Hypocritical Outrage

Surprise! Not everybody supports Mayor Nenshi. His Worship is either naive or delusional to think that he has 100% approval. In light of a secretly taped presentation to a private meeting of developers Cal Wenzel of Shane Homes had the audacity to express his opinion and dislike of some current elected officials. How dare he, in a democratic city be able to say that he does not approve of the way that business is conducted at City Hall?

Mr. Wenzel , in the tape is seen and heard saying that he and other developers made donations amounting  to $1.1 million to the Manning Centre for Democracy. This money is apparently is being used to educate prospective candidates in the next municipal election. From the known facts I do not believe that such contributions contravene any municipal electoral laws. There is no difference to donations made to the Pembina Institute, Tides, or the Fraser Institute or any other organization which supports political or activist causes.

So far as we know there is no such thing as a slate for the next municipal election. What we know is that the Mayor and other members of Council belong to Civic Camp, a community activist group. If the developers group broke any laws, shouldn’t we also investigate the involvement of Civic Camp, the Sierra Club and other leftist organizations who supplied volunteers to the Mayor’s, and other Aldermanic campaigns? It is a myth to believe that there is no party politics at city hall. If not we should at least recognize that there exist some form of coalition.

While there have been extensive coverage of the ‘secret tape’, the media has never covered the involvement of any other ‘leftist’ groups in the City. Would the media consider secret tapes of some Aldermen meetings?

While we can sympathize with a media industry in constant search for the next controversial issue, there is one point missing in all the reports. This tape is very reminiscent of a “Mitt Romney- 47% moment’. However the statement made in both these recordings may have been in poor taste or ill timed, but they were both truthful in fact and content. 

There has not been any outrage of the covert recording, by some body that Mr. Wenzel obviously trusted, but that is typical of a leftist reaction. Let us remember that when the Mayor had his fundraiser behind closed doors there was no ‘right wing’ nut making any recording. It seems that taping other people’s conversation is more common on the left than on the right.

If there were any laws broken, it deserves the full attention of the Minister of Municipal Affairs; otherwise it is purely a political issue.  Ironically it is rumoured that the Labour Unions want an investigation, this coming from a group that constantly is involved in electoral campaigns either covertly or openly by funding certain candidates. While the whole saga makes for good copy it may just be another hypocritical outrage by a Mayor who has failed to be transparent as he promised.

Marcel Latouche

Chronic disease, bad medicine

In my last blog about the Alberta budget, I mentioned that both Health and Education services should be restructured. Events of the past week have made it more imperative for the government to do so. There is why:

Although Albertans are reasonably pleased with their doctors, they feel that access to services remain a major problem. According to a Health Quality Council of Alberta survey showed that the medical system and little coordination among health care providers are still a problem.

The continued , dispute between the Minister Fred Horne and the Alberta Medical Association shows that a complete restructuring of the health services need to be undertaken, There are several issues to be considered and a focus on doctors’  salaries is not the starting point.

 In Alberta we must understand that doctors are quasi contractors, who get a fee from the province for their services. As contractors, doctors must maintain their offices, pay staff and overheads. While the size and amenities of these offices may depend on the doctors’ choice, the costs are still theirs to pay.

The current dispute resides in the fact that the government in its proposal has frozen the total budget for the doctors’ compensation at $3.4 billion for this year. In addition the Minister has introduced another wrinkle as he requested another $275 million in reductions to pay for 300 new doctors.

With a shortage of doctors and a mediocre service delivery Albertans are faced with more waits for treatment. One aspect of this continued dispute, if not settled amicably and to the satisfaction of both sides, is that doctors may start to leave the province for greener pastures. Depending on how you look at it, Obamacare will have an impact on the supply of doctors in Canada. Under scenario one, if the new law is implemented the United States will need more doctors. If Alberta becomes too onerous to practice, our physicians may decide to leave and thus cause more problems down the road. The second scenario is that Obamacare causes American doctors to close their practice. As a result, Canada may become their choice of destination. This may be a good thing for our system. However if Alberta is seen as a place where it is difficult for doctors to operate, we may miss on an opportunity to attract doctors.

Going after doctors,  in my opinion is not the right way to balance the health care budget. There are other places such as administration, change in the delivery system, and union contracts that could be look at before we alienate doctors. However, how we do this may be part of a larger discussion in another blog.

As a cross-over, Mount Royal University has decided to close its program for the accreditation of foreign nurses. Once again it seems that the education system does not have its priorities right. We continue to educate some people in subjects that may not be required by the market place and yet we cut programs that may provide solutions to an increasing labour shortage in certain industries, The above example , is  but one of the reasons why the Institute opposed the establishment of Mount Royal College into a University.

