Gregory Thomas2013-05-26T03:39:03-04:00Gregory Thomashttp://www.huffingtonpost.ca/author/index.php?author=gregory-thomasCopyright 2008, HuffingtonPost.com, Inc.HuffingtonPost Blogger Feed for Gregory ThomasGood old fashioned elbow grease.It's Time to Reel in Canada's Government-Owned Companiestag:www.huffingtonpost.com,2013:/theblog//3.32089572013-05-03T17:28:14-04:002013-05-03T17:28:23-04:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/new legislation that will give it tighter control over negotiations with unions at crown corporations, such as Canada Post, Via Rail and the CBC.
The big-spending bureaucrats have begun to grow accustomed to so-called "interference" from the elected Prime Minister and his caucus. But the high-priced executives who manage government-owned companies have enjoyed, until now, special status: They are paid like business people, with none of the risk. They can provide unpopular products, deliver mediocre customer service, and lose dollars by the billions. But the taxpayer is always there, at the end of the day, to stroke another cheque, cover the losses, and make everything better.
The same is true of unionized employees at government-owned companies. They enjoy higher hourly pay than the rest of us. They get sick more often -- or at least they take more paid sick days. They retire earlier, on average, than the rest of us do. The overwhelming majority of them enjoy guaranteed monthly pension benefits, indexed to rise with the cost of living, with additional benefits for their surviving spouse when they pass away. Working for government or a government-owned company is a privileged status that extends into the afterlife.
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So Ottawa's officialdom considered it rude for Harper and his ministers to use budget legislation to elbow their way into contract negotiations between unions and 47 government-owned companies.
Simply put, provisions in Bill C-60, the new budget legislation, grant Harper and his cabinet the power to tell negotiators at these companies how much they can offer unions in wages, benefits and working conditions. The new law even goes so far as to provide a seat at the bargaining table to officials of Treasury Board, the government department responsible for controlling spending.
These signs -- that the Harper government is sprouting a spine ahead of next year's big round of contract negotiations -- are meeting stiff resistance.
The Globe and Mail reported that "union leaders, academics, and opposition parties reacted strongly" to the budget legislation (after all, who else's opinion matters?), quoting George Smith, a unionized university professor who previously worked at the CBC, who called it "reprehensible."
"There's been no discussion or debate about this and there's no sense that this is what the Canadian public wants," huffed professor Smith.
Presumably, Canadians want to pay progressively higher taxes to subsidize money-losing government-owned companies that pay their employees to work fewer days than employees in similar companies not owned by the government.
While the rest of us were attempting to dodge becoming one of the 417,000 private-sector job losses during the 2008-2009 financial meltdown, the federal government was actually adding to its payroll and boosting wages and benefits at the same time. Payroll costs grew at a compounded annual rate of 7.1 per cent between 2006 and 2011, from $29 billion to $42.3 billion.
According to the Parliamentary Budget Officer (PBO), the average cost of a federal government employee jumped from $86,000 when the Harper government took office in 2006 to $111,379 in 2011.
The PBO projects the government's payroll expenses to jump $3 billion over the next two years to a staggering average of $129,800 per employee.
Highly skilled union negotiators have been playing the federal government like a sucker at a high-stakes poker game, using rich contract settlements at government-owned companies as examples for the next round of demands from the government itself. It's no wonder they prefer the old way of doing business. Harper's surgical initiative -- to insert some spine into government negotiating teams -- should improve the odds for taxpayers.]]>The Government's Costly Hot Potatotag:www.huffingtonpost.com,2013:/theblog//3.31487542013-04-25T17:07:14-04:002013-04-25T17:07:21-04:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/
Purchased by the feds for $208 million in 2010 from the bankrupt Canadian tech giant, the mammoth 370-acre complex could house an army. Covering 2.35 million square feet in 11 interconnected buildings, it was once the largest industrial research facility in the country, housing 15,000 Nortel staff.
An army, it seemed, was exactly what the Harper government had in mind for the massive space. Officials even scheduled an announcement in October of 2010: the Department of National Defence (DND) would take over the site, emptying a million square feet of office space in downtown Ottawa, and slashing its roster of locations in the nation's capital from 42 to just seven.
