Saturday, October 14, 2006

On balancing agreements

A few months back, I discussed the regulatory harmonization agreement (the TILMA) between Alberta and B.C. based on. It appears that the media reports were less than thorough in assessing the deal, so after running into the actual TILMA text I'll take some time now to point out some of the problems with the deal which didn't appear in the press at the time.

My earlier positive comments were based in large part on the assumption that the deal would result in harmonization to the higher of the respective regulatory standards in Alberta and B.C. However, the deal itself only requires that the provinces "reconcile" their standards, with no mention of which direction that should take. From Article 5:
1. Parties shall mutually recognize or otherwise reconcile their existing standards and regulations that operate to restrict or impair trade, investment or labour mobility...

5. Parties shall cooperate to minimize differences in standards or regulations adopted or maintained to achieve legitimate measures.
In other words, any obligation to harmonize standards at all is based purely on future negotiation between the provinces. There's no clear language suggesting that the provinces are obligated to work toward the higher possible standard; that seems to be purely a side arrangement which can be ignored as the provinces actually decide how to harmonize.

In contrast, the provinces' obligation not to introduce or maintain any "measures" (a term which includes any form of government action) which could possibly affect trade except under the narrow terms of TILMA is far more clearly stated. Article 3 reads as follows:
Each party shall ensure that its measures do not operate to restrict or impair trade between or through the territory of the Parties, or investment or labour mobility between the Parties.
And Article 5 includes a specific commitment not to introduce new regulations or standards:
3. Parties shall not establish new standards or regulations that operate to restrict or impair trade, investment or labour mobility.
The exception to this obligation to pursue free trade above all else comes in Article 6, but only through a painfully restrictive provision:
A Party may adopt or maintain a measure that is inconsistent with...Articles 3, 4 or 5...provided that the Party can demonstrate that:
a) the purpose of the measure is to achieve a legitimate objective;
b) the measure is not more restrictive to trade, investment or labour mobility than is needed to achieve that legitimate objective; and
c) the measure is not a disguised restriction to trade, investment or labour mobility.
On its face, this provision offers a route through which restrictions on trade can be maintained where justifed. But there are a few major problems with the phrasing which look to make the provision at best shortsighted, and at worst potentially useless when it comes to allowing governments to justify what should be reasonable policy choices.

The first problem in Article 6 lies in the definition of "legitimate objective" (p. 33), which is confined to a closed list of matters. In principle, one can argue that the list probably includes most, if not all, matters which the provinces in question currently regulate (or might plan to regulate). But TILMA also ties down future government action. And while future needs could evolve in any direction, the agreement provides no scope for addressing those needs if they can't be lumped into the existing categories of "legitimate objective". Which makes for a striking contrast between the closed list of "legitimate objectives" or listed exceptions, and the absolutely open-ended commitment not to limit trade for any reason other than those presently-anticipated matters.

Sadly, this lack of foresight is far from the biggest problem with Article 6. That instead comes in (b), which essentially suggests that governments will be forced to prove that all regulations are set to precisely the optimal level "needed" to achieve their stated objective, and will be liable if they exceed that level in the slightest.

By way of comparison, consider that the test to uphold a government measure under s. 1 of the Charter of Rights and Freedoms consists of a "rational connection" standard, and a "minimal impairment" test which at least allows for a government actor to choose from a range of reasonable options. In essence, (b) provides that governments face a significantly higher standard of justification in limiting freedom of trade between B.C. and Alberta than in violating their citizens' Charter rights, requiring them to be perfect in their assessment of what measures are justified rather than reasonable. And that seems far too likely to create an incentive for the provinces to avoid doing anything.

As an added bonus, even meeting the first two criteria isn't enough to defend a governmental action due to (c). This provision implies that a reviewing tribunal should look for reasons to declare that even though a legitimate objective exists and is met to the letter by the government's action, the action should instead be considered a disguised attempt to limit trade.

And to top it all off, the article as a whole places the onus on a province to "demonstrate" the application of each part of the test. In the case of (c), this essentially leaves provinces with the obligation to prove a negative in order to maintain or implement any restrictions on trade.

The rest of the agreement contains additional problematic possibilities. For example:
- Article 7.2 may (depending on the article's interpretation) force each province to seek comments from the other before implementing any future trade restrictions;
- Article 8 provides that provinces may delete agreed exemptions unilaterally but may only add new ones by agreement, meaning that a single right-wing government could singlehandedly destroy a province's entitlement to use exemptions which a previous government had fought for (the same applies to "transitional measures" under Article 9); and
- Article 26 provides NAFTA-style ability for individuals or for-profit corporations to seek damages for any government action which violates any provision of TILMA, including those discussed above. (Note as a point of interest that under the definitions of "enterprise" and "person", this same ability doesn't extend to not-for-profit entities.)

