The (Right) News Rundown
- This past Tuesday during a Facebook Q&A session Jason Kenney said his balanced budget can be accomplished in 3 years by focusing on operating spending and cutting per capita spending, the amount spent per person, to the same level as British Columbia.
- Online Jason Kenney said, “We would have to exercise a period of sustained restraint in spending in order to get us down more or less to British Columbia per-capita spending over time, B.C. spends about 20 per cent less than Alberta per capita.”
- Further from the article, “According to the most recent figures from Alberta Treasury Board and Finance, the Alberta government spends $12,517 on every man, woman and child in the province, nearly $2,500 more per capita compared to British Columbia.” This data is more or less confirmed by the RBCs latest analysis of the fiscal status of provincial governments of Canada and our federal government.
- Premier Notley responded calling the plan, “heartless, reckless and mean-spirited.” She continued saying that it would cause, “nothing but chaos and instability. For sure, going forward we need to engage in careful restraint.”
- It’s worth noting that the current forecast for the current fiscal year is a budget of $10.8b with $15.8b in debt. Debt servicing costs are forecast to be over $1b for the current fiscal year, $1,033,000,000 to be precise. With the increases in interest rates as we talked about on last week’s episode of The Right Side, we can only expect this debt servicing cost to increase. So to call any plan that attempts to avert this reality, “mean-spirited” is pure political rhetoric.
- While Premier Notley and the media were sparring over Jason Kenney’s “mean-spirited” plan the unemployment rate in Alberta ticked up to 8.1% from 7.8% the month prior. This was aided by the unemployment rates in Calgary and Edmonton of 8.7 and 9.1% respectively. Despite positive indicators Canada-wide, the economy and fiscal situation in Alberta must improve.
- Lots of news out of BC this week, but first a follow up on the ICBC story from a few weeks ago. On Episode 30 I talked about how ICBC rates are going to be hiked up for everyone, costing the average driver an extra $130/year. So that's going to be nice to look forward to. BC already has some of the highest auto insurance rates in the country, and it's going to be hiked up even more? According to the report, “they are not high enough to cover the true cost of paying claims.” Clearly there's something going on there.
- But onto other BC news, where a BC Liberal surprisingly broke ranks and volunteered to become the Speaker of the House, despite wishes of his party. Abbotsford South MLA Darryl Plecas has been acclaimed because no one else put their name forward. The loss of Plecas means the Liberals only have 41 votes compared to the 44 that the NDP/Greens have. It basically means that there won't be any successful attempt by the Liberals to call a vote of non-confidence on the NDP, who are being propped up by the Greens.
- The BC Liberals say Plecas had promised that he wouldn’t make the move and they are disappointed with his decision. Said Interim Liberal Leader Rich Coleman: “Caucus had agreed, and everybody had committed — including Mr. Plecas — to not run for speaker, so, to change your mind and not inform me when you change your mind until after the fact… I still think that’s a betrayal. As a matter of fact, on numerous occasions, he’s reiterated to the caucus and to me he had no intention whatsoever of running for Speaker. I took him at his word. When you tell your colleagues that you are not going to do something, they take you at your word, you break your word, you go do it, become the Speaker, you de facto already joined the NDP.”
- Hours after the move, the BC Liberals kicked Darryl Plecas out of the BC Liberal caucus. The Party issued a statement: "Constituents must be able to trust their elected representatives," it said. "Party members must be able to trust those who hold positions of leadership in the party. And members of the legislature must be able to trust one another." The statement said Plecas' decision was a betrayal, one he made "despite repeated promises and assurances that he would not."
- Plecas threatened to quit the caucus earlier this year after demanding Christy Clark’s resignation as party leader. By breaking with tradition, he’s helping the New Democrats hold on to power.
- All of this must make NDP Premier John Horgan smile with delight, as the news cycles are now occupied with this story, rather than the story that the construction on George Massey bridge project has been cancelled and that the project is being sent back for review, much like the NDP did with the Site C dam project back in late August. The bridge was intended to replace the 58 year old underground George Massey Tunnel that connects Delta with Richmond; a key corridor from the ferry terminal to Vancouver which faces daily overcrowding.
- The cancellation brought derision from the Liberals, who say the project has already been studied, debated and analyzed for years. There are more than 150 reports linked to on the project’s website. “I would hope they would speed up the process,” said Delta South Liberal MLA Ian Paton. “We were in the bridge replacement office this morning and there has to be a dozen binders five-inches thick of documents and studies and engineering reports on why the bridge is the best answer. They could simply send the bridge review committee to study the 14,000 pages that have already been worked upon and come to the conclusion the bridge is the most sensible option.”
- The province had shortlisted three companies to bid on the main contract, and two of those companies had submitted proposals. The deadline for government to pick a winner was Oct. 24. The two companies will now be compensated up to $2 million each for their aborted bids. Taxpayers have already spent $66 million on engineering and geotechnical work, public consultation, land procurement and site clearing, including preparations for eventual widening of Highway 99.
- The Speaker story also buries another issue surrounding the NDP government, namely the issue of the throne speech, which was held on Friday. There was lots to talk about, namely the NDP promises on election finance reform, another electoral referendum, lobbying reform, childcare, housing, poverty, wages, education, healthcare, and student debt. What wasn't talked about were taxes, the economy, jobs, and natural resources. Once again, we see the priorities of this NDP government on display. Time will tell what they actually get done.
