Sand in the Shorts: Time for the Sun to Set on Federal Transfers

The time has come for the federal government to let the provinces know that transfer payment growth has seen it's day. In bringing down the new(ish) budget today, the main areas of restraint can be found in the gradual elimination of the vote subsidy and the promise to find savings totaling $11 billion over the next four years within Ottawa's $80 billion operating budget. This will allow the deficit to be eliminated by fiscal 2014-15.

That's nice. But it just scratches the surface when it comes to reigning in runaway growth in provincial transfers in order to be prepared for increased healthcare spending as Canada's population ages. As it stands, the next five years will see the national debt stop growing and even shrink, ever so slightly. But if our current fiscal health is to last through the next 50 years, there needs to be much more done.

Right now the provincial governments as a whole are tending to spend like drunken sailors, with Ontario's massive $14 billion deficit merely leading the way. The problem is that even this level is reliant upon massive federal transfers. Partly this is a result of the muddled way of funding programs which has grown in Canada over the last 50 years. It is also partly a result of the system of transfer payments which were initially meant to balance services, but instead now allow Canadians in Ontario, BC and Alberta to subsidize superior levels of service in PEI, New Brunswick, and Nova Scotia.

These transfers, and the confused means of federal funding for provincial responsibilities, represent the single biggest drag on federal spending – and the single biggest excuse used by provincial governments to disguise their fiscal incompetence. The McGuinty government in Ontario gives massive pay raises to government employees, along with a $7 billion gift to Samsung which will supposedly bring all kinds of wind-power equipment manufacturing to Ontario – if the stars, planets, and galaxies align, the Maple Leafs win the Cup, and Ontarians are lucky beyond belief. Then it passes a budget with a projected deficit in the coming year of $11 billion. Why? “The federal government...”

Alberta has been doing the same, ignoring it's own mismanagement of oil revenues, abortive royalty increases in the oil patch, and out of control spending. Instead the blame is laid on Ottawa. The same can be seen in provincial capitals across the country.

The means to fix this system is fairly simple, though. It starts with the Ottawa getting out of funding programs such as health and education which are a provincial responsibility, and transferring the tax points which formerly funded these to the various provincial governments. The transfer payment system should be abandoned and replaced by a new one which covers just the most basic services, with adjustments being made to reflect relative cost of living and differences in costs to the governments of providing equivalent services.

For example, if the cost of hiring a nurse in New Brunswick is only 95% of the cost in Ontario, the transfers should be adjusted to reflect that. Right now it isn't, and as a result, the level of service found in a Charlottetown hospital is far superior to that in a Belleville hospital. A dollar simply goes further in some parts of the country.

The net effect of this would be to make clear to the voter precisely which level of government is wasting their tax dollars in a given area, and thus allow Canadians to vote accordingly. It would also mean the end of Ontario, Saskatchewan, Newfoundland, Alberta and BC subsidizing Quebec's grossly over-subsidized nanny state and general fiscal mismanagement.

And if we fix this system soon, maybe we'll be able to nurse our healthcare system through the next 50 years.

Ontario's Premier Doesn't Get It.

It would seem the McGuinty Liberal government at Queens Park is completely incapable of acting in the best interest of anyone besides public sector unions. Considering this government was ostensibly elected to represent the interests of ALL Ontarians, their willingness to throw around tax money to OPSEU, to the OPP, and now to Ontario's prison guards is appalling.

With Ontario's deficits stuck well into double digit billions, it should be clear to anyone with half a clue that the government has to stop increasing spending, and start reducing it.

Bob Rae realized this about halfway through his single term as Premier, and the result was Rae Days. For all that, though, he was incapable of reducing government spending significantly, and as a result was soundly thrashed in the 1995 provincial election which elected the Progressive Conservatives under Mike Harris. This government kept it's promises, and massively reduced government expenditures during the following years, while simultaneously cutting taxes. The result was a span of strong economic growth in Ontario.

But a departure from the decisive government of the late 1990s by the PCs in the early 2000s led to an increase in government expenditures, and a picture of a government that had lost touch with it's raison d'etre. The result was a Liberal victory in the 2003 election, highlighted by Liberal promises of a balanced budget, no new taxes or tax increases, and labour peace between the government and public sector unions.

What did Ontario get? Labour peace, but only because the Liberals gave away the farm to public sector unions. As a result, even with the Liberals early on breaking their promise not to increase or add taxes with the health care tax, health care in Ontario is a disaster, literally threatening the lives of Ontarians. Other tax increases followed, but Ontario is now a fiscal basket case, a “have not” province with a standard of living underneath the national average for the first time since Confederation.

