Elizabeth May is the leader of Canada's Green Party and is currently the party's only MP in Ottawa. She recently announced her engagement to a gent named John Kidder, who happens to be the brother of the Canadian actress Margot Kidder.
Here's a little piece from the Toronto Star about the upcoming nuptials. As you might expect, May is promising that it will be "a low-carbon wedding". That's just as well, because if you read the entire story, you'll find that the happy couple recently jetted from Vancouver to Poland to attend a climate conference. Then they came straight home, right? Well no, actually -- they hopped another jet down to Sicily for a little private time. I'm guessing they're not voyaging home from there by sailing ship or rowboat.
Congratulations to Ms May on her engagement -- but she's going to have to stay awfully close to home for a good long time just to get her carbon footprint down to the level of the ordinary folk she aspires to lead. No exotic honeymoon for you, John and Elizabeth! And maybe cut back on the four far-flung homes the two of you currently divide your time among. It's only fair.
Monday, 31 December 2018
Thursday, 27 December 2018
Yawn! Not again!
A new survey by Canadian Imperial Bank of Commerce has found that Canadians say their #1 financial priority for 2019 is (drum-roll please)....paying down debt.
This is the ninth year in a row that debt reduction has topped the list, and if you've been reading this blog for a while you'll know that what's actually happened in each of those nine years is that household debt burdens have moved ever higher.
I think the only comment I need make here is, I'll believe it when I see it.
This is the ninth year in a row that debt reduction has topped the list, and if you've been reading this blog for a while you'll know that what's actually happened in each of those nine years is that household debt burdens have moved ever higher.
I think the only comment I need make here is, I'll believe it when I see it.
Monday, 24 December 2018
Galbraith--me--Keynes
The great Canadian economist John Kenneth Galbraith once said that economists didn't make forecasts because they thought they could predict the future; they made forecasts because people asked them to. That was certainly the case during my own career: predicting the inherently unknowable was a big part of the job. Still, you have to wonder who asks the economists at Canada's Department to Finance to do this: a long-term economic and fiscal projection.
The introduction notes that projections over several decades are subject to "a fair degree of uncertainty". That's putting it mildly, and it may explain why the updates to these projections are always snuck out just as Santa is loading up the old sleigh. The projections don't get a lot of media attention, although one wire service solemnly reported that the federal budget deficit was now forecast to disappear in 2040, "five years sooner than was projected last year".
There are things you can reasonably forecast for the long term. For any country, the rate of real GDP growth will oscillate around a base level dictated by the growth in the labour force and the rate of productivity gains. The first of those is certainly reasonably predictable, and it's quite reasonable to approximate productivity growth by extrapolating past trends, which is not, by the way, particularly good news for Canada. It's also not a stretch to assume that the inflation-targeting approach in place for the last two decades will be maintained, which can be layered onto the real GDP forecast to come up with a defensible projection for nominal GDP growth.
So far, so good. It's when you get into the fiscal policy forecasts that the trouble starts. Budget making is political. Canada faces a Federal election in 2019 and, assuming that the pattern of elections every four years is maintained, will see a total of six elections by 2040 when, if you recall, the deficit is now projected to fall to zero. That means there are six occasions on which a wrenching change in the direction of fiscal policy might occur, throwing even short term forecasts, let alone long term projections, into disarray.
Just look back a recent history. The Stephen Harper Tory government had been devoted to balanced budgets. Justin Trudeau decided almost on the spur of the moment during the 2015 election campaign to pledge a return to deficit financing for a limited time to boost the economy, a pledge that he believes won him the election.
In office, the Trudeaucrats have abandoned the "limited time" part of that pledge; there is now no timetable for a return to balance. The main opposition leader, a right-wing Tory lightweight named Andrew Scheer, will surely fight the 2019 election on a platform of fiscal responsibility. That got Doug Ford elected in Ontario, so you can't bet against it working at the national level, and if that happens, all current bets are off.