In sum, while I stand by my view that it's perfectly possible for a trade agreement to both expand trade possibilities and appropriately protect governments' freedom to act, on a detailed review there's little reason to believe that TILMA is such an agreement. Which means that rather than looking to sign on to TILMA, Saskatchewan would be best off looking to negotiate a more balanced agreement - whether with Alberta and/or B.C., or with other provinces who aren't so determined to tie their own hands for ideological reasons.

On misplaced trust

The Globe and Mail reports on the continued growth of income trusts in Canada, noting that in the longer term the trust form of organization may continue expanding for reasons beyond its tax implications:
Until this week, in fact, when (BCE CEO Michael) Sabia announced the creation of Canada's largest income trust, the company had argued that the telecom business was changing too rapidly for management to adopt such an inflexible business structure.

But the straitjacket, for many, explains much of the appeal of the almighty trust. What started as a way for small companies to cut their tax bills has become something else — a tool for shareholders to reclaim some of the discretion that once belonged almost exclusively to CEOs and directors, and at the same time address one of their deepest concerns: a lack of faith in corporate executives to spend their excess cash wisely...

Indeed, one of the reasons shareholders have gravitated toward trusts is that they function as a kind of a leash on executives bent on sacrificing upfront, predictable profits in their core business in favour of empire-building or diversification. Because trusts pay out the bulk of their cash to unitholders, they are forced, in essence, to ask permission from investors every time they want to raise money for a large acquisition...

The trust market can be a stern taskmaster, and it expects its cash distributions to be made routinely, with no exceptions. If a regular company has a bad quarter, or makes an acquisition that doesn't pay for itself within a prescribed time, it can typically soldier on. For a trust, however, the problems are more transparent, and one bad deal can force management to cut distributions. When that happens, the punishment is usually swift.
Now, it's understandable that shareholders would seek a way to increase their say over the management of businesses generally. But that can easily be done through better corporate governance processes within corporations themselves - and without the wider downsides of a move toward the income-trust format.

After all, Canada already faces a shortage of savings, which is only exacerbated by the Cons' eagerness to encourage yet more consumption through indiscriminate GST cuts. And it's hard to see how matters can do anything but get worse when the latest business fad sets increased cash payouts as the default, punishes businesses harshly for short-term downturns which may not be reasonably avoidable, and makes longer-term investment the exception rather than something to be expected.

Unfortunately, any increased move toward income trusts only seems destined to make Canada's productivity concerns even worse. And with the Cons apparently planning to do nothing more than "monitor" the situation with no plan for action, it'll take a change in government for anything to be done before the damage is irreversible.

Separate and unequal

Don Martin rightly laments the media's failure to stand up to PMS. But Tim Naumetz reports that the pattern of secrecy and information suppression is only getting worse, as Con ministers have happily bought into a separate computer system to try to keep their own documents from becoming subject to Access to Information requests:
A government briefing note to Treasury Board President John Baird discloses the existence of a confidential computer system designed to keep ministerial documents, including contracts, from the public.

The memorandum sent to Mr. Baird soon after the Conservative government took office last February advised him that even though the Tories promised to make cabinet ministers subject to the Access to Information Act, a "segregated" Internet server could be established to ensure his documents could not be obtained under the act...

"Control for the purposes of the ATIA goes beyond physical possession to encompass records over which there is some sort of legal control or a power to produce," the memo says. "That is why it is important for records of the Minister or exempt (political) staff to be kept separate from departmental employees."

The memo adds that the same considerations applied to contracts concluded by a minister's office.

"Once information on contracts is transmitted from the President's Office to TBS (Treasury Board Secretariat) officials, they fall within the scope of the ATIA and are accessible, subject to the relevant statutory exemptions," says the memo, obtained by Ottawa researcher Ken Rubin under the Access to Information Act.

Mr. Baird's communications director confirmed the minister agreed to the arrangement -- despite a Conservative election campaign promise to open up ministerial records -- but described it as "routine administrative business" that applied to all cabinet ministers.

Communications director Mike Van Soelen said the measure was in place to streamline the system for Access to Information officials, who otherwise would have to "sort through everything" to keep ministerial records from being released through the act...

NDP MP Pat Martin said Mr. Baird's agreement to establish a separate computer server system indicates the Conservatives may have dropped plans to include ministerial records in the Access to Information Act.

"At the very moment they are crafting legislation to expand freedom of information, they were planning to circumvent it," said Mr. Martin.
Of course, the Libs deserve blame for setting up the system as well. But they at least can claim to have been relatively consistent in their contempt for public accessibility - unlike the Cons, whose campaign for transparency has once again been shown to apply to eveybody besides themselves.

The result for now is to ensure that documents in the hands of the office of the Cons' point man on accountability are kept immune from the access to information process regardless of whether or not the documents actually fit within a statutory exemption. Which leaves only the question of whether both media figures and voters will give the Cons a free pass on their broken promise of accountability, or whether they'll recognize the need for a governing party which consistently recognizes the value of genuine transparency.