The site is turning into a costly hot potato for the government. Three years ago, military planners shocked analysts with their initial $623 million estimate for fixing the place up. Fast-forward three
years, and the latest estimated price tag is said to have jumped over 40 per cent, to $880 million.
If you're trying to figure out why anybody would spend $880 million to renovate a $208 million, nearly-new, state-of-the-art high technology complex, you're not alone.
National Defence is renowned for its cosy relationships between military brass and retired buddies, who supplement their pension income working as lobbyists, suppliers and contractors. In a 2011 report, retired Major General Andrew Leslie blew the whistle on the incestuous goings-on at DND headquarters. Leslie called for a 30 per cent reduction in the military's $2.7 billion spending on consultants.
Almost none of General Leslie's recommendations have been acknowledged, much less acted upon. So a green light to move DND into the Nortel complex could set off a feeding frenzy amongst
well-connected former brass who populate the executive suites of DND construction contractors.
Last year, Harper aggressively slammed the brakes on military spending, in a letter that was leaked to the media, he chastised Defence Minister Peter Mackay for not doing enough to reign in the generals.
Then in October, Harper used the installation ceremony for General Tom Lawson, the new Chief of Defence Staff to send a message that he wants the military to have "more teeth and less tail," warning of "very real budget constraints."
Between 2004 and 2010, DND's headquarters payroll bloated by 38 per cent, with the addition of 3,385 civilian employees, 756 regular-force soldiers, and 845 reserve soldiers -- at the same time that the Royal Canadian Navy was shedding 1,119 sailors.
This year, the government is planning to slice $1.8 billion and 1,641 positions from the military payroll. But when General Lawson appeared before the Senate defence committee in March, he denied there was any fat in the defence budget, even at headquarters.
"I would like to think that there was fat in the armed forces," General Lawson told the defence committee. "I do not think there is. I think that where we have invested taxpayers' dollars across the capabilities and capacities, and even in headquarters and contracting, the investment has been well responded to in terms of capabilities."
Maybe General Lawson -- and 110 generals and 350 colonels who report to him -- really expect the Prime Minister -- and Canadians -- to believe there's no fat in the military. Then he should explain why they need seven extra buildings, in addition to 2.35 million square feet of space in the Nortel complex, to house Canada's military headquarters. And they should explain why they need to blow $880 million, or more, on renovating a nearly new building.
]]>Why This Bill Could Be a Game Changertag:www.huffingtonpost.com,2013:/theblog//3.30172012013-04-08T17:30:03-04:002013-04-08T17:30:44-04:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/
The bill does two things; first, it fixes a flaw with the current access to information law that resulted in Canada's Information Commissioner taking the CBC to court over whether her office has the authority to adjudicate on access request appeals.
Twice the courts have ruled in the Commissioner's favour, but they also acknowledge that the law needs to be re-written. Bill C-461 cleans up this legislation. The second and more important thing Bill C-461 does is change the law such that Canadians can file access to information requests to obtain the actual salary and job description of any public servant earning more than $188,000.
Incredibly, senior federal executives in Ottawa can currently earn up to $513,400 in salary (and an additional $169,422 in annual bonuses) and Canadian taxpayers are not entitled to know the amount of the salary or the size of the bonus. We are only entitled to a broad salary range, and we are not entitled even to read an executive's job description.
But powerful forces are manoeuvring behind the scenes to rip the heart -- and the teeth -- out of the bill when it comes up for review by a parliamentary committee.
In short, senior bureaucrats, through their powerful networks and government employees unions, are pushing to raise the disclosure limit to the moon: $320,000 or even higher.
In proposing this gold-plated disclosure limit to the House of Commons, Robert Goguen, Parliamentary Secretary to the federal justice minister, said it "better reflects the intention of disclosing the income of the very highest paid individuals."
Perhaps it's somewhat remarkable that this bill passed second reading at all: C-461 is the brainchild of Conservative MP Brent Rathgeber, the Conservative maverick from Edmonton-St. Albert who has spent a good portion of the current Parliament kicking the shins of Conservative cabinet ministers over embarrassing stories like $600,000 of paid overtime for their limo drivers.
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C-461 lost some important backers by daring to even talk about the CBC; Rathgeber trespassed on the hallowed ground of public broadcasting, triggering the knee-jerk opposition of the NDP, and all but a single member of the Liberal caucus.