If there's that much uncertainty over the possible impact of an election that's ten months away, how can you even conceive of forecasting the next five elections after that? Now of course, the Department of Finance carefully spells out the assumptions it uses to generate its results, but they're basically all of a "steady as she goes" nature. Given the ever-widening gap between left and right wing policy approaches nowadays, it seems very unlikely that will be the case.
I started with a quote from an eminent three-named economist, so let's finish the same way. John Maynard Keynes once remarked, a propos of long term forecasting, "In the long run we are all dead". And on that cheerful note, let me wish everyone who has stopped by this blog during the past year a happy Christmas and a safe and prosperous new year!
The introduction notes that projections over several decades are subject to "a fair degree of uncertainty". That's putting it mildly, and it may explain why the updates to these projections are always snuck out just as Santa is loading up the old sleigh. The projections don't get a lot of media attention, although one wire service solemnly reported that the federal budget deficit was now forecast to disappear in 2040, "five years sooner than was projected last year".
There are things you can reasonably forecast for the long term. For any country, the rate of real GDP growth will oscillate around a base level dictated by the growth in the labour force and the rate of productivity gains. The first of those is certainly reasonably predictable, and it's quite reasonable to approximate productivity growth by extrapolating past trends, which is not, by the way, particularly good news for Canada. It's also not a stretch to assume that the inflation-targeting approach in place for the last two decades will be maintained, which can be layered onto the real GDP forecast to come up with a defensible projection for nominal GDP growth.
So far, so good. It's when you get into the fiscal policy forecasts that the trouble starts. Budget making is political. Canada faces a Federal election in 2019 and, assuming that the pattern of elections every four years is maintained, will see a total of six elections by 2040 when, if you recall, the deficit is now projected to fall to zero. That means there are six occasions on which a wrenching change in the direction of fiscal policy might occur, throwing even short term forecasts, let alone long term projections, into disarray.
Just look back a recent history. The Stephen Harper Tory government had been devoted to balanced budgets. Justin Trudeau decided almost on the spur of the moment during the 2015 election campaign to pledge a return to deficit financing for a limited time to boost the economy, a pledge that he believes won him the election.
In office, the Trudeaucrats have abandoned the "limited time" part of that pledge; there is now no timetable for a return to balance. The main opposition leader, a right-wing Tory lightweight named Andrew Scheer, will surely fight the 2019 election on a platform of fiscal responsibility. That got Doug Ford elected in Ontario, so you can't bet against it working at the national level, and if that happens, all current bets are off.
If there's that much uncertainty over the possible impact of an election that's ten months away, how can you even conceive of forecasting the next five elections after that? Now of course, the Department of Finance carefully spells out the assumptions it uses to generate its results, but they're basically all of a "steady as she goes" nature. Given the ever-widening gap between left and right wing policy approaches nowadays, it seems very unlikely that will be the case.
I started with a quote from an eminent three-named economist, so let's finish the same way. John Maynard Keynes once remarked, a propos of long term forecasting, "In the long run we are all dead". And on that cheerful note, let me wish everyone who has stopped by this blog during the past year a happy Christmas and a safe and prosperous new year!
Wednesday, 19 December 2018
Donald won't like it
As expected, the US Federal Reserve announced a 25 basis point increase in the funds rate target today. Earlier this week, Donald Trump had suggested it was crazy for the Fed even to be thinking about a further rate hike; evidently Trump is starting to worry that the economy is turning sour, taking away one of the key "achievements" he likes to brag about.
It probably wouldn't do any good to point this out to Trump, but let's say it anyway. By calling on the Fed not to hike rates, Trump made it just about impossible for the Fed not to do so. Even if there had been some Fed governors inclined to hold rate stable for now, Trump's intervention effectively ruled that out. The market's reaction if it ever began to suspect that monetary policy was being set from the Oval Office really doesn't bear thinking about.
A lot of market-watchers have been focused less on today's decision, which was basically seen as a done deal, and more on what clues the Fed might offer about its actions in 2019. Not many, it turns out: considering the wild gyrations in the stock market, the collapse of oil prices and the ongoing trade tensions between the US and just about everybody, the statement is remarkably anodyne. Risks to the outlook are generally balanced, so future decisions will be data-dependent. Begging Donald Trump's pardon, there will probably be further tightening in 2019, but the pace is likely to slow down considerably from what we have seen in the last little while.