Friday, October 13, 2006

Criminal negligence

The good news is that Ottawa is now at least considering paying some of the costs it plans to impose on the provinces through its criminal agenda:
Ottawa plans to pay for its ambitious anti-crime agenda with a combination of new funding, cost cutting and a push to "streamline" the legal system, Justice Minister Vic Toews said Friday.

But provincial justice ministers were still worried about how they will absorb the costs of a slate of bills aimed at toughening the criminal justice system as a conference with their federal counterpart wrapped up at a resort in western Newfoundland...

Toews and Public Safety Minister Stockwell Day appeared to offer an olive branch - though no firm commitments - in pledging to press cabinet for a package that would share the costs for more police, jails, prevention programs and court time.
But the bad news is where the Cons would apparently draw the money from:
"The federal government does understand that cracking down on crime has some increased cost associated with it," said Toews.

Asked the price tag, he declined to be specific, saying only "they are not paltry...We have to all look around and try to be more efficient in the running of other areas of government, so we have the money available."

"This isn't reaching into a big bag of money and taking it out. This is a significant consideration for the government in terms of what it's doing and its current fiscal situation."
In fairness, Toews' immediate suggestions are based solely in other areas of criminal law - suggesting at least some rational link between efficiencies and the cost of the Cons' plan. But after the Cons' recent track record of merrily hacking away at a wide range of other programs just to prove they can, the reference to "other areas of government" may hint at an intention not to put a single dollar into the justice system which can't be extracted from a social program.

Mind you, the Cons do have another idea to make up the cost of more prisons and prosecutors. But unfortunately, it's based on a pipe dream:
Day argued crime may go down as a result of the threat of stiffer sentences.

"On the other side of the ledger is the deterring effect that the going to have on those inclined who might be criminal activity," he said.
It's hard to blame Day alone for being utterly clueless about the complete lack of a link between higher sentences and crime rates when even the minister responsible hasn't bothered to read his department's reports. But it seems all too likely that the Cons are both planning based on fact-free assumptions about the effect of their legislation, and preparing to ensure that any difference is made up through even more social demolition.

Value subtracted

The Tyee discusses the effect of the softwood lumber capitulation on Canada's attempts to add value to its lumber before exporting:
Russ Cameron, president of the Independent Lumber Remanufacturers Association, said that of the 120 member companies in his association, 76 filed legal cases at the Court of International Trade. Of them, 24 have withdrawn, while 52 had not.

"And of those 24, there's probably about a dozen that have done that willingly," said Cameron, who claimed the government put pressure on firms to get on board. "The other guys [withdrew legal claims] because they were a little worried with all these phone calls from government."

Cameron said the duties have been especially hard on Canadian makers of products such as heavy timbers, flooring, shakes and shingles.

Because such value-added products are more labour-intensive and expensive to create, they sell at a higher price. A higher price meant higher duties at the border, and after years of trade wrangling, many remanufacturers are in financial dire straits.

Cameron doesn't see value-added producers faring much better under the Softwood Lumber Agreement.

"This deal basically institutionalizes this tax on us," he said...

"The more value you add in Canada, the higher the penalty for doing so," said Cameron...

How those business models will adjust to the new rules is anybody's guess, but Tate of the United Steelworkers said that the bigger companies are "looking to recoup [the costs of the Softwood Lumber Agreement] on the backs of the workers and the communities."

"We've already had meetings with employers, who are telling us that when this tax comes in...we're going to have to tighten our belts," he said.

He's concerned the deal could clear the way for a lot more exporting of raw logs instead of processing the wood in Canadian factories, which creates more jobs on this side of the border.

"Mark me, I know it's coming; [the mills] are going to ask for an exemption to export either [rough lumber] or raw logs in order to subsidize their manufacturing plants."
And of course, the recent job losses can only make matters all the worse for workers, communities, and anybody else who would like to see Canada do more than just cut down raw trees to be processed elsewhere.

While there's a tiny bit of good news in the surprising conclusion that the "good cause fund" may actually have ended up going to good causes after all, the long-term effects of the capitulation on Canada look to be even worse than the immediate ones. And if the Cons are willing to throw away Canada's role in adding product value to lumber in the name of avoiding conflict with the U.S., there's plenty of reason for many other Canadian industries to fear the same result going forward.

On smokescreens

The CP reports that a leaked version of the Cons' much-ballyhooed Clean Air Act is completely lacking in substance:
Environmentalists say they have obtained a leaked draft of the federal government's long-promised Clean Air Act, and they're not impressed.

The bill amounts to little more than a set of minor amendments to the Canadian Environmental Protection Act (CEPA), according to a team of environmental lawyers who studied the draft.

"First they promised a made-in-Canada plan and there is no plan. Then Prime Minister Harper promised a new Clean Air Act. Now we know there isn't one," said Beatrice Olivastri, head of the Friends of the Earth Canada.

