The Canadian Independent

Dalton’s hidden bureaucrats: When people in private society do this – they go to prison

Posted in Ontario, Politics, Role of Government, The Public Sector by dave on April 2, 2010

The Ontario government is hiding what it pays bureaucrats, and breaking its own guidelines, by using crown corporations to pay their salaries so they don’t show on the books:

The Liberal government is on the defensive for continuing to channel salaries for top-earning civil servants through hospitals and other institutions where they are not employed.

Despite a promise from Premier Dalton McGuinty last October that “we’re going to change it,” salaries such as the $511,971 paid to former deputy health minister Ron Sapsford were still listed through hospitals in the government’s annual four-volume “sunshine list” made public Thursday.

The list reveals the earnings of public employees making more than $100,000 annually.

As first revealed by the Star last October, the government has been hiding the salaries of some high-rolling bureaucrats to avoid public scrutiny and skirt civil service pay guidelines, such as the maximum of $220,150 recommended for deputy ministers.

When private companies hide their finances from investors and the public, the industry regulators shut them down and imprison their CEOs. When the government hides their finances, finances confiscated unwillingly from the public, through shady accounting practices the politicians just say “Oh, it won’t happen again!” and continue on business as usual, as the media has moved to the next issue of the day.

If we’re going to believe that there are certain moral principles that everyone has to obey, why are those moral principles abandoned when applied to government?

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10%ers are only the tip of the iceberg when it comes to politics at the public expense

Posted in Politics, The Public Sector by dave on March 23, 2010

Jane Taber blogged today about the issue of blatantly political 10%ers going out to constituents, paid for by tax dollars. Its ridiculous to have political parties publishing and mailing political material at taxpayer expense, but that’s only one small way that political system uses tax dollars for partisan, political or campaign means.

Established political parties in Canada receive a taxpayer-funded welfare cheque of millions a year. The Bloc, the secessionist party in Canada, receives 86% of their total party funding from Canadian taxpayers. Under this scheme parties receive $1.95 per vote they received in the previous federal election. From the 2008 election: “the Conservatives earned $10 million in subsidies, compared to $7.7 million for the Liberals, $4.9 million for the NDP, $2.6 million for the Bloc Québécois and $1.8 million for the Greens.”

As well, the breakdown of how that translates into operating budgets is as follows:

But because the Conservatives have such a strong fundraising base, their subsidy represents only 37 per cent of the party’s total revenues.

By comparison, the subsidy amounts to 63 per cent of the Liberals’ funding, 86 per cent of the Bloc’s, 57 per cent of the NDP’s and 65 per cent of the Greens’.

Look at the branding done by the federal government regarding their Keynesian stimulus package, Canada’s Economic Action Plan. Radio and television ads, smooth corporate branding, all assuring us that indeed the government, and Stephen Harper, is here to save us from the economic apocalypse by spending money. Oh, and vote for him next election. This kind of abuse of public funds isn’t blatantly partisan, but its just as political as sending out 10%ers which feature ridiculous caricatures of the Liberal party. You don’t need caricatures to find the Liberal party ridiculous.

And indeed, Canada’s Economic Action Plan is a political vote-buyer in the first place. Its long been a strategy in electoral politics to smear money around to those areas you want support from. Individual ridings that are close, those ridings which have supported your party. In the United States they often piggyback legislation and use earmarks to achieve this. In Canadian politics, the party system and the legislative system is much more centralized, and individual parliamentarians don’t wield the kind of legislative influence as individual congressmen, so this kind of spending has to be plot out centrally by government figures. Likely whatever Doug Finley, Stephen Harper, Guy Giorno thinks will win the next election.

The reason we should be concerned about public funds going to the operation of political parties in Canada is three-fold. First, I think that it significantly degrades the quality of the political discussion in Canada. It makes parties lazy, and it allows them to rest on their laurels. Money is another vector to gauge political support, if your party is making the kinds of noises you like, you reward them with donations. If your party is ignoring the base, or passing policy which is alien to them, then donations dry up and the party does worse in the polls. Having parties work for donations is fundamentally important for the political system because it keeps that party responsible to those people who support it with their time and money. Perhaps this is one of the reasons we’re all starting to drift towards cadre parties, who just throw out whatever set of policies they think will win the next election?