It probably wouldn't do any good to point this out to Trump, but let's say it anyway. By calling on the Fed not to hike rates, Trump made it just about impossible for the Fed not to do so. Even if there had been some Fed governors inclined to hold rate stable for now, Trump's intervention effectively ruled that out. The market's reaction if it ever began to suspect that monetary policy was being set from the Oval Office really doesn't bear thinking about.
A lot of market-watchers have been focused less on today's decision, which was basically seen as a done deal, and more on what clues the Fed might offer about its actions in 2019. Not many, it turns out: considering the wild gyrations in the stock market, the collapse of oil prices and the ongoing trade tensions between the US and just about everybody, the statement is remarkably anodyne. Risks to the outlook are generally balanced, so future decisions will be data-dependent. Begging Donald Trump's pardon, there will probably be further tightening in 2019, but the pace is likely to slow down considerably from what we have seen in the last little while.
Bank of Canada sidelined
Regardless of where the Federal Reserve goes next, the case for the Bank of Canada to raise rates again any time soon has just about disappeared. Data released this morning by Statistics Canada reveal that the year-on-year increase in headline CPI eased to 1.7 percent in November from 2.4 percent in October. The November figure was the smallest annual increase since January of this year.
The sharp slowing in inflation mainly reflects a reversal in energy prices, which had been largely responsible for headline CPI moving above the Bank's 2 percent target around the middle of the year. Gasoline prices now stand 5.4 percent lower than in November 2017. Anecdotally, it seems very likely that further falls in gasoline prices -- the retail price of a litre of regular grade is now below $1 in my neck of the woods -- will push the headline figure lower still when the December data are reported.
All eight principal sub-components of the index remain in positive territory year-on-year. However, all three of the Bank's preferred core measures are now back below the 2 percent target, with all of them standing at 1.9 percent.
With CPI comfortably in check and wage gains slowing markedly in spite of the tightness of the labour market, the case for the Bank of Canada to raise its target rate any further in the first quarter of 2019 now seems very weak indeed. Of course, the persistence of historically low rates will still leave the Bank fretting over the continuing willingness of Canadian households to take on debt. Even there, however, the Bank may be about to catch a break, with most forecasters looking for the housing market across the country to turn in a weak performance in 2019.
It's remarkable to contemplate the possibility that a policy interest rate of 1.75 percent might mark the peak of this tightening cycle. With increasing doubts surrounding the global growth outlook, however, that may well turn out to be the case.
The sharp slowing in inflation mainly reflects a reversal in energy prices, which had been largely responsible for headline CPI moving above the Bank's 2 percent target around the middle of the year. Gasoline prices now stand 5.4 percent lower than in November 2017. Anecdotally, it seems very likely that further falls in gasoline prices -- the retail price of a litre of regular grade is now below $1 in my neck of the woods -- will push the headline figure lower still when the December data are reported.
All eight principal sub-components of the index remain in positive territory year-on-year. However, all three of the Bank's preferred core measures are now back below the 2 percent target, with all of them standing at 1.9 percent.
With CPI comfortably in check and wage gains slowing markedly in spite of the tightness of the labour market, the case for the Bank of Canada to raise its target rate any further in the first quarter of 2019 now seems very weak indeed. Of course, the persistence of historically low rates will still leave the Bank fretting over the continuing willingness of Canadian households to take on debt. Even there, however, the Bank may be about to catch a break, with most forecasters looking for the housing market across the country to turn in a weak performance in 2019.
It's remarkable to contemplate the possibility that a policy interest rate of 1.75 percent might mark the peak of this tightening cycle. With increasing doubts surrounding the global growth outlook, however, that may well turn out to be the case.
Tuesday, 18 December 2018
A modest proposal
With apologies to the inimitable Jonathan Swift......