Then we have a farce in the making. The Minister of Advanced Education has put forward a proposal for teachers’ wages, but the behavior of some school boards is so bizarre that it should make taxpayers cringe. While some school boards have accepted the proposal, others have not. At the same time The Calgary School Board has allocated over $1 million for pay raise for non-unionized administrative officials, while thousands of teachers are being asked to take a salary freeze.

This is the type of decision that shows a complete lack of leadership and causes animosity during contract negotiations. These exempt officials make six figure salaries, and the timing of the decision is absolutely baffling, given the economic times.

Education is supposed to be about children. The costs are rising but the allocation of budgets is being mismanaged. The majority of funding should go to the classroom, not necessarily to teachers, in the form of class room hour’s re-allocation or administrative staff. Instead we should focus on delivery in the classroom and new schools. The whole system needs to be looked at. Why not change the size of classes, pay teachers according to class size, and restructure the delivery system to make school more year round and introduce vouchers for education.

As for the costs of education we need a complete revamp of the funding mechanism. In the first place we must change the way we collect taxes for education. Property taxes have no correlation with education and the means of collection is not only archaic and penalizes many seniors, because of the market value assessment. Many fixed income seniors may pay a higher property tax because of the value of their property, but the increase is not a realized but a paper gain, while at the same time they may no longer have children in the education system..

Advanced Education Minister Thomas Lukaszuk, must be praised for having the courage to look at changing the education structure in Alberta. There are too much duplication while the needs of industries and workforce are not being met. Furthermore too much of the funding allocation goes towards administration rather than education.

The current situation within these two services demand that Albertans and in effect the government of Alberta seriously consider changing how we deliver these services and more specifically how we fund them.

Marcel Latouche

Alberta Budget:The good, the bad and the ugly

The 2013 budget has many surprises for Albertans; however they are not all good ones.

The Good:

This budget has no increase in taxes, and a promise of a balance budget next year. A cut in the price of generic drugs and the introduction of means testing for supplementary health benefits is a step in the right direction and it will save $270 million a year. While a savings plan is introduced, for the Contingency Account and the Heritage Fund, this budget also proposes to borrow for infrastructure to the tune of $4.3 million. The later policy is cautiously supported by IPSA, because we believe that long term assets should be financed by long term debt. However we believe that the government policy may go south if interest rates go up. Education property taxes are  reduced 1.8%, but that will not be seen by taxpayers as greedy mayors will quickly appropriate it. More importantly we must have a clear definition of ‘infrastructure’ to be included in the borrowing policy. We do not want to see borrowing to cover a professional sport arena for example.

The Bad:

The new three pronged format of the budget makes it very difficult to compare with previous years and the separation into, capital, operating and savings makes it difficult for even seasoned accountants to get to a bottom line deficit. This is a bit of slight of hands. To date the deficit ranges from $2- 6 Billion depending on your point of view.

Senior Property tax Assistance program will be scrapped in 2014. Farmers will be hurt and cuts to certain programs have not been well thought of.

The Ugly:

No increase in spending beyond last year’s $36.4 billion, but there are no cuts above the previously announced 480 managerial jobs. No restructuring of service delivery or privatization. This means that labour cost will continue to grow. The problem is that Alberta will continue under the same model without having the leadership required to reform the delivery of health and education services. The Senior Property tax Assistance program will be scrapped in 2014. It is possible that the debt level may rise to $16 billion within the next 3 years.

In our opinion this budget is a disappointment, because the government had the opportunity to make radical changes but has not done so. As the economy picks up it would have been the appropriate time to make huge cuts in spending, including layoffs. Should the price of crude remain the same Alberta may well continue on its path of yearly deficits: that would be a shame.

Marcel Latouche

Feeding at the trough

Recently across the country we have been told that senators, elected politicians, members of public sector organizations have been using taxpayers’ money as their private piggy bank.

 Some members of the Senate are under investigation for abusing the housing allowance to the tune of thousands of dollars. Senators Mike Duffy, Patrick Brazeau, and Pamela Wallin, among possibly other Senators, have racked up thousands of dollars in housing allowance while living in Ottawa and claiming that their main place of residence is in the Province they represent.. Under the rules members of the Senate can claim an allowance for transportation and housing expenses for a residence in Ottawa when they are serving the public. However under audit scrutiny these senators have seemingly made large claims for personal expenses, including transportation, food and even travel expenses for family and staff members.

Not to be outdone by members of the upper house, we had former Minister Bev Oda who racked up expenses including luxury hotel rooms as well as the fame $16 glasses of orange juice. Defence Minister Peter MacKay apparently used army helicopters for fishing trips.

In Alberta we have Minister of Tourism Christine Cusanelli claimed expenses for travel to the Olympics for herself and members of her family, albeit she has now reimbursed these costs to the province. The audit in expenses for members of the Alberta Health Services has uncovered millions of dollars for expenses which a reasonable person who not have thought to be part of the expenses associated with the duties of these officials. The claims included expenses for automobile, food and expensive wine.