Thankfully, every Conservative, one Liberal, and even the four Bloc Québécois MPs were able to get past the CBC mention to vote on the real issue: Ottawa's burgeoning federal payroll that has grown to $44-billion, from $29-billion when Stephen Harper took office in 2006.
Government salary disclosure has been mandated by law at the provincial level for many years: Ontario just published its annual Sunshine List -- the salaries of every Ontario government employee earning over $100,000 have been made public since 1996. In Nova Scotia salaries over $100,000 are also made public. In New Brunswick, the bar is set at $60,000. In Manitoba, it's $50,000.
Frankly, by agreeing to the highest salary disclosure benchmark in Canada -- $188,000 -- Rathgeber may have corralled enough votes to keep his bill alive, but he's set the bar already too high. John Williamson, MP for New Brunswick Southwest, suggested during second reading debate that the level ought to be lowered to $158,000, but even that is significantly higher than many provincial levels.
Nobody is suggesting that every clerk, secretary or janitor working for the federal government have their salary published on the front page of the daily news, but Bill C-461 should be amended to lower the disclosure level to $100,000.
Bill C-461 is a tremendous opportunity to improve transparency and accountability on one of the largest expenditures of the federal government. But if it is gutted by those who fear accountability, it will not only be an opportunity lost, but a slap in the face of taxpaying Canadians.]]>Will Harper Keep His Promise on Budget Day?tag:www.huffingtonpost.com,2013:/theblog//3.29094092013-03-21T09:45:19-04:002013-05-21T05:12:01-04:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/Stephen Harper won his majority in 2011 -- on his fourth attempt -- because of certain promises he made. He promised to control spending. He promised to balance the federal budget in 2014-15. And he promised to deliver tax relief once the budget was balanced, by extending income splitting to working families and by doubling the amount we can all put in our Tax-Free Savings Accounts each year.
This year's federal budget will show us if he's serious about keeping the promises that got him his majority.
Despite the Prime Minister's strong mandate for fiscal discipline and tax relief, a chorus of naysayers is singing the siren song of spending, more loudly than ever, ahead of this year's budget.
Former senior officials in the federal finance department mock Harper's "ideology." They urge the government to "put aside its sole policy commitment of eliminating the deficit by 2015-16, and introduce a medium-term strategy to support job creation and economic growth."
Since the financial meltdown in 2008, the Harper Conservatives have run five deficits in a row and added $150 billion to the federal debt. They plan to run seven deficits in total and borrow a further $30 billion or so by 2015. But according to these critics, all this borrowing and spending isn't nearly enough.
Canadian taxpayers have good reason to fear these powerful voices. As recently as last November, federal Finance Minister Jim Flaherty appeared to cave in to the pressure. Saying "balanced budgets are not an end in themselves," Flaherty forecast deficits until 2016, before the Prime Minister corrected him two days later.
Canadians know that debt is not the cure for a sluggish economy. If it was, the United States would be booming: since the financial meltdown, the U.S. government has borrowed and spent $7.2 trillion dollars to keep its economy moving -- nearly 50 times as much as Canada has borrowed.
And Ottawa's School of the Public Service, the elite institution responsible for training federal mangers in ethical behaviour, recently suspended two senior managers after they rigged contracts so former colleagues on pension could collect hundreds of thousands of dollars without competing for the work.
In the 2011 election campaign, Stephen Harper promised to cut waste, balance the budget, and leave more money in the hands of working Canadians, to truly grow the economy and create jobs. Here's hoping he delivers on his mandate on budget day.
]]>What Ottawa Isn't Saying About Canada's Deficittag:www.huffingtonpost.com,2012:/theblog//3.22960412012-12-18T00:07:16-05:002013-02-16T05:12:01-05:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/jumped over 30 per cent since 2008, to over $600 billion? Why did the government miss its deficit target by $1.4 billion last year, and what is pushing this year's deficit forecast higher by more than $5 billion to $26 billion?
We got an important answer recently, not from the government, but from the Parliamentary Budget Office (PBO), an independent research team established to give MPs the straight goods on the nation's finances.
Figures released by the PBO show that, contrary to all the talk we've been hearing about cutbacks, Ottawa's payroll is getting out of control. Recent attempts to rein in federal payroll spending amount to the Conservatives bailing out the Titanic with a soup spoon.
