Tuesday, October 16, 2012

Tuesday Morning Links

This and that for your Tuesday reading.

- Crawford Kilian talks to Ed Broadbent about the effect of increasing inequality and the prospect of changing course:
On how quickly things could turn around:

"I'd like to see a strategic plan. We can't change overnight after 20 years. We could take a series of measures; B.C., for example, has an affordable housing problem. The Trudeau government brought in a mix of public and private measures for such problems, but it took time. A hike in the minimum wage would help. Currently the federal government sets its wages on provincial levels, instead of setting its own levels. We also see the evidence of other advanced countries: more equality means a more productive economy. Germany, Sweden and Norway all have productivity levels equal to ours or higher."

On the least understood aspect of inequality:

"Inequality is bad for everyone, including the rich. Americans in the top three per cent have health outcomes worse than those in Sweden and the Netherlands. Such negative effects on the whole society aren't understood. With equality, everyone does better. Also, a more equal society benefits middle-class Canadians -- stronger pensions, lower crime rates, fewer teen pregnancies, and so on. The evidence shows the U.S. is way down in social mobility. The poor in equal societies have better chances than they do in the U.S."
- Meanwhile, David Fraser reports on Kirk Englot's work as to how Saskatchewan can reduce poverty - if we choose to make that a public policy priority.

- Toby Sanger notes that part of Dalton McGuinty's legacy will be the choice to hide savings from lower interest rates - with the apparent purpose of taking a larger bite out of Ontario workers than he could possibly justify if it were honest about the province's fiscal situation:
(T)he Ontario government will be able to save an additional $5 billion from lower borrowing costs over the next five years as a result of lower interest rates than they had forecasted in their 2012 budget.  By a surprising coincidence, these savings are almost identical to the amounts that they can be expected to save from their wage freeze legislation.  (Perhaps that’s why these interest savings weren’t acknowledged in their fall Statement.)

These savings are similar to what they expect to save from the two year wage freeze on public sector workers imposed through their Orwellian-sounding Protecting Public Services Act.

This means the Ontario government could reach its deficit targets without imposing these public sector wage freezes, which will dampen wage growth all around and slow down the economy, thereby reducing revenue growth. Even the IMF recently warned governments not to unnecessarily cut spending and impose austerity measures as this is leading to slow economic growth.
- Murray Mandryk rightly tears into Con MP Kelly Block for her publicly-funded anti-immigrant mailout.

- Finally, Sean Tucker and Andrew Stevens point out the inevitable end result if one accepts the Cons' spin as to why unions should be forced to make their membership matters the subject of public scrutiny:
Bill C-377, An Act to Amend the Income Tax Act (labour organizations), if passed, would require unions to publically disclose an unprecedented amount of financial and other information about their activities on the Canadian Revenue Agency’s website. Not surprisingly C-377 is opposed by organized labour who see it as principally anti-union. However, in the face of such criticism, the bill’s sponsor has argued that “If there is an ideology, it is based on the principle that organizations that receive public benefits should be accountable to disclose how they use those benefits.” According to Heibert, the primary public benefit enjoyed by unions is that their members can deduct dues from their personal income, thus depriving the public treasury of over $400 million of dollars in lost revenue.

Mr. Heibert’s public benefit argument is problematic for several reasons. Many businesses receive substantial direct and indirect benefits through the Income Tax Act and other federal government programs but disclose little or no information to the public. If Hiebert’s chief motivation is to ensure the financial accountability of organizations that benefit from taxpayer supported initiatives, why restrict C-377 to trade unions? Why not extend this transparency model to private businesses and professional associations? An MP inspired by accountability, and not an anti-union animus, should settle for nothing less.

Imagine a medium-sized engineering firm that receives any of the following federal government benefits: $5,000 to subsidize the salaries of post-secondary graduates under the federal Youth Employment Program, $35,000 for eligible research and development activities under the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program, or $50,000 under the Canadian Innovation Commercialization Program. These are all part of the government’s Economic Action Plan. The business equivalent of Heibert’s law would require this firm to publicly disclose senior management salaries and all transactions over $5,000, with both the payer and payee being identified. But, the extent of accountability would reach even further under Hiebert’s bill.

Though C-377 references the level of financial transparency required of registered charities as a model, the bill demands far more information. For example, the government would define and require reporting on over a dozen categories of business-related activities and require senior managers to report on all political and lobbying activities. The costs associated with reporting, of course, would be borne by the business and non-compliance would result in a fine of $1,000 per day. And, because the scope of disclosure mandated by C-377 is not proportional to the size of the public benefit, all businesses would be treated equally. All of this would be taking place as business associations are lobbying for fewer government regulations.

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