Thursday, 13 December 2012

Taxpayer funded Unions

As a long-time advocate of fiscal restraint in the public sector, it is very comforting to see the sobering report by Kevin Page the Parliamentary Budget Officer. His latest report states that the federal public sector compensation is approximately $114.000 per employee. This figure which comprises wages and benefits outpaces inflation and of course the average compensation in the private sector.

What we must remember is that the reported figure is for federal employees. We must also look at compensation for provincial and local government employees to see how much of the taxpayers money is spent on public sector employees; given that in some cases the wages, salaries and benefits of public sector employees account for over 60% of operating costs.

In the past years there has been a movement towards the right-to-work (RTW) in the United States. Last fall Wisconsin saw a very acrimonious battle between Unions and the State Government. A recall of the Governor by Unions was soundly defeated at the ballot box.
On December 11, 2012 Michigan became the 24th State to pass a right-to-work legislation. What is significant is that Michigan is the bastion of the union movement, the birth place of the Auto Workers Union, one of the most powerful unions, which also has a foothold in Canada.

Statistics show that unemployment is lower in most of the states that have adopted RTW policy. Union membership is dwindling in the United States where the huge settlements made through collective agreements in the public sector are the main cause of bankruptcies at the local and state levels. Governments can no longer sustain the costs of promised pensions in a changing economy.

In Canada, The Rand Formula (1946) which makes trade union dues mandatory regardless of the worker’s union status has legal force in certain province. While unions have contributed to the wellbeing of workers in the past, in the 21st century their role has changed and the results of collective bargaining, especially in the public sector has clearly become a burden on the taxpayer.

In addition unions in many cases have not represented their membership very well. For example the Alberta Teachers Association did not support Lyndon Dorval in the ‘no zero’ policy. Unions oppose immigration of foreign workers in an environment of high levels of vacancies and change in  demography . They oppose any privatization of public sector services, and always maintain that any collective bargaining is ‘not about money’ and yet refuse to open their books.

Despite the fact that Brent Rathgeber Conservative MP opposes a bill that will force unions to publicly disclose how they spend the dues collected from members, it is important for this bill to pass and this is why: Unions derived the majority of their revenues from dues paid by their members. Under the Rand Formula workers are forced to pay union dues deducted from their wages. Once collected there are very few limitations as to how this money is spent by the unions. In many cases they fund political parties or agendas. In the public sector all wages are paid from taxes collected from Canadians, it therefore seems that the tax payer is the main provider of funds to Unions. Should we not have more disclosure on how our money is being spent?

Canada should follow the United States in the sea change in laws governing unions. At the very least we should amend the Rand Formula to give workers the right to choose where their dues are being spent, or as in some cases designate where the money collected should go ( e.g. to charities of their choice). The right-to- work, without joining a union should be encased into the Canadian Charter; alternatively those who want to join a union can do so freely.

Unions have a role to play in the private sector, but no longer in the public sector, where as a result of their size have become too powerful and less conciliatory. The cost of their existence has become too expensive and they have become a deterrent to change required to make the public sector more efficient. It is time for Canadian taxpayers to demand that their money is better spent on services and not Unions.

Marcel Latouche

Tuesday, 11 December 2012

The Wireless industry- an unfortunate oligopoly

Canadians are divided over the regulations to allow foreign owned companies to buy Canadian companies in the energy industry. However there is no outraged about regulations and operations of Canadian owned companies in the wireless and communication industry.

 The Canadian Radio-television and Telecommunications Commission ( CRTC ) seems to be blind to the way that companies in the wireless and cable industry operate. Increasingly politicians and consumers are getting restless about the contract terms and roaming fees. As for cable TV, the CRTC refused to allow the acquisition of Astral Media by BCE Inc., but will still consider the takeover if the bid is amended. If allowed this takeover will further shrink the number of companies. This $19.1 billion industry is an oligopoly tolerated by the government and the CRTC.

In the wireless industry, most if not all contracts demand that a consumer signs a three year contract. In the meantime as technology changes rapidly the consumer is boxed in and continuously pays more for the services. ‘Canadians look at consumers and services in other countries and are getting tired and frustrated with bigger bills, poorer service and limited choices. Data produced by the Organization for Economic Co-operation and Development shows that Canadians still pay higher prices than subscribers in the United States and Europe, While it may be a strategic move in his leadership campaign for the Liberal party, Marc Garneau, a former astronaut, has taken a stance regarding the wireless industry dominance, he said: , “I am doing what I think is important for Canada, important for the economy,” which he said was the “No. 1 priority” of his campaign
While The Hon. Marc Garneau advocates a more competitive industry by allowing multinationals to enter the Canadian market, it is unfortunate that a takeover by a foreign giant company is unlikely at this stage. The existing Canadian operators all own television distribution businesses. They are not only licensed by the CRTC but are also protected because of restrictions by foreign-investment laws under the Broadcasting Act.

The three year term contract is not the only complaints as almost 90 per cent of consumers want their wireless carriers to halt their data use abroad when they’ve spent a maximum of $50 on international data roaming fees. A recent survey found about 90 per cent of consumers had received a bill that was much higher than expected for international data roaming. , The Public Interest Advocacy Centre said that Canadians face cellphone bill shock while using their phones outside of Canada.

As for TV, Canadians are given very little choice. Often the same companies which provide them with their TV are also their internet and cellphone providers. The bundling of channels is full of programs which are duplicated and with several repeats during the day. Consumers are forced to buy certain channels as part of a bundle, yet these channels must carry a level of Canadian content. For example if you get BBC Canada, you now get a plethora of Canadian programs such as ‘Holmes this or that’ which has nothing to do with the BBC.  Mr. Holmes the construction guru already appears on other channels which are already offered through other bundles.  

While most American channels are offered as part of the mainstream, it is ironic that news channels are offered under different rules. For example CNN is widely accessible, yet Fox News must be bought as an additional channel not readily accessible by the masses. Therefore Canadian perception of U.S politics may be indirectly shaped, and influenced.

 The CRTC has a number of issues to look at in the new year; starting with the opening of the communication industry to foreign investors, followed by a revision of channel bundling by providers and the percentage of required Canadian content. They could include the limitation of long term contract and how customers are notified of international roaming rates in its new wireless code of conduct, .

The regulation of the industry is not and should not be one drawn on political ideology.   Rather the CRTC should look at how it can change this oligopoly into a more competitive industry to better serve the Canadian consumer.
Marcel Latouche