Consider: are you any better off today than you were in 2003? Do you feel any more confident about the future than you did then? Do you think our healthcare system will be there for your children like it is for you? I doubt most Ontarians will answer any of these in the affirmative.

As we move closer to the fall election, the question Ontarians need to begin considering is this: can Ontario afford another four years under Dalton McGuinty and the Liberals?

Portrait of a madman | Wellington Times

By Rick Conroy - from the Wellington Times

Just how far will he go?

Since Dalton McGuinty stared into a television camera in a leaders’ debate in 2003 and promised he would rid the province of coalfired electricity generation by 2007, there has been no barrier, no regulation, no safeguard strong enough or important enough to slow Dalton McGuinty from his futile obsession with wind and solar powered generation. Never mind that eight years later Ontario is still generating electricity from coal, and despite lavishing developers, conglomerates and others with billions of taxpayer’s dollars—he is no closer to his goal than he was in 2003.

So he has become more desperate. Now he appears willing to throw entire species under the bus for the sake of a piddly and unreliable trickle of electricity that might from time to time be emitted from an array of massive turbines on Crown land on Prince Edward County’s south shore.

A quick recap of the madness that has twisted Ontario’s energy supply so far under Dalton McGuinty’s guidance:

- billions of dollars spent and committed to developers to erect an intermittent power supply that cannot be harnessed by our grid operator or consumers;

- billions more committed to Korea’s Samsung in a deal negotiated in secret and of which Ontarians remain in the dark;

- legislation that removes local government input and authority over wind and solar factories in their jurisdictions;

- the replacement of environmental, archeological, social and economic impact scrutiny applicable to every other power or infrastructure development by a check-thebox process for wind and solar factory developers. Did you consult with the community? Yes? Check. Did you consult with the municipality? Yes? Check. It matters not that any of the folks consulted had critical objections, only that they were consulted;

- Crown land, set aside by our ancestors to preserve natural features and beauty, sacrificed and handed over to developers— whose interest in the land extends not one second past the 20 year life of the guaranteed power purchase contract it holds;

- residents forced from their homes and made ill due to vibration and noise from neighbouring wind turbines; and

- not as well understood are provisions in the Green Energy Act that compel the Ontario Energy Board and grid operators to take intermittent electricity from wind and solar electricity generators. These utilities have no use for electricity they can’t dispatch (turn on or turn off) so, under orders, they take the wind and solar-powered electricity and fork over to other markets or risk putting the system out of balance. Those markets like Michigan and Ohio are happy to take it off our hands—for a hefty fee.We are being held ransom daily in the electricity market by one man’s misguided obsession. In the United Kingdom the government has begun paying intermittent electricity generators to disconnect from the grid for the same reason.

Read more...

Portrait of a madman | Wellington Times

Persichilli: Harper and McGuinty called Quebec’s bluff - thestar.com

By Angelo Persichilli - from the Toronto Star

One of the most important axioms in Canadian politics was that nobody could win a majority government in Ottawa without winning big in Quebec. That axiom has now been erased.

The credit for calling the bluff on this self-serving rule goes to two people — Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty.

This artificial Quebec veto on national majorities dominated politics for decades, branding francophone leaders as the only ones capable of winning majorities for their parties and keeping Canada united.

Prime ministers from Quebec have dominated Canadian politics for almost half a century because of this axiom. Lately this notion was strengthened because of the two back-to-back Conservative minority governments: “Harper will never lead a majority government,” many commentators wrote, “because he can’t win Quebec.”

The demise of this fallacy started to take shape in November 2008, at a time when Harper was still disappointed with the results of the October election, in which Quebec denied him a majority. This was also when McGuinty got the news that the Ontario economy was collapsing, with the manufacturing sector evaporating and the almighty auto industry almost bankrupt.

Provincial Liberals and federal Conservatives were fighting each other — and the federal minister of finance, Jim Flaherty, was accused of undermining Ontario’s economy by encouraging investors to stay away from the province.

But this was a fight mainly between Flaherty and his Ontario counterpart Dwight Duncan; McGuinty and Harper were just treading water at a distance.

A message that Harper, disappointed with Quebec, was ready to open up to Queen’s Park, was delivered to McGuinty on Nov. 7, 2008. The Ontario leader, just back from a trip to China, decided to act on the afternoon of the following Monday, Nov. 10, at the end of a federal-provincial summit in Ottawa. And he did.