"Based on the draft reviewed, this bill is mainly housekeeping and minor adjustments in language. It shuffles air pollution and greenhouse gas provisions to a new section of CEPA."

Olivastri said the bill does not appear to enhance federal regulatory authority to curb greenhouse gases or other pollutants...

According to the environmentalists, the draft bill would give the provinces more authority over pollution, making national standards even harder to attain.

"There are no new (federal) powers and standards," said John Bennett, executive director of the Climate Action Network.

"This is a significant delay tactic," said Stephen Hazell, executive director of the Sierra Club of Canada.

"Obviously, this means that there is no Clean Air Act. We're still waiting."
It remains to be seen whether the Cons actually do have something more substantive in the pipeline to be introduced later, or whether they plan to continue pretending that the mere existence of a piece of legislation called a Clean Air Act makes for real progress on the environment.

But either way, it's looking all the more certain that the Cons' supposed interest in the environment is at best nothing more than a smokescreen for further inaction at best, and at worst another feeble excuse to get the federal government out of the business of governing. And neither of these outcomes can be acceptable for the large majority of Canadians who want to see actual results in the battle to reduce greenhouse gas emissions.

Update: And it gets worse, as a follow-up article suggests that one of the Cons' unnecessary changes in wording may make the new bill vulnerable to a constitutional challenge.

Thursday, October 12, 2006

Cause and effect

The results are in on the Cons' softwood lumber capitulation: an export boom when the deal looked to be delayed, and now thousands of job losses following implementation. Of course, PMS claims it's all a big coincidence, and that we should be happy with a "stable" lack of employment - which should be a status which Canadian voters should be more than willing to bestow upon Harper following the next election.

Unfair enough

Leftdog has been all over the Cons' attempts to silence the Canadian Wheat Board, as well as the CWB's rightful frustration with the unprecedented gag order. But it's worth noting a couple of additional factors in the fight to save the CWB.

First, while the Cons are apparently relying on their supposed aversion to having federal funds spent on advocacy as a basis for the Order-in-Council, they had no such concern when it came to organizing the CWB's opponents on the federal dime (and behind closed doors).

Second, on a more positive note, the CWB at least isn't lacking for a strong supporting movement even if it isn't permitted to defend itself. Meaning that while the Cons may be doing their best to tilt the playing field in favour of undermining the CWB, there's still no realistic prospect of their ideology winning out as long as the question is one of public opinion.

The trust issues continue

CanWest reports that predictably, the income trust issue has popped up again due to BCE's planned conversion. And the result could be both a major loss of federal revenue, and a transition by businesses toward a form of organization which further prioritizes cash payouts over long-term development:
BCE Inc.'s decision to go the income trust conversion route is ratcheting up pressure on Ottawa to find a way to put a stop to other large companies following suit, says a leading expert on trusts.

Jack Mintz predicted more corporate heavyweights are headed into the income trust structure with negative consequences for both government tax revenue and the ability of the economy to grow and innovate.

"The minister of finance has a big problem on his hands," Mintz, a business professor at the University of Toronto and former president of the C.D. Howe Institute, said.

"There is going to be tremendous pressure on the government to act...This has been going on for too long as it is.

"There are huge conversions down the road that could easily happen. We have to ask ourselves if this is how we want to allow corporate Canada to organize itself."

Income trusts pay almost all their cash to shareholders and pay little or no corporate tax. Last fall, Mintz estimated the tax hit to government revenues from earlier trust conversions was $500 million in 2004. Now, he says the bill is heading toward $1 billion and could go well past that depending on how many more companies convert...

As well, he said the tax advantages of the income trust structure are diverting capital to slow growth industries that are the most suitable to conversion to the income trusts.

Finance Minister Jim Flaherty told reporters in Vancouver Wednesday he's concerned about the issue and the government will continue to monitor the market...

Analysts have speculated other candidates for trust conversions include grocery chains, cable companies, mutual fund firms, and the wealth-management arms of the big banks.

"The onus is going to be on management to explain to shareholders why they aren't doing it," said Ian Nakamoto, research director at brokerage firm MacDougall, MacDougall & MacTier Inc.
The article suggests a carrot-and-stick solution which both applies a higher tax to foreign trust distributions, and offers yet another set of tax breaks on corporate dividends. But there's no more reason now than there was earlier to use a loophole as an excuse to lower other taxes, rather than simply closing the loophole to avoid encouraging similar problems in the future. And two moves (one by Goodale, one by Flaherty) based on more generous tax treatment of dividends have obviously failed to stop the shift.

Whatever one's preferred solution, there's no apparent reason aside from political optics why the Cons wouldn't try to take effective action where the Libs didn't. But unfortunately, it looks like those politics will win out over the substantive need for change:
David Perry, senior research associate at the Canadian Tax Foundation, said he believes the minority Conservative government will be in no hurry to tinker with income trusts given the controversy that erupted when the former Liberal government announced it was looking at the matter last year.