- Another of the Liberal’s campaign platform promises from 2015 is slowly coming true. During the campaign the Liberals pledged to remove the small business deduction. This means that a small business that employees 5 people would pay the same rate as one that employs 5000.
- After tax reductions the corporate tax rate in Canada is 15%. Small business who claim the dedication that the Liberals are targeting pay a tax rate of 10.5%. Any business that brings in less than $500,000 is eligible for this deduction.
- Estimates from the Financial Post suggest that 70% of families in Canada receive dividends (or funds) from a small business and have a household income below $200,000. That of course means that the businesses affected will indirectly be affecting the middle class. According to the 2016 Labour Force Survey from Statistics Canada, 70.5% of those employed in Canada are employed by a small business of 1-99 people while 19.8% are employed by a medium sized business of 100-499 people.
- The Trudeau government has said that it would be doctors, dentists, accountants, lawyers, and other professionals who would bear the brunt of this change. In reality that accounts for just 12% of small business revenue. There are other sectors that are equally as large: manufacturers at 12%, construction operators also at 12%, and high tech innovators at 10%.
- The Financial Post also provides some arguments as to ways neutrality could be achieved between unincorporated and incorporated businesses but that is beyond the scope of our show. What they do show also equally well is a snapshot of how “draconian” the proposals could be:
- “Under the new rules, passive income could now be taxed at an almost-confiscatory tax rate of over 70 per cent, as government claws back the benefits of the low corporate income tax rate on business income. The rules also result in heavier taxation on family succession compared to selling the company to unrelated domestic or foreign investors, resulting in a potential 90 percent “estate tax” on distributions of corporate shares to children.“
- What’s more is that these changes to the tax system are being proposed very quickly and as stated right now will come into effect in one swift motion. Most are surprised by this pledge but it was outlined very clearly in their 2015 campaign platform. While the media is covering this issue here in Canada and the opposition is rightly pointing out that this will affect millions of Canadians, the media is ignoring the outright magnitude of how much money this will cost average small businesses.
The Firing Line
- A few episodes ago, we discussed a few head scratching priorities of the Trudeau government's NAFTA negotiations with the US. When negotiating with another country, it is generally in Canada's best interest that the government represents the country fairly, and respects all viewpoints, especially in the House of Commons, but more importantly, what Canadians want. However, rather than trying to get a better deal on Canada's vast natural resources or the growing tech and manufacturing industries, Catherine McKenna, Trudeau's Minister of Environment, is still pushing for climate change action.
- What's more is that rather than devote time to better serving Canada at the negotiation table, McKenna is taking potshots at opposition party members on Twitter and Facebook that are being classified as "official government responses".
- McKenna launched an angry missive at Conservative Foreign Affairs critic Erin O’Toole on Sunday, for suggesting the environment was a mere “trinket” better left to the sidelines in order to protect Canada’s economic well-being.
- However, in his remarks, O'Toole simply wanted to make sure that the NAFTA negotiations remained on the economy, creating jobs, securing market advantage, and protecting Canadian labour markets that are being undercut by cheaper Mexican labour. He mentioned that when dealing with a Republican US government and Donald Trump, there is "no time for the “virtue signalling” on gender, Indigenous and environmental issues that the government has also raised as bargaining priorities."
- “What I want to see out of Canada is less of the virtue-signalling type of approach where we put the centrepieces of Justin Trudeau’s image building — the gender equal cabinet, the reconciliation — they’re all important but this is an economic trade agreement. I don’t think anyone who’s had a casual observation of the Trump administration will suggest that their priority is going to be environment, Indigenous affairs and other things like that.” O'Toole said.
- McKenna, and other Liberal party members have decried O'Toole, Andrew Scheer and the Conservatives in the media, saying that they are "undermining Canadian interests" and Gerald Butts wrote on Twitter that "It’s still Stephen Harper’s party."
- Catherine McKenna also took to Twitter to snipe at the Conservatives with thinly veiled comments. She reduced the devastating forest fire situation in BC to harp at Andrew Scheer: "Looking out the window at a smoky Kelowna. Waterton Lakes is under fire evacuation alert...The economic impacts of climate are real, Scheer. And #ClimateChangeIsReal :)"
- And she also talked down to O'Toole just this evening: "Tune in to @ctvqp tmrw where I explain to Erin O'Toole why the #environment belongs squarely in NAFTA."
- However, when it comes to making an agreement with the United States and Donald Trump, Canada will have to work with what American interests are, to ensure that Canada can still have a level playing field. Trump will not be interested in the partisan Twitter bickering of our politicians, nor will he have an interest in climate change talks. To make sure that Canada gets a fair deal out of NAFTA, our government should be making sure we get what we need first, before trying for the rest.
Word of the Week
Virtue signalling - “To take a conspicuous but essentially useless action ostensibly to support a good cause but actually to show off how much more moral you are than everybody else.” - Urban Dictionary
“Fred: I see George has changed his profile picture to show his support for refugees.
Barbara: Has he donated money or time? Is he giving English lessons? Is he making a room available?
Fred: No, no, he's just virtue signalling.”
How to Find Us
Episode Title: Mean-spirited or Necessary?
Teaser: Is Kenney’s balanced budget feasible? The NDP calls it “mean spirited”! A BC Liberal “betrays” his party to become speaker, the federal government want to change taxes impacting small businesses, and McKenna virtue signalling in the NAFTA negotiations.
Recorded Date: September 9, 2017
Release Date: September 10, 2017
Edit Notes: None