The numbers don't lie: when Stephen Harper took office in 2006, there were 336,831 people working for the federal government. Fast forward to March of 2011 -- just before the Prime Minister won his coveted majority -- and Ottawa's full-time payroll had ballooned to 379,760, an increase of 42,929 staffers.
The all-in cost for this high-priced talent -- including wages, benefits, pension contributions, extended medical, dental, disability insurance, and sick leave -- went from $29 billion to $42.3 billion -- a staggering increase of 46 per cent in just five years.
Even more troubling, especially to working Canadians who thought they elected a fiscally conservative government to Ottawa, is the spectacular jump in payroll costs for the average federal employee: from $86,000 in 2006 to $111,379 five years later.
There is hope on the horizon: the government cut the federal payroll by 4,200 positions last year, and Treasury Board president Tony Clement recently reported the elimination of another 10,980, on the way to cutting 19,200 by 2014.
But here's the problem: even if the government succeeds in making the cuts they've committed to, they will still have 12,000 more people on the federal payroll than the day they took office. According to PBO projections, all the built-in inertia in Ottawa's staffing system -- union contracts, job re-classifications, pension increases and the like, will push the average cost of each of these people to $129,800. So Ottawa's payroll costs will rise to $45.3 billion -- $3 billion more than they were last year.
The government's defenders will say that it simply isn't possible for any government, even a conservative government, to grapple with the massive Ottawa bureaucracy and keep a lid on payroll costs. But the Parliamentary Budget Office says otherwise. When Jean Chretien took office in 1993, there were 345,942 full-time federal employees. Five years later, there were 288,484, a reduction of 57,458. And instead of boosting payroll expenses by $13 billion, as the Conservatives have done, Chretien actually cut payroll expenses by $2.3 billion, a savings of 13 per cent.
Sadly, Chretien and his successors failed to sustain the progress he made in his first five years in office. In fact, when the federal payroll dropped last year, it was the first reduction since 1998. Ottawa's payroll costs have grown at an astounding compounded annual rate of 7.1 per cent since the Harper government took office, compared with 3.1 per cent for Canada's business sector.
In recent years, the federal Conservative party has taken steps to legally protect its brand identity, even going to court to prevent other candidates in elections from using the word 'conservative' on their campaign signs.
Unless the Harper government takes serious steps to get its payroll costs under control, taxpayers should really consider a prosecution for false advertising.]]>Keeping Canada Away From the Fiscal Clifftag:www.huffingtonpost.com,2012:/theblog//3.20638832012-11-02T12:17:19-04:002013-01-02T05:12:01-05:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/$26.2 billion recently, the news didn't spark a sell-off in the markets or an emergency debate in parliament. But that doesn't mean Canadians should be complacent about balancing the budget.
When Ben Bernanke, the chairman of the United States Federal Reserve is nervously warning Congress that they face "a massive fiscal cliff of large spending cuts and tax increases" this coming January 1, while Canadians shouldn't confuse what's going on south of the border with Ottawa's dilemma, the need for more cuts in Canada is certainly real.
The Harper government has taken some heat from the opposition for making so-called spending cuts. The truth is that spending has risen every year since the Conservatives took office, rising 30 per cent over the past six years. And Finance Minister Jim Flaherty, in his spring budget, forecast that number to rise to 42 per cent by time the next election rolls around in the spring of 2015.
At $26.2 billion, Canada's deficit last year was a noticeable improvement from $33.9 billion in 2010 and the record shortfall of $55.6 billion in 2009. All told, four consecutive deficits have pushed up our federal debt by $124.5 billion, and Flaherty expects the accumulation of red ink to reach $157.1 billion before the next election.
All that new debt makes it tougher for Ottawa to pay for things that people want. Interest payments on the federal debt reached $31 billion last year, more than the entire combined budgets for unemployment benefits, maternity and parental benefits, the child tax credit, and the universal child care benefit.
Unbelievably, that's with the lowest interest rates in 50 years. What would happen if interest rates went up a percentage point or two? Multiply our federal debt, soon to be $600 billion, by one per cent, and you get $6 billion in additional interest costs. Multiply by two per cent, you get $12 billion. That's more than the entire provincial budget of Saskatchewan.