"I think there's a sense of urgency in the Department of Finance but it's a tough one to get into cabinet," Perry said. He noted there are "powerful interests" involved and adjusting tax laws to discourage trust conversions is a complex undertaking.
Which means that a substantial portion of Canada's economy could soon shift to the income trust model with little regard for its pitfalls, taking a significant amount of government tax revenue with it. And with the precedent set that both the Libs and the Cons are perfectly happy to let new tax avoidance measures expand indefinitely until it's too late to control them, the door is wide open for more and newer schemes to exacerbate those problems in the future.

(Edit: Fixed formatting.)

Wednesday, October 11, 2006


If there ever was any rhyme or reason to the Cons' selective recognition of deals made before their took power, they've shattered any sense of internal coherence with their latest declaration about federal/provincial funding:
Canada's intergovernmental affairs minister says the Conservative government remains committed to the deals its predecessors made with the Maritimes and Ontario, but future funding commitments will be designed to benefit provinces equally.

Speaking at a luncheon Wednesday at the Economic Club of Toronto, Michael Chong said a long-term framework to address the fiscal imbalance between Ottawa and the provinces is in the works and will focus primarily on post-secondary education and infrastructure needs...

Chong said the "one-off" deals made with province's (sic) like Ontario are unfair, although he said his government is prepared to honour them.
It's not the least bit clear why the Cons would be willing to follow through on deals which they themselves consider to be unfair, particularly given their trigger-happy approach to other agreements such as the Kelowna Accord which couldn't reasonably face the same criticism. And the willingness to honour the equalization side deals is particularly bizarre when the probable effect is to give the provinces affected absolutely no incentive to cooperate when it comes to working out a new fiscal structure.

Meanwhile, those provinces who didn't get a signature on the dotted line before the election are left yet again without any prospect of improved funding - presumably as a prelude to the Cons ignoring yet another call for fairness between the provinces. And PMS shouldn't be surprised if Saskatchewan would rather change the channel than stay tuned to yet another program of excuses.

Consulted to death

The CP reports on Canada's sad recent track record of one-sided environmental consultations leading to minimal results - including consultations on climate change going back to the Mulroney era. Once again, it's hard to see what PMS could have to gain from tapping into the legacy of delay, but there can be little doubt that Canada's Crappy New Government has done nothing to change past dithering for the better.

On questionable purchases

The Chronicle-Herald reports on a planned $5 million sole-source contract being granted by the Department of National Defence to a partner of the company which employed Gordon O'Connor as a lobbyist:
The federal government intends to award a $5-million sole-source contract for armoured-vehicle tracks to a Quebec company whose partner has ties to Defence Minister Gordon O’Connor.

Ottawa plans to buy 55 sets of rubber tracks for the military’s M113 armoured personnel carriers from Soucy International Inc. of Drummondville, Que., according to an advanced contract award notice released Tuesday. It also wants to order "an optional quantity" of up to 90 more sets of tracks and as many as 500 half-sprocket assemblies from the same company.

In June 2002, Soucy International announced it had entered into a "teaming agreement" with United Defense, a Virginia company, "to commercialize the M113 rubber-band track system by developing and making this equipment available to customers in worldwide markets."

Mr. O’Connor, a retired brigadier-general, worked as a consultant lobbyist for United Defense from October 1996 to February 2004. At the time, United Defense was owned by the U.S. company FMC Corp...

Documents Mr. O’Connor filed with the federal government’s lobbyists registration system show his work for United Defense, among other projects, involved trying to win the company an M113 track contract with Canada.
On its own, that would be dubious enough. But it gets worse, as the vehicles in question apparently aren't even fit for use in the mission which is supposedly preventing Canada from deploying troops in significant numbers anywhere else:
Now more than 300 (M113s) have been upgraded, "allowing the army to assign the M113 as combat support and combat service support vehicles to tracked armoured, artillery and engineering units," said Lt. Adam Thompson, a Defence Department spokesman.

The military intends to use the vehicles until 2020 and it wants them ready for overseas missions, he said...

Brian MacDonald, a senior analyst with the Conference of Defence Associations, doubts Canada will deploy M113s to Afghanistan, where roadside bombs, rocket attacks and suicide bombers plague NATO convoys.

"The armour on them is aluminum," said Mr. MacDonald, a retired colonel. "It has roughly the same stopping power as the armour on the LAV (Canada’s eight-wheeled light armoured vehicle), but it’s not sloped. Sloped armour gives you an effective thickness that is greater than the actual thickness."

A decade ago, the federal auditor general reported that thousands of soldiers had been sent into combat zones in Bosnia and Somalia in M113 vehicles that Defence Department studies repeatedly found "seriously deficient" and "very vulnerable to anti-tank mines."
In other words, the apparent conflict isn't limited to the mere fact of rewarding O'Connor's former employer. Instead, there should be serious questions as to why the contract would be enough of a rush to justify sole-sourcing when, absent a change in government or a complete about-face from the Cons, it'll be at least two and a half years (and longer if the Cons continue in their stubbornness surrounding Afghanistan) before there's any prospect of using the affected vehicles in large numbers abroad.