I've written here before about Western democracies turning into the kind of gerontocracies that Mao Zedong would have envied. The United States is the prime example, with its septuagenarian President. Arrayed against Trump on the Democratic side is an equally un-spry bunch: Bernie Sanders, Hillary Clinton, Joe Biden. Elizabeth Warren, Nancy Pelosi, all of them well past the Biblical three-score-and-ten. Sure, there are some younger folks in the Democratic Party, such as Beto O'Rourke or Alexandra Ocario-Cortes, but come on! We all saw how Hillary basically forced the Democrats to accept her awful candidacy in 2016, and now Pelosi has imposed herself onto a doubt-ridden party as Majority Leader. Chances of someone young and dynamic running against Trump in 2020 already look slim.
Over in the UK things may be even worse, with dead people set to deliver a Brexit that young people don't want. One researcher, using actuarial data, has made a remarkable calculation. If you just take the people who actually voted in 2016 and eliminate those who have died in the last thirty months, the tiny majority for Brexit has just about vanished, because the older people who were the main supporters of that ludicrous decision are moving on to meet their maker. Think about that next time Theresa May or Jacob Rees-Mogg asserts that a second vote would be a betrayal of democracy.
What can be done about this? Well, here we come to my modest proposal which, you will be relieved to learn, has nothing to do with eating babies. We don't allow people under the age of eighteen to vote because we judge they can't be relied on to determine what's in their and their country's interest. Yet we allow people to continue voting right up to the point when they take their last breath, even though they won't have to live with the consequences if they make insane decisions, like Brexit. Should there maybe be an age beyond which citizens are no longer permitted to help in setting public policies which they won't have to pay for and which will far outlive them? No vote before 18, no vote after 80??
I'm not entirely serious about this because I know it's a non-starter, but I'm not entirely unserious either. I've long felt that the obligations of the old to the young far outweigh the obligations of the young to the old. Right now we oldsters are doing a bang-up job of leaving an unholy mess to our descendants. Something needs to be done to rein us in -- anyone have a better idea?
I've written here before about Western democracies turning into the kind of gerontocracies that Mao Zedong would have envied. The United States is the prime example, with its septuagenarian President. Arrayed against Trump on the Democratic side is an equally un-spry bunch: Bernie Sanders, Hillary Clinton, Joe Biden. Elizabeth Warren, Nancy Pelosi, all of them well past the Biblical three-score-and-ten. Sure, there are some younger folks in the Democratic Party, such as Beto O'Rourke or Alexandra Ocario-Cortes, but come on! We all saw how Hillary basically forced the Democrats to accept her awful candidacy in 2016, and now Pelosi has imposed herself onto a doubt-ridden party as Majority Leader. Chances of someone young and dynamic running against Trump in 2020 already look slim.
Over in the UK things may be even worse, with dead people set to deliver a Brexit that young people don't want. One researcher, using actuarial data, has made a remarkable calculation. If you just take the people who actually voted in 2016 and eliminate those who have died in the last thirty months, the tiny majority for Brexit has just about vanished, because the older people who were the main supporters of that ludicrous decision are moving on to meet their maker. Think about that next time Theresa May or Jacob Rees-Mogg asserts that a second vote would be a betrayal of democracy.
What can be done about this? Well, here we come to my modest proposal which, you will be relieved to learn, has nothing to do with eating babies. We don't allow people under the age of eighteen to vote because we judge they can't be relied on to determine what's in their and their country's interest. Yet we allow people to continue voting right up to the point when they take their last breath, even though they won't have to live with the consequences if they make insane decisions, like Brexit. Should there maybe be an age beyond which citizens are no longer permitted to help in setting public policies which they won't have to pay for and which will far outlive them? No vote before 18, no vote after 80??
I'm not entirely serious about this because I know it's a non-starter, but I'm not entirely unserious either. I've long felt that the obligations of the old to the young far outweigh the obligations of the young to the old. Right now we oldsters are doing a bang-up job of leaving an unholy mess to our descendants. Something needs to be done to rein us in -- anyone have a better idea?
Thursday, 13 December 2018
Another warning on household debt
The high level of household indebtedness in Canada has been causing alarm in official circles (and on this blog) for several years now. Even as the Bank of Canada has been gently moving interest rates higher, it has continued to identify high household debt as a factor that could limit its ability to move policy toward more neutral settings.