This german woman has it right. It would be more useful to burn our money for heat than to give it to political parties.

Secondly, it’s waste. Its waste because its spending money to solve a problem that isn’t a problem in the first place. Theres no serious problems that arise out of political parties having to work to build their own donation base. It’s waste because its money that could be spent somewhere else solving (or attempting and failing) another problem. Its waste to approve of projects in certain areas because you think it will win you political votes, because you are not judging the projects based on their merit or value, but rather their ability to score you points at the polls.

And thirdly, its not the proper role of government. Taxation isn’t a neutral force in society, it has real effects on real people. It takes money out of their pocket, that they can’t spend on their families or mortgages or food or sports cars. When you take people’s money away from them and spend it on frivolous activities, such as politicians throwing cocktail parties and sending out mailers, its wrong because you are decreasing the net welfare of society and wasting that money. You are making people worse off. Poorer than they would have been otherwise. Even if its just a fraction of a cent, those fractions add up. Add up to on average 38% of the GDP at this moment. Taxation is also force, and I’m not sure we should be taking people’s money away from them with the threat of property confiscation or imprisonment so some politicians can try to buy votes and play their little game of political chess, at other people’s expense.

And thats not even counting all the special funds for political lobby groups!

The Deficit Fantasy

Posted in The Economy, The Public Sector by dave on March 21, 2010

The Canadian government has some difficult fiscal policy decisions to make, that the government simply isn’t interested in talking about. None of the opposition parties are interested in making these decisions, either. Politicians are too concerned about winning the battle of the day, be it about Rahim Jaffer’s coke habit or whether or not Canadian soldiers are complicit in maybe sometime sending Afghan detainees to be tortured by other Afghans.

Unfortunately there is a real fiscal problem coming in Canada – the aging crisis. The fundamental issue is this. In 2001 there was about 5 working Canadian taxpayers for every senior in Canada. As soon as 2020, that number will be down to 2 working taxpayers for every senior in Canada.

Seniors, use a disproportionate amount of healthcare, social assistance and collect from the Canada Pension old age retirement program and the Canada Pension disability program. What this effectively means is since we have socialized, made society responsible for the costs of individuals using these particular services, is that we’re going to have a glut of elderly people requiring more healthcare than they had needed before, requiring more long-term care service than they had needed before, requiring more in-home care services than they had needed before. Demand for healthcare in this country is going to rise simply because the amount of people, as a proportion of society, who require these services is going to rise dramatically. And that group expected to supply for the costs of healthcare in this country, the base of taxpayers, is going to reduce dramatically as a proportion of society.

The result of this trend is that healthcare, disability, long-term care and pension costs are going to continue to rise while the tax base to pay for these costs is going to continue to shrink. You don’t have to be a genius to see that such an arrangement is fiscally unsustainable.

Ontario Premier Dalton McGuinty has already said that in 12 years 70 per cent of the province’s operating budget will be needed just to sustain medicare. That’s not going to happen because otherwise education and other services would collapse, leaving us without the resources to sustain medicare.

The small changes that the Federal Tories are making in order to “reduce the deficit” is a fantasy in light of the changing demographic trends and the way we have set up healthcare and other services in this country.

Canada is facing a permanent structural deficit based on the services that it already has set up. The only way we can avoid this is by significant reform of the current system. The problem from a fiscal and ideological standpoint is that we’ve set up an upside down pyramid, where seniors and the elderly in our society are provided for by the young working taxpayer. Normally this arrangement shouldn’t have the fiscal problems that we are facing, because often times there are several taxpayers for every senior, and together they have the fiscal capacity to sustain the programs for the seniors.

However, in our current circumstance we are having an increasingly smaller population base to support a rapidly increasing base of seniors.

Without a change in the way we deliver healthcare and other seniors services, the deficit the government is facing can only be structural, and will be something that will be much more difficult to deal with 10-15 years down the road.