There's certainly a need for legitimate investment in Canada's military. But a rushed process only seems likely to ensure that Canada doesn't receive value for its money. And particularly where there seems to be a serious possibility that the goods purchased won't be put to much use, the Cons' zeal to funnel money to O'Connor's friends can only reflect poorly on a government which seems all too happy to permit waste as long as it's in the name of national defence.

On toeholds

CanWest reports on some potentially great news for labour, as a Quebec store is on the verge of finalizing the first collective bargaining agreement at a North American Wal-Mart:
Contract negotiations between the retail giant and unionized workers at the Wal-Mart store in St. Hyacinthe, Que., have resolved all issues but salary, which is to be brought before an arbitrator in November.

Indeed, after a year of talks, the negotiations are further ahead in St. Hyacinthe than they were at the unionized store in Jonquiere, Que., which Wal-Mart shut in 2005, after citing poor sales...

"Certainly, Quebec has been the leader," said Bob Linton, spokesperson for UFCW Canada.

"Right now it's wait and see. Once, and if there's a collective agreement, we're pretty confident that other Wal-Mart employees will want to follow suit."
It still remains to be seen whether Wal-Mart will look for excuses to close the St. Hyacinthe store as well, or otherwise ignore the rights of its workers. But given that some results have already been reached through collective bargaining, it would seem awfully late in the day for that type of move.

Which means that despite a corporate culture aimed at demonizing unions, Wal-Mart may not be far away from learning that collective bargaining can easily be a part of a successful business model. And if that recognition takes hold, then barriers to unionization could start to drop both at Wal-Marts specifically, and across the retail sector generally.

Tuesday, October 10, 2006

A welcome addition

It's been around for a few months now, but Relentlessly Progressive Economics just came to my attention (and apparently joined the Blogging Dippers) over the last couple of days. Give it a read for a sampling of the ways in which genuine economics differ from the corporatized version so often taken as gospel by the Libs and Cons, as well as strong coverage of politics in general.

Dithers II: Delaying the Green

It hasn't gone without plenty of comment elsewhere. But particularly after all their ranting about PMPM's ever-maddening Mr. Dithers routine, one would think the Cons would follow six months of hype with something more than a decision to consult for yet another year before setting a timetable to do something about the environment.

On injustices

There was never much room for doubt that the provinces wouldn't simply go along quietly with the Cons' plans to impose massive new costs on provincial justice systems. And with a meeting of justice ministers coming up this week, the time has come for Vic Toews to deal with the fallout:
Several provincial justice ministers want Ottawa to help them pay for the Conservative government's get-tough crime agenda, which they said will cost the provinces more money by putting extra strain on their jail and court systems.

The pitch will be made to federal Justice Minister Vic Toews and Public Safety Minister Stockwell Day when they fly into western Newfoundland on Wednesday for a meeting with their provincial counterparts.

"Obviously all ministers are going to be interested in the impacts of the federal criminal justice reforms and how that will affect the provincial justice systems," said Newfoundland's Conservative justice minister, Tom Marshall, who will chair the meeting.

"It's going to have a major effect on our system. We will need more room in our prisons, we will need more prosecutors and we will need more legal aid lawyers so it's going to have a financial effect."...

Day has acknowledged the measures could cost the system more money and he said that Ottawa has set aside as much as $245 million over five years to pay for additional prison cells.

But the provinces - which are partners in justice and run provincial jails where people serve sentences of under two years - question how they are going to pay on their end.

"The costs will be borne almost entirely by the provinces and not just on the capital side, building new correctional facilities, but with legal aid and Crown prosecutors," said Saskatchewan Justice Minister Frank Quennell.

"All through the system it's going to cost more money and it's a cheque being written on provincial taxpayers' account by the federal government."

Although several ministers support the legislative proposals, others have concerns, including Quennell, who is skeptical that the tough-on-crime policies will actually make Canada safer.

Toews, through spokesman Mike Storeshaw, declined an interview in advance of the meeting. However, Toews hinted last spring there would be no additional money for provinces to carry out the justice reforms. He said at the time that the provinces largely supported the measures, so they should share in the costs.
It's clear from Quennell's quote that any support from the provinces is far from absolute or unanimous. Which in turn means that there's even less weight to the Cons' already-flimsy justification for imposing yet more costs on the provinces.

Of course, the Cons haven't generally been the least bit shy about making promises on behalf of the provinces. But particularly in what's supposed to be one of their bread-and-butter areas, the Cons' continued unwillingness to support increased provincial obligations with any funding can only lead to yet more unhappiness from the provinces - particularly in light of Jim Flaherty's challenge to provinces to justify any tax increases. And if the provinces understandably refuse to increase their own costs based on Toews' whims, the result could be a far less effective justice system than the one the Cons claim to want to improve.