On a national basis, the household debt/income ratio seems to have stopped increasing this year, although at 1.71 (or debt at 171 percent of income, if you prefer) as of mid-2018 it is hardly reassuring. That's a significantly higher figure than was seen in the US before the financial crisis. South of the border the debt burden has been heading lower for the past several years, whereas in Canada it had been steadily rising before appearing to plateau this year.
Now we have a new report from Canada Mortgage and Housing Corporation (CMHC), pointing out significant and worrisome differences in the debt burden between major cities across the country. The lowest ratio, at 1.06, is found in the small city of Saint John, New Brunswick. The highest by far is in Vancouver, at 2.42, followed by Toronto at 2.08. Given that these are respectively the third largest and largest cities in Canada by population, these numbers suggest that a significant number of Canadians are at significant risk of financial difficulties if interest rates continue to rise.
It seems likely that the Bank of Canada will be keeping rates on hold for the next few months, mainly because there are few signs that the apparent tightness in the labour market is leading to wage pressures. The problem for the Bank is that the CMHC data seem to show that, despite actual increases in debt servicing costs and repeated warnings of more to come, Canadians are showing little inclination to start paying down their debts. With the housing markets in both Toronto and Vancouver showing signs of moving higher again, high household debt promises to remain a headache for policymakers well into the future.
On a national basis, the household debt/income ratio seems to have stopped increasing this year, although at 1.71 (or debt at 171 percent of income, if you prefer) as of mid-2018 it is hardly reassuring. That's a significantly higher figure than was seen in the US before the financial crisis. South of the border the debt burden has been heading lower for the past several years, whereas in Canada it had been steadily rising before appearing to plateau this year.
Now we have a new report from Canada Mortgage and Housing Corporation (CMHC), pointing out significant and worrisome differences in the debt burden between major cities across the country. The lowest ratio, at 1.06, is found in the small city of Saint John, New Brunswick. The highest by far is in Vancouver, at 2.42, followed by Toronto at 2.08. Given that these are respectively the third largest and largest cities in Canada by population, these numbers suggest that a significant number of Canadians are at significant risk of financial difficulties if interest rates continue to rise.
It seems likely that the Bank of Canada will be keeping rates on hold for the next few months, mainly because there are few signs that the apparent tightness in the labour market is leading to wage pressures. The problem for the Bank is that the CMHC data seem to show that, despite actual increases in debt servicing costs and repeated warnings of more to come, Canadians are showing little inclination to start paying down their debts. With the housing markets in both Toronto and Vancouver showing signs of moving higher again, high household debt promises to remain a headache for policymakers well into the future.
Friday, 7 December 2018
What's going on with wages?
The usual caveats about the volatility in Canada's monthly labour force survey apply, but....the November data, released by StatsCan this morning, are remarkably strong, except in one key respect, which we'll get back to.
Employment across the country reportedly grew by 94,000 in the month, the best figure for any month in more than six years. This pushed the unemployment rate down to 5.6 percent, the lowest figure recorded since StatsCan started publishing this series in 1976. Details of the jobs added in the month look equally positive. Just about all of the gains were in full-time employment, and almost 79,000 of the new jobs were in the private sector. Over the past twelve months employment in the economy has risen by 219,000 or 1.2 percent, with all of the gain represented by full-time positions.
If you want a reason to be skeptical about the data -- and with this series, you should -- consider the fact that StatsCan is reporting that employment rose by 24,000 in the Province of Alberta in November, dropping that Province's unemployment rate by a full percentage point. It's hard to square those numbers with the howls of anguish coming out of Alberta on a daily basis, as oil prices collapse and increased numbers of wells are abandoned. StatsCan's data may be right on the money, but there seems at least the possibility that something -- most likely the seasonal adjustment factors -- is creating a misleading picture.