After the meeting, when all the premiers were leaving, McGuinty stayed behind and informally approached Harper. He told the Prime Minister that it was time to work together for the sake of Canada and Ontario.

Read more...

Persichilli: Harper and McGuinty called Quebec’s bluff - thestar.com

Ontario gave secret wage hike to public-sector workers, documents allege - The Globe and Mail

By Karen Howlett - from the Globe and Mail

The Ontario government struck a “secret deal” with the province’s largest public-sector union, awarding its members an additional wage increase of 1 per cent for 2012, according to documents revealed Wednesday at a labour board hearing.

The revelation that the 38,000 workers received a quiet wage top-up in a contract spanning a fixed election date is likely to draw criticism from the opposition. The previously undisclosed deal also calls into question other wage settlements with public-sector employees. At least one union says it treated the public version of the OPSEU agreement as a benchmark.

Documents entered at a hearing before the Ontario Labour Relations Board reveal that the government agreed to pay the “adjustment” to 38,000 members of the Ontario Public Service Employees Union, on top of a scheduled wage increase of 2 per cent for 2012.

The documents were presented after Diane Gee, chairwoman of the hearing, rejected the government’s request to permanently seal correspondence outlining the across-the-board adjustment, which was over and above a four-year collective agreement reached between OPSEU and the government in December, 2008.

The government agreed to top up the wages for OPSEU members 15 months before it called for a voluntary wage freeze for teachers, nurses and other public-sector workers who bargain collectively, according to the documents. Public-sector unions and arbitrators have all but ignored that request.

Government lawyers argued that there would be “significant detrimental impact” on labour relations if confidential agreements or undertakings were disclosed.

“Confidential agreements are of paramount significance in labour relations and have proven to be a highly productive means by which to resolve difficult issues,” the government’s written submission says.

Ms. Gee disagreed and asserted that open proceedings are a cornerstone of Canada's justice system. “Sealing evidence heard and considered in a legal proceeding is antithetical to openness and transparency,” she said in her written decision.

The deal for extra pay is spelled out in letters from an official in the Ministry of Government Services to the chief negotiator for OPSEU. In a letter dated Dec. 24, 2008, the ministry official says the government appreciates the union’s approach to labour relations and the atmosphere of “mutual trust” that helps to resolve issues and problems.

“The parties recognize the current economic climate poses significant challenges to government,” the letter says.

In a second, unsigned letter with a hand-written date of Dec. 23, 2008, the ministry official says the 1-per-cent adjustment will not be part of the collective agreement, but that OPSEU can file a grievance if the top-up payment is not implemented.  Read more...

Ontario gave secret wage hike to public-sector workers, documents allege - The Globe and Mail

Sand in the Shorts: Heath Care Is Not a Federal Issue

This column appeared in the April 16th, 2011 Intelligencer


  During this federal election, a lot of the discussion 'on the street' seems to be focusing on issues like education (with Michael Ignatieff proposing his 'education passport' which will mostly help the upper middle class and wealthy) and health care.

  People are frustrated with what they (rightly) see as a dysfunctional health system, hospitals that provide slow and often mediocre care, and increasing concerns that, with the ageing of Canada's population, the whole system may be approaching overload and collapse.

  So they are turning to the government for answers. Unfortunately, it's the wrong level of government.

  According to the Constitution Act, 1867, these areas are under the exclusive jurisdiction of the provinces: education, and health.

  As such, the federal government has no role in these areas except for what is allowed it by the provinces.

  This means two things.

  First, Mr. Ignatieff is meddling in provincial affairs with his 'education passport', which has already drawn some fire from the provinces.

  Granted, most of it has come from the government of Quebec, which would complain if a drowning resident were thrown a federal life preserver instead of a provincial one.

  But there are legitimate reasons for the separation of responsibilities which make such jurisdictional adventurism troublesome.

  These centre on the matter of confusion. If there is no clear distinction of responsibility, then there is the problem of holding the appropriate authorities responsible, and different levels of government could, and likely will, end up stepping on each other, and wasting tax dollars.

  Second, those who are complaining about health care during the election are barking up the wrong jurisdictional tree.

All the federal government does is fork over tax money to the provinces, who are then responsible for how the money is spent.

