The little trains that can

Different people sometimes see the same thing differently.

Consider the coal trains in British Columbia that trundle south from Elk Valley, in the southeast, to Roberts Bank, near Vancouver. When the “heavy-metal” set look at these coal trains, they see powerful engines, massive steel cars and energy-rich coal. The “sensitive” set see diesel fumes, noisy cars and dirty old coal.

However, when I look at these trains I see bypass operations, maternity beds, emergency wards, the services of doctors, post-secondary education and social services.

I also see exports, because governments don’t pay for health care, education or social services; nor do taxpayers. Exports pay for them. Provincial economies are like sieves: Money from exports flows in at the top, circulates in the economy for a while and then drains out at the bottom to pay for imports.

In B.C., the outflow of money to buy imports is greater than the inflow of money from exports. In 1998, the province imported $10.1 billion more than it exported. Although, in the short run, such deficits merely erode the assets of the economy, in the long run, they reduce our ability to import. As long as we want to import things like Aspirin, Beta Blocker drugs, organic herbal teas and Birkenstock sandals, we must export. As long as we want to have health care, we have to have money to pay doctors, nurses and lab technicians, which also means we have to export.

Each car of coal brings $4,000 into the B.C. economy, with a whole train of cars bringing in $440,000.

Right off the top, of the $4,000 received for each car of coal, $150 goes to taxes, for a total of $16,500 per train. There are additional direct tax payments for fuel tax, and federal and provincial taxes on equipment and supplies. The after-tax revenue goes to wages, equipment and supplies; whatever is left over (if anything) is profit.

Each of these expenditures is, in turn, taxed. And so the money goes around, taxed and taxed again until ultimately it flows out of the provincial economy to purchase imports.

What do these exports buy? The basic no-frills bypass operation in B.C. costs approximately 30,000. That means that the direct taxes on two coal trains pays for one bypass operation, and the direct taxes on the 820 trains per year pay for 450 such operations.

Per-capita provincial government spending on health care in B.C averages $1,834 per year. Each coal train pays, in direct taxes, enough money to pay for the annual health-care bill for nine citizens of the province and brings in to the provincial economy an amount equivalent to the annual health care for 240 people. Annual direct taxes on all coal trains pays for the health care of 7,360 people.

The $4.5 billion that metal mining, coal mining, and smelting and refining brought into B.C. in 1998 was the equivalent of total provincial government spending on hospital care ($3.2 billion) and preventive care ($1.5 billion). And it exceeded the $4.2 billion spent on elementary and secondary education.

The direct and indirect revenue generated from mining, forestry, tourism, high technology, and the other activities that bring money into the province is our only source of money to pay for health care, education, social services, wages and salaries, and imports.

So the next time you see a coal train heading for Roberts Bank, give the crew a big wave. Think of them as your health-care providers.

— David Baxter is the executive director of the Urban Futures Institute, in Vancouver B.C. This article was reprinted with the permission of Business in Vancouver.