If the Bank of Canada's policy decisions are data-dependent, as Governor Poloz regularly reminds us, then these figures must surely prompt markets to price in a rate hike early in 2019, right? Not necessarily. The one key weakness in today's numbers is the performance of wages. Year-on-year wage growth was rising smartly in the first half of this year, reaching a worrisome 3.9 percent in May. Since then it has been slipping steadily lower, and in November stood at just 1.5 percent, materially below the rate of CPI inflation.
The sluggishness of wage growth in the face of a strong economy and tight labour market is not just a Canadian phenomenon, and no fully satisfactory explanation has been found. Recent pronouncements by Governor Poloz indicate that the Bank of Canada is not quite as convinced as it once was that the economy is operating at full capacity, and the trend in wage growth over the past half-year seems to support that. If the economy can keep adding jobs without triggering fears of a wage-price spiral, there will be less need for the Bank to keep moving rates higher. No rate hike is likely in January, and unless there are some nasty surprises in the December jobs report, a move in February is probably off the table too.
Employment across the country reportedly grew by 94,000 in the month, the best figure for any month in more than six years. This pushed the unemployment rate down to 5.6 percent, the lowest figure recorded since StatsCan started publishing this series in 1976. Details of the jobs added in the month look equally positive. Just about all of the gains were in full-time employment, and almost 79,000 of the new jobs were in the private sector. Over the past twelve months employment in the economy has risen by 219,000 or 1.2 percent, with all of the gain represented by full-time positions.
If you want a reason to be skeptical about the data -- and with this series, you should -- consider the fact that StatsCan is reporting that employment rose by 24,000 in the Province of Alberta in November, dropping that Province's unemployment rate by a full percentage point. It's hard to square those numbers with the howls of anguish coming out of Alberta on a daily basis, as oil prices collapse and increased numbers of wells are abandoned. StatsCan's data may be right on the money, but there seems at least the possibility that something -- most likely the seasonal adjustment factors -- is creating a misleading picture.
If the Bank of Canada's policy decisions are data-dependent, as Governor Poloz regularly reminds us, then these figures must surely prompt markets to price in a rate hike early in 2019, right? Not necessarily. The one key weakness in today's numbers is the performance of wages. Year-on-year wage growth was rising smartly in the first half of this year, reaching a worrisome 3.9 percent in May. Since then it has been slipping steadily lower, and in November stood at just 1.5 percent, materially below the rate of CPI inflation.
The sluggishness of wage growth in the face of a strong economy and tight labour market is not just a Canadian phenomenon, and no fully satisfactory explanation has been found. Recent pronouncements by Governor Poloz indicate that the Bank of Canada is not quite as convinced as it once was that the economy is operating at full capacity, and the trend in wage growth over the past half-year seems to support that. If the economy can keep adding jobs without triggering fears of a wage-price spiral, there will be less need for the Bank to keep moving rates higher. No rate hike is likely in January, and unless there are some nasty surprises in the December jobs report, a move in February is probably off the table too.
Thursday, 6 December 2018
Meet the new boss, same as the old boss
Former Ontario Premier Kathleen Wynne has kept a low profile since leading her Liberal Party to a crushing defeat in the Provincial election last June. She resigned the leadership of the party right after the vote, leaving the rump Liberal caucus -- seven members, not enough to claim official party status -- under the temporary leadership of a nonentity whose name I can't even be bothered to Google. However, Wynne suddenly emerged back into the political spotlight this week, and mostly not in a good way.
Early in the week, Wynne put on her mother-knows-best garb to introduce a bill in the provincial legislature to improve safety on school buses, mainly through the mandatory use of seatbelts. Hard to argue with that, though one might wonder why, if it's such a good idea, Wynne and her predecessor Dalton McGuinty didn't quite get around to it during the fifteen years they were governing the Province.
Without seeming too cynical, it looks very much as if Wynne chose this timing for the bill so as to receive at least a few favourable headlines in the media, because the rest of the week was a lot less kind. The Ford government has been running hearings (kangaroo court might be a better term) on the alleged wasteful spending of the Wynne regime. Wynne herself was called upon to testify about her Fair Hydro scheme, a pre-election goody aimed at appeasing voter anger over soaring energy prices.