  The current funding system is based on the Kelowna Accord, signed by the provinces and (then) Prime Minister Paul Martin. Prime Minister Stephen Harper has already said he will maintain funding based on the accord (which gives a six per cent increase every year to the provinces, an impossible to maintain growth rate over even the medium term) even after it expires, making that issue largely irrelevant in the context of the current election.

  Rather, let's lay the blame for the current health care mess where it belongs — with the provincial Liberal (McGuinty) government.

  This is a government which, rather than focusing on front line care, instead created the Local Health Integration Network (LHIN) — a make-work program for expensive bureaucrats, and probably the most egregious contributor (in terms of lack of bang for the buck) to the Sunshine List (government employees making $100,000 or more).

  When a system has become as bloated and inefficient as Ontario's health system has, the idea of adding another level of pure bureaucracy is idiocy. And that is just what the McGuinty government, including our own MPP and provincial minister, Leona Dombrowsky, did.

  So if you want to complain about defence, foreign relations, or the postal system, complain to the federal government.

  But for health care, lay the blame where it properly belongs: Dalton McGuinty and Leona Dombrowsky.

Thoughts (which could become columns) on the first two weeks of the election:

Thoughts (which could become columns) on the first two weeks of the election:

• The coalition issue is one that hasn't completely gone away for the Liberals, and it won't, and it shouldn't. In our parliamentary system, there is nothing legally stopping Michael Ignatieff governing at the head of a formal or ad hoc coalition if the opportunity arises. Why he expects us to take his word when he wouldn't suggest we take any other politician's is beyond me. Especially when he was so equivocal in the months leading up to the election when it came to this matter.
• Iggy says he wants to have a 'fly-off' to decide what Canada's next fighter will be. His platform says the fighters aren't necessarily going to be replaced immediately regardless (shades of Chretien's helicopter cancellation – still waiting for those, twenty years later, thanks to the Liberals). Question is, how can you have a fly-off when there are only 2 fifth-generation fighters in the world, and one of them, the F-22, is not for sale. There is no other contender. As to the numbers being thrown around by the opposition, the numbers from the Department of National Defence are, quite frankly, more credible. The parliamentary budget office priced the planes over 30 years to get it's higher estimate, amongst other matters (the DND numbers are over 20 years – the extra 10 years significantly increase the costs, as these will be the most expensive maintenance-wise – as aircraft get older, the ratio of maintenance hours to operational hours grows), which, along with costing critiques from other sources, leads me to be quite sceptical of the basis for the higher numbers.
• The Green Party has no place in the debates amongst the party leaders. They have no MP’s, and the major raison d'etre of the party seems to be getting Liz May elected. This as she runs in her third different riding in the last three elections. And of course there's her tendency to endorse Liberal party leaders as Prime Minister. When she and her party get serious, and the party ceases to be a one issue noisemaker, we'll talk. It should be said that the Bloc shouldn't be there either – listening to Gilles Duceppe, while occasionally amusing, is a waste of what little space cheapskate networks will devote to the debates in the first place.
• How can Dalton McGuinty, Dwight Duncan, and Leona Dombrowsky look Ontarians in the face and say their government has done a good job. Government spending has exploded, meaning even with increasing revenue in the middle of the last decade Ontario ran massive deficits, and these got worse as the economy tanked in 2008-10. Now we are celebrating a deficit of 'only' $16+ billion dollars, we are a 'have not' province, the 'Sunshine List' is exploding... In terms of fiscal management, the McGuinty government since 2003 has been an unmitigated disaster.
• Saw my first robin this spring. It was frozen solid.
• In a day and age where discrimination is supposed to be illegal, how does Loyalist College get away with having new student housing which is unaccessable for those in wheelchairs? And what about the Picton courthouse? The front door doesn't open wide enough to allow a wheelchair through, and the very heavy door itself has no power assist.
• Toronto Maple Leafs fans are out, after grimly holding on to a slim chance their team might make the playoffs. While there may be some hope for next year, folks, the only good thing about this run is it means the Bruins won't get another top 5 pick courtesy the Phil Kessel trade.
• When I think of the late, great Liz Taylor (who apparently hated being referred to as Liz), I will think of an actress who dominated the scenes she was in. Are there any actresses today who can dominate a screen in that same way?
• Best tv show you've likely never watched: Justified. The boss and I download and watch it. Timothy Oliphant is great as Kentucky-bred US Marshal Raylan Givens. Great supporting cast as well, featuring Nick Searcy as Chief Deputy Art Mullen, and Walton Goggins as Boyd Crowder, who grew up with Raylan, but is not as concerned with obedience to the law, so to speak.