Furthermore we have the unscrutinized expenses of First Nations Chiefs, who get the funds from the taxpayers. Chief Roger Redman of Standing Buffalo First Nation makes more money than the Prime Minister. How can we forget the well documented ‘hunger strike’ of Chief Spence of the Attawapiskat while her partner and herself were paid thousands of dollars from the public purse.

To top it all, we have the Senate investigating its own members and now a proposed investigation of First Nations’ expenses. What a joke? When are Canadians going to get a full transparent report on these expenses which seem to continuously mount, even during hard economic times? Accountability is clearly missing at all levels of our government institutions. No transparency results in any accountability. We obviously need an independent review of public sector officials’ expenses

Marcel Latouche

Alberta Economic Summit

As a participant at the Summit, my first impression was  the diversity of the attendees, ranging from Union leaders, Academics, politicians and citizens on the right and the left, We inevitably had  Greenpeace  staging a protest as a diversion.

While the gathering made for very interesting discussions and ideas, I felt that the summit was held too late to have any impact on the March 7^th budget. Therefore we shall have to wait a year before the government  implements any of the ideas put forward.

My observations will follow the Agenda which consisted of four discussion panels:

1.      What is the problem?

This discussion centred mostly on the revenue problem caused by the lower price of bitumen. The panel all agreed that the price differential was hurting the revenue. It was explained that we needed to find other markets for Alberta’s oil and that a solution to getting the oil to different markets would not happen immediately, but that it may take a minimum of 5years  before new pipelines and other means of transportation are put into effect. My conclusion is that this issue will not be resolved in the short term and that unless we see a huge jump in the price of oil, the revenue problem will be with us for some time.

2.      What services do Albertans need?

This panel had a diverse group, which included a union representative from Health, and a non-profit sector representative. The discussion was mainly in support of the status quo. That we need to spend to provide Albertans services. Of course cuts were not part of the discussion but that the government needed to continue to support the ever increasing costs of providing services. As a long-time proponent of the provision of public services through alternative means; I put forward that we should instead be discussing, not what Albertans needs were but rather that we should be asking whether Albertans care who provides the services? Public or Private? The panel had some responses but danced around the issue of private delivery with no real commitment either way.

3.      Perfecting Alberta’s revenue mix.

A panel made up of Dr. Mintz of the School of Public Policy,   was perhaps the most animated of all the day’s discussion groups. With Dr. Mintz supporting a revenue mix including a sales tax and Derek Fildebrandt of the CTF opposing it without a mandate, made for great debate. Albertan’s have for very long opposed a consumption tax of any kind, at the Institute we have always supported a reform of the tax mix, including a consumption tax with caveats. Taxpayers are very skeptical of politicians when new taxes are implemented.. The real issue is what should we do with the new revenue? Do we invest in the Heritage Fund or do we just use it for continued spending?

For those who believe we have a reveue problem a sales tax may make sense, but it may also be political suicide for any party who initiates it. The result may be that they would be voted out of office, and yet the new government would very likely not rescind the tax as they benefit from the increased revenue. The solution in IPSA”s view is tor educate the public on the merits and use of any new sales tax, combine with a change in the taxable income level which could be increased to mitigate the burden of a new tax for lower income families.

4.      Needs versus wants – setting the proper framework for spending.

With U of C’s Dr. Tom Flannagan and Mr. Gil McGowan president of the Alberta Federation of Labour on this panel, the debate got quite interesting. Dr. Flannagan proposing Ralph Klein across the board cuts while Mr.McGowan proposing continued spending to provide services, albeit promoting the benefits of a public sector union> However, the panel still did not address the question of excessive spending by the government. Participants who made comments ignored the real question of deficit financing by the government.

My comment to the panel was: “Alberta has a spending problem, it would be better to make cuts when the economy starts growing instead of  during a recession, when people cannot find jobs. So if we do not make cuts now, when should we do it?”

Unfortunately I received the usual response : that we cannot and need not make cuts because Albertans want services. The Chamber of Commerce representative said that the time was not right because the economy was still sluggish. With the exception of Dr. Flannagan, who wants cuts now, it left me  me wondering whether any significant cuts will be done under the so- called ‘results base budget’ At IPSA we advocate ‘zero-base budgeting’ which would identify areas of inefficiency immediately and then implement ‘ performance -based budgeting’ in following years.

On the financial status of Alberta, I am pessimistic in the short term, and yet optimistic in the long term. In my view, too much time was spent on new taxes and not enough on how to make necessary cuts or provide services by alternative models. Despite the fact that the Summit did not provide immediate solutions I believe that it was a worthwhile exercise. I also believe in the resilience of Albertans to push their politicians to make the right choice. If not there will be political cost to be paid at the next election.

Marcel Latouche