildingonfloodplainsandensurethepolicyisfollowed.

Municipalitiesmustbemadeaccountablewhenissuingbuildingpermits,Ifeeltheyneedtohelppayfor

thedamagecausedbytheirlackofpoliciesregardingbuildingonknownfloodplains.

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