The rise in energy prices largely relates to a poorly-designed clean energy plan, devised by McGuinty but enthusiastically continued by Wynne. Wind turbines have sprung up all over the Province, compelling the construction of all kinds of backup facilities because wind is an unreliable power source. Hydro, gas and (whisper it) nuclear capacity already in place can in fact easily supply all the Province's needs, but wind power has "first to the grid" rights. A lot of cheap hydro power is regularly spilled, and a whole lot of surplus power routinely sold at knockdown prices to US utilities.
Wynne's "solution" was to extend the amortization term for fixed power assets in order to borrow money against said assets to keep prices down in the near term. This of course just pushes the burden onto future power customers, but that's not Wynne's problem, at least as she saw it. What was her problem was that the added borrowing would increase the deficit at an awkward time -- so the power utility was instructed to carry out the borrowing, keeping it off the Provincial books.
Wynne gave as good as she got at the hearing, which was made easier by the fact that the Tories have not reversed the Fair Hydro scheme, having no better idea of their own. Still, Wynne was forced to admit that her own civil servants had been aghast at the scheme, but she had carried on with it anyway despite their concerns.
Next came the Provincial Auditor-General's report. The A-G and the Wynne government were perpetually at loggerheads and the report reflects that. It contains a veritable litany of mismanagement, overspending and duplicity. Needless to say the Ford government is making hay with it, and will doubtless use it to justify the spending cuts that are clearly coming when a full budget is tabled in the spring.
It would be gratifying to report that things are different under the new Ford regime, but that's not even remotely true. Ford and his cronies are quickly building a rap sheet of their own. One of the government's first moves was to fire the CEO of the part-privatized Hydro One utility, whom Ford had dubbed the "six-million dollar man" because of his exorbitant salary. It turned out that firing this worthy cost a whole lot more than six mil' -- and this week the cost ballooned way higher. Hydro One had been planning to buy a US utility, Avista, but the deal has been nixed by US regulators because of the demonstrable risk of political interference. That leaves Hydro One facing a drop-dead fee in excess of $100 million, which will presumably be rolled into the rate base and picked up by consumers.
There's more. Ford unilaterally cut the size of Toronto City Council, in the middle of an election campaign, without ever having mentioned such a plan during his own election campaign. He has engineered the appointment of a long-time crony as Ontario Police Commissioner despite the fact that the gent in question never rose above the rank of Superintendent during his active policing career. The Province's chief auditor (not the same as the A-G) has resigned rather than sign off on the Finance Minister's wildly-overstated estimate of the fiscal deficit inherited from his predecessor. And so on.
Comparisons between Ford and Donald Trump become easier to make with each passing day. Ford loves rallies, craves adoration and clearly thinks that his position as Premier means that the rules, whether of politics or of simple common decency, just don't apply to him. He is starting to make noises about ambitions in Federal politics. We're probably safe until after next October's Federal election, but if current Tory leader makes a hash of things, the rest of Canada may have to start bracing itself for the Doug Ford experience.
Early in the week, Wynne put on her mother-knows-best garb to introduce a bill in the provincial legislature to improve safety on school buses, mainly through the mandatory use of seatbelts. Hard to argue with that, though one might wonder why, if it's such a good idea, Wynne and her predecessor Dalton McGuinty didn't quite get around to it during the fifteen years they were governing the Province.
Without seeming too cynical, it looks very much as if Wynne chose this timing for the bill so as to receive at least a few favourable headlines in the media, because the rest of the week was a lot less kind. The Ford government has been running hearings (kangaroo court might be a better term) on the alleged wasteful spending of the Wynne regime. Wynne herself was called upon to testify about her Fair Hydro scheme, a pre-election goody aimed at appeasing voter anger over soaring energy prices.
The rise in energy prices largely relates to a poorly-designed clean energy plan, devised by McGuinty but enthusiastically continued by Wynne. Wind turbines have sprung up all over the Province, compelling the construction of all kinds of backup facilities because wind is an unreliable power source. Hydro, gas and (whisper it) nuclear capacity already in place can in fact easily supply all the Province's needs, but wind power has "first to the grid" rights. A lot of cheap hydro power is regularly spilled, and a whole lot of surplus power routinely sold at knockdown prices to US utilities.