More obnoxious emissions

Greg Weston catches Rona Ambrose lying about the nature of past funding of international environmental projects. But the bigger issue (which Weston seems to miss as well) is why Ambrose and the Cons seem to want to pretend that Canada's environment is wholly detached from the rest of the world, rather than acknowledging that reduced emissions around the world do help us here at home.

Update: CTV reports that the Cons have admitted that Ambrose was wrong. While NDP MP Nathan Cullen agrees with commenter Steve V that Ambrose should be summoned back before the environment committee, I'm not so sure that the Ambrose's reappearance would serve any useful purpose - why allow her yet another chance in the spotlight to spread more misinformation? Better to tag every Ambrose story with "Ambrose, who has previously misled Parliament with her claim that hundreds of millions of dollars were spent on international carbon credits...", and move on to somebody more credible.

Monday, October 09, 2006

The road to imbalance

While it's tough to disagree with Carol Goar that it's a plus to see Jim Flaherty's rare willingness to actually talk about substantive policy at the Fiscal Federalism conference, Flaherty's actual policy of looking for excuses to demolish Canada's federal government leaves much to be desired:
The government's objective is not solely to put money back in taxpayers' pockets, Flaherty said. It is to give the provinces an opportunity to increase their share of the national tax take.

By reducing federal taxes, Ottawa creates room for the provinces to raise theirs without imposing an additional burden on taxpayers.

There is a catch, of course. The provinces have to convince their citizens that they're better off paying for improvements in health care, education and social programs than getting a tax break.

But Flaherty considers that fair.
Needless to say, Flaherty is all too happy to ignore the realities facing provinces who would otherwise like to take over some of that tax room. But in fact, any prospect of provinces moving into the extra "room" is remote at best for the short term.

The first difficulty is that inter-provincial competition makes it difficult for any one province to take the first step absent some agreement. And the problem is magnified when most provinces are fighting to keep their workers from moving to a province which (for all its readily-visible warts) can afford to keep running for the foreseeable future without raising taxes no matter how much federal contributions are reduced. This problem could be overcome with a move toward tax harmonization...but the Cons don't seem the slightest bit interested in trying to create national movement in that direction.

Moreover, while Flaherty claims to have a genuine interest in opening tax room rather than merely cutting taxes generally, his party's public rhetoric is strongly to the contrary. And however little evidence there is behind the constant whine that Canadians pay too much in taxes, the Cons' constant repetition of that mantra will lead to an even greater perception problem for provinces who would otherwise want to make the case that program investment is worthwhile.

It's in order to deal with difficulties like those that it makes sense for the federal government to collect a relatively high proportion of taxes for distribution to the provinces. Instead, Flaherty's "road map" goes nowhere but to greater interprovincial disparity and poorer services for Canadians. Which may leave Canadians looking forward to the opportunity to put somebody else at the wheel.

5 things feminism has done for me

The "5 things feminism has done for me" meme has obviously been a major force in the progressive blogosphere over the last couple of weeks. I'm a bit late to the party and will probably be duplicating some previous comments, but here's my addition to the list.

(1) Feminism has challenged previous notions of equality, highlighting the fact that equality depends on one's ability to determine society's measuring sticks as well as how one measures up against them. (Though there's still an awful lot left to be done on both counts.)

(2) Feminism has fostered further inclusion by enabling a bevy of minority groups to better point out the barriers placed in their way. Minorities on their own may have faced an even more difficult path toward recognition - but a movement emphasizing the fact that even a majority could be subject to institutional discrimination has opened the door for other groups to raise similar issues.

(3) Feminism has changed the face of my profession. As recently as 50-60 years ago, some law schools were still awaiting their first female student; now over half of law school graduates are female. The result has been not only to double the pool of prospective lawyers, but also to result in exponential development to the law itself.

(4) Feminism has opened up the range of options for myself and my fiancee in planning our future together. Rather than facing a strong expectation of having children quickly, resulting in me supporting a family and her staying home and raising it, we're able to consider a multitude of possibilities (with or without children, with one or both of us pursuing multiple university degrees, etc.) in determining how we want to spend our lives going forward.

(5) And perhaps most importantly to me personally, feminism has enabled many of the people closest to me to be themselves and to develop their strengths. I can't say how many of the strong, intelligent females in my life would have been able to show those traits to the same degree in a society which did more to suppress those qualities - and it's thanks to feminism that the remaining barriers are ones which have been surmountable.


Only a few weeks before many Canadians will choose their new municipal leaders, the Globe and Mail highlights the severe underfunding of municipal infrastructure over the last three decades:
The Montreal-area overpass that collapsed less than two weeks ago was built in 1970 during Canada's Golden Age of infrastructure spending, when roads, sewers and bridges still enjoyed pride of place in government budgets.