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To be sure, the Americans have bigger problems: for every dollar the Canadian government spent last year, it collected over 90 cents in tax revenue. For every dollar the U.S. government spent, it brought in just 70 cents, up from 57 cents a year earlier. And while we've added $124.5 billion to our federal debt over the last four years, U.S. federal debt has jumped by $6.1 trillion -- you read that number correctly -- the U.S. government has borrowed 50 times as much money as Canada's government has borrowed over the past four years.
American and European politicians are learning, again, the hard way, that you can't spend your way out of an economic downturn and you can't borrow your way to prosperity.
Here in Canada, the Harper government is trying a bit too gradually to tighten the spending tap, in hopes that a growing economy will bring enough new money into the treasury to balance the books by 2015.
Fortunately, arrows are moving in the right direction.
After plunging $12 billion to $103.9 billion in the wake of the financial meltdown in 2010, Canada's federal income tax revenue reached a new record high of $119.3 billion last year, without any rate hike. Federal income tax revenue from business rose $1.7 billion to $31.7 billion last year, after Flaherty cut rates from 18 to 16.5 per cent, and then again to 15 per cent, proving that lower tax rates can help boost business activity. Not only did businesses pay more income tax, but the government saved $2.2 billion, paying out fewer unemployment insurance benefits as more Canadians found jobs.
As taxpayers, we need to keep our politicians focused controlling costs, keeping taxes affordable, and balancing budgets -- the straight and narrow path that leads us far away from the fiscal cliff.]]>Your Tax Dollars: Investing in Bev Oda's Futuretag:www.huffingtonpost.com,2012:/theblog//3.17294682012-08-01T15:55:40-04:002012-10-01T05:12:03-04:00Gregory Thomashttp://www.huffingtonpost.com/gregory-thomas/her $233,247 salary, her car and driver, and allowances for travel and housing.
Oda's career went up in smoke. Literally. She famously a billed taxpayers for everything from chauffeured limousines, a $16 glass of orange juice and luxurious accommodations at London's Savoy Hotel.
But her days of cashing cheques from taxpayers have a long way to go. Oda started collecting her parliamentary pension on August 1 at the handsome rate the Canadian Taxpayers Federation estimates at $52,183 per year. The pension is indexed to inflation, so it will rise every year with the cost of living. It's guaranteed for life. If anything should happen to the retired parliamentarian, a surviving spouse is entitled to 60 per cent of the money for life.
That's pretty rich, considering that she only served eight years as an MP. Consider how hard somebody would need to work to save up a nest egg like that, operating in the real world, rather than Parliament Hill. In order to collect $52,000 annually for life starting at age 67, indexed to inflation, with a further $31,000 annually to your surviving spouse for the rest of their life, you would need to save over $800,000, assuming you could get the kind of returns the Canada Pension Plan has produced: 6.2 per cent.
To save up $800,000 in eight years, again assuming you didn't invest in anything wild and crazy, and you got the same kind of returns the national pension plan generates, you would need to save about $80,000 every year
In Bev Oda's case, she chipped in $16,327 of her own money to the MP pension plan last year, or seven per cent of her salary, bringing her contribution to roughly $120,000 over her eight years in Parliament.
If most Canadians tried to turn $120,000 in pension contributions into an $800,000 nest egg in just eight years, we could do it, providing our investments earned returns in the range of 50 per cent each and every year. Unfortunately, no reputable investment manager offers those kinds of returns and Bernie Madoff isn't scheduled to get out of jail until 2139.
MPs don't rely on the magic of compounding to generate the kinds of returns that will keep Bev Oda living in style for years to come. They rely on the magic of taxation. Last year, Canada's parliamentarians put $4.5 million into their pension plans, while taxpayers "contributed" $110.7 million.
You see, MPs charge taxpayers "interest" at a hefty rate of 10.4 per cent annually -- set by the politicians themselves -- in addition to "employer pension contributions," bringing the total taxpayer contribution in 2010-11 to $24 for every one dollar paid by MPs into their own pension plan.
The Canadian Taxpayers Federation recently put up billboards in Vancouver, Calgary, Regina, Ottawa, and Halifax. Hundreds of CTF supporters across the country each donated $24 to make the billboards happen, their share of a national campaign to tell Canadians the truth about the MP pension plan.
Tech-savvy texters can text the word "Tax" to 212121 on their mobile device to join the fight against platinum-plated pensions for politicians, or log on to Taxpayer.com.