Wynne's "solution" was to extend the amortization term for fixed power assets in order to borrow money against said assets to keep prices down in the near term. This of course just pushes the burden onto future power customers, but that's not Wynne's problem, at least as she saw it. What was her problem was that the added borrowing would increase the deficit at an awkward time -- so the power utility was instructed to carry out the borrowing, keeping it off the Provincial books.
Wynne gave as good as she got at the hearing, which was made easier by the fact that the Tories have not reversed the Fair Hydro scheme, having no better idea of their own. Still, Wynne was forced to admit that her own civil servants had been aghast at the scheme, but she had carried on with it anyway despite their concerns.
Next came the Provincial Auditor-General's report. The A-G and the Wynne government were perpetually at loggerheads and the report reflects that. It contains a veritable litany of mismanagement, overspending and duplicity. Needless to say the Ford government is making hay with it, and will doubtless use it to justify the spending cuts that are clearly coming when a full budget is tabled in the spring.
It would be gratifying to report that things are different under the new Ford regime, but that's not even remotely true. Ford and his cronies are quickly building a rap sheet of their own. One of the government's first moves was to fire the CEO of the part-privatized Hydro One utility, whom Ford had dubbed the "six-million dollar man" because of his exorbitant salary. It turned out that firing this worthy cost a whole lot more than six mil' -- and this week the cost ballooned way higher. Hydro One had been planning to buy a US utility, Avista, but the deal has been nixed by US regulators because of the demonstrable risk of political interference. That leaves Hydro One facing a drop-dead fee in excess of $100 million, which will presumably be rolled into the rate base and picked up by consumers.
There's more. Ford unilaterally cut the size of Toronto City Council, in the middle of an election campaign, without ever having mentioned such a plan during his own election campaign. He has engineered the appointment of a long-time crony as Ontario Police Commissioner despite the fact that the gent in question never rose above the rank of Superintendent during his active policing career. The Province's chief auditor (not the same as the A-G) has resigned rather than sign off on the Finance Minister's wildly-overstated estimate of the fiscal deficit inherited from his predecessor. And so on.
Comparisons between Ford and Donald Trump become easier to make with each passing day. Ford loves rallies, craves adoration and clearly thinks that his position as Premier means that the rules, whether of politics or of simple common decency, just don't apply to him. He is starting to make noises about ambitions in Federal politics. We're probably safe until after next October's Federal election, but if current Tory leader makes a hash of things, the rest of Canada may have to start bracing itself for the Doug Ford experience.
Tuesday, 4 December 2018
Saudi turbulence
It's clear that Saudi Crown Prince Mohammed bin Salman and his inner circle are not students of English history. If I were in MBS's sandals, with the wolves circling ever more menacingly, I'm pretty sure I'd be citing what you might call the King Henry II defense.
As related here by the always-reliable Wikipedia, Henry was having trouble with the Archbishop of Canterbury, Thomas Becket. The King supposedly uttered the fateful words "Will no-one rid me of this turbulent priest"? Four knights promptly set sail from Normandy to Canterbury, confronted Becket in the Cathedral and murdered him.
Henry was vilified and forced into public acts of expiation but kept his throne. MBS has probably left it too late, but if this defense -- basically, "Gee, I was just venting! I never meant for this to happen!" -- had been adopted earlier, it might well have worked. Especially as there's a guy in the White House that would dearly love to believe it.
As related here by the always-reliable Wikipedia, Henry was having trouble with the Archbishop of Canterbury, Thomas Becket. The King supposedly uttered the fateful words "Will no-one rid me of this turbulent priest"? Four knights promptly set sail from Normandy to Canterbury, confronted Becket in the Cathedral and murdered him.
Henry was vilified and forced into public acts of expiation but kept his throne. MBS has probably left it too late, but if this defense -- basically, "Gee, I was just venting! I never meant for this to happen!" -- had been adopted earlier, it might well have worked. Especially as there's a guy in the White House that would dearly love to believe it.
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