New investment on infrastructure grew at a rapid 4.8-per-cent clip annually between 1955 and 1977...

Between 1978 and 2000, new government infrastructure spending grew at only 0.1 per cent a year.

Today, long-ignored demands to refurbish decades of bricks and mortar have piled up. Estimates of the infrastructure replacement backlog range from $60-billion for cities to $125-billion to fix everything that is not being fixed...

In Calgary, for instance, the city is only now overhauling a downtown bridge first built in 1912. Mayor David Bronconnier says the 94-year-old structure is among several bridges “literally ready to fall down” and “just one of many examples we have of deferred maintenance.”

He said Calgary needs $5.5-billion over 10 years to replace and repair old infrastructure as well as meet new demands — cash it can't provide by itself.

“In Calgary's case, 66 cents out of every tax dollar goes to the federal government, 29 per cent to the province and only 5 per cent to the local level,” he said. “That is a fiscal imbalance of epic proportions.”...

Municipal leaders say their infrastructure trouble is exacerbated by the increasing pressure they face to spend money on social problems that other levels of government aren't sufficiently addressing, from English training to immigration settlement to urban native needs.

“There's 3,000 people on the streets of Calgary who are homeless,” Mr. Bronconnier said. “Should property tax dollars go to service that when you've got a federal government running a $13-billion surplus?”

In retrospect, critics say, Canadian politicians should have set money aside regularly to prepare for replacement costs of the new infrastructure they were rolling out.

“Our present system is design, build and forget,” McGill's Prof. Mirza said.
While part of the problem lies with past (and in some cases current) underinvestment in maintenance by municipalities, it's too late to change that part of the equation. But there's no reason at all why the current strong fiscal position of both the federal government and the bulk of the provinces can't be applied to make up for some of the gap which those levels of government helped to create. And with the Laval overpass tragedy still fresh in the minds of Canadians, now may be just the right time for all three levels of government to reach agreement as to how to get maintenance funding where it needs to go.

Sunday, October 08, 2006

On planning

A reader points out this essay at Global Research, which lists a significant military buildup in the Middle East and suggests that an attack on Iran may be imminent within the next couple of weeks.

Some of the piece undoubtedly needs to be taken with a grain of salt, particularly its willingness to pretend Iran's leaders are any less bellicose or more credible than Bush and company. And in the bigger picture I'd have a hard time seeing how there's enough public support for the U.S. to launch another war, particularly with the administration discredited as thoroughly as it has been over Iraq.

But it's still worth noting the actions being taken by both the U.S. and Canada which could only be explained by at least some plan for war - and keeping the background in mind if the U.S. does seek to ramp up tensions in the short term.

On disadvantages

This weekend's stories add a lack of housing and systematic deficiencies in service to the list of costs in following the hype to Alberta. Which can only add to the well-known lower cost of living and similarly-booming job market to make the province to the east look all the better in comparison.


The CP reports that the Cons are following through on a previous Lib plan to cut off food aid to Afghani war widows:
A long line of widows in tattered blue burkas waited for hours Sunday for Canadian-bought rations of flour, cooking oil, dried peas and medicine...

They are the poorest of Afghanistan's poor, yet their monthly food support is to be cut off by April.

That's when the Canadian International Development Agency plans to replace the rations, worth C$2.5 million a year, with training designed to help widows support themselves.

Ottawa planned to end them last year but extended funding for another 12 months when the widows planned a protest - an extraordinary act for one of the country's most voiceless, marginalized groups.

Zainab Wahdi, deputy manager of women's programs for CARE Afghanistan, hopes Canada will reconsider.

"Vocational training is the best, but it will not be enough," she said.

Proposals being considered so far would only cover about 5,000 widows - and many will face child-care issues and resistance from men who don't want them to work, she added.

The reality is that thousands of women still desperately need help to feed their families, Wahdi said.
Now, providing minimal food support for war widows would seem to be a fairly affordable means of making sure that Canada is seen positively by the Afghani citizens whose choices will determine the country's future direction. And indeed the plan for increased training would seem to be more appropriate as a supplement to food aid, rather than a substitute for it.

But apparently, food aid doesn't fit into the Cons' priorities for Afghanistan. And unless another protest again succeeds in shifting the current position, the move may soon give both the widows and those who are paying attention to their cause plenty of reason to doubt Canada's commitment to doing anything to improve the lives of Afghanistan's citizens.

Repugnant indeed

Linda McQuaig unloads on the Cons' potential gay-bashing legislation.

About the only problem with McQuaig's take is that she misses the extent to which hatred is already sanctioned even without a federal bigotry bill: contrary to her statement that current law provides "not a whit of protection", the scenario seems to be taken from a case where just an ad was ultimately held not to result in a human rights violation. Which makes it all the more disgusting that the Cons are trying to turn back the clock even further.