Wednesday, October 28, 2009

Hell will Freeze over before this Government tells the Truth

About Income Trusts or just about anything else for that matter.

In 2006 Canada’s “new government” came to power having made numerous promises in their election platform to clean up Ottawa, and usher in a new era of accountability and transparency.

Up until October 31 it was doing fairly well, in that its numerous broken promises were passing under the radar screen of most people, its supporters still ran around uttering the phrase “promises made promises kept” at every opportunity. That ended on Halloween, about the only thing we can be thankful for.

The Government announced it was regretfully forced to break its own promise and introduce a punitive tax on Income Trusts, apparently things had changed drastically since it made the promise much to its amazement it now thought it was losing millions of dollars a year in tax revenue.

Fair enough things change, how very regretful, now would be the perfect opportunity for the “New Government” to live up to its promise on accountability and transparency, and quickly produce a mountain of evidence, surly Mr. Harper and Mr Flaherty would be eager to prove their case and get every little minion in the Department of Finance eagerly pushing out documents to support their new bosses.

Sadly this was not the case, when appearing before a parliamentary committee Mr. Flaherty was full of extravagant claims but failed to produce a single bit of evidence suitable for peer review, a freedom of information request finally produced 18 pages of blanked out information, since then parliament, freedom of information requests and law suits have produced nothing................. zilch.

A cynic could be excused for thinking this might just have something to do with the government not having any evidence that would stand up to serious scrutiny, if you have a bad hand of cards you better not show it.

This impression would be further confirmed when the cynic learns that private groups including some of the countries leading economist have produced serious reports suitable for peer review that indicate quite the opposite, the government was in fact profiting handsomely for the income trust structure when a full life cycle analyses was undertaken.

The government that can't count continues to be amazed and more than a little stunned when it comes to finance, and hell is in no danger of freezing over.

Tuesday, April 21, 2009

The Inconvenient Truth, refuses to go away

No not that, although it to refuses to go away, but Income Trusts
From a recent article in the Hill Times also available here.

"Why the income trust issue REFUSES to go away
... Canadians refuse to accept a policy whose premises are all false, whose passage is inherently undemocratic."

Unfortunately for our spectacularly incompetent government the "facts" that back up the authors arguments are available here in the form of reports from some of the countries leading economists, including HDR Economics, Price Waterhouse, RBC, BMO, Fortin Tait, Jack Mintz and others.
I know these are heavy boring economic reports but somebody in the government (yes they got copies) or the media (also got copies)
really should have bothered to take the time to read them.

Right now the Billions in lost tax revenue that have resulted from this debacle would come in mighty handy.

Monday, December 15, 2008

"Come Clean with the Numbers" GOOD LUCK!

Today Jim McCallum and Scott Brison met with Jim Flaherty and asked him to "come clean with the numbers" good luck guys, its just not in this governments DNA.

Now all Canadians find themselves in the same situation Income Trust Investors found themselves when the government presented blacked out documents to back up its numbers and income trust investors produced over a dozen full reports with all the numbers to back up their case.

Guess what? only the blacked out report that nobody could read counted in this governments opinion.

It reminds you of a third rate banana republics' government.

No doubt we will get the same story with the nations budgets, Stevie and Jims version of the numbers (minus details) versus countless economists.

With this government, ideology always wins out over inconvenient facts.

If the facts don't match change the facts to suit, the only problem is when you keep pulling this kind of nonsense and get away with it for a while, you start believing your own nonsense and pull a stunt like the fiscal update that just about hardly anybody believes, and then who looks stupid?

Friday, November 28, 2008

What Took So Long?

Why did it take so long for the opposition parties to get together and figure out a way to hold the Harper Conservatives accountable?
The cynic in me might be inclined to think the loss of their financial support might just have a little bit to do with it.
What ever the factor was it was long overdue the 62% of Canadians that did not want this government is fed up of being left out.
Hopefully this government will be replaced with a coalition that more accurately reflects the wishes of Canadians, even if this government survives the tone of this parliament has permanently changed and not in a way that Mr Harper is going to appreciate, he might just have to listen to others if he wants to survive as PM.

Friday, October 31, 2008

How Big a Table do you Need?

How big a table do you need to seat 38 people for a cabinet meeting?

If the table was 6 feet wide it would have to be 54 feet long to allow 3 feet per person and one at each end.

Maybe you could use the old table and have junior cabinet members stand behind the seats of senior members? They could also look after the drinks and snacks and actually do something useful.

If Stevie sits at the head, who sits at the other end?

How do you decide the pecking/seating order?

Or would a round table be better, it would have to be a minimum of 36 feet diameter?

If Stevie chooses a round table would that mean he is a weak leader? Maybe oval is better.

Where do you put this table so you can keep the media away?

Where are you going to get this table from? Do you

a) Order an expensive new hardwood table made from endangered trees to annoy Elizabeth May.

b) Have a new one built out of pine beetle killed lumber, its really quite pretty and would support all those folks in BC that voted for you after you sold them down the road on the softwood lumber deal.

c) Borrow some tables from the canteen, to show how your expanded cabinet is really cutting costs.

Could you just close the canteen and have the meeting there?

No body ever said being PM was easy.

Jims Halloween Horror Story

Two years ago on Halloween deficit Jim announced the tax fairness plan, an attempt to stop an alleged tax revenue loss due to Income Trusts and introduce tax splitting for seniors as some sort of compensation.

How has the plan worked so far? Last years update

The income splitting for seniors that benefits the top 30% of Canadians seniors was introduced at an estimate cost of $5 billion a year.

Up until October 07 the number of income trusts and Bell Canada that were brought out by private equity has resulted in an annual loss of tax revenue of $1.7 billion.

Since then the majority of action in the sector has been to convert to corporations where they can employ different tactics to reduce or eliminate their tax bill.

The few Income Trusts that will remain no doubt plan to use tax pools to reduce or eliminate their tax bills, the net result will be that no significant new tax revenue will be collected whilst the loss in tax revenue will be from $3 to 7.5 billion plus the bill for income splitting.

The total cost of the Tax Fairness Plan will be around $8-12 Billion every year plus the one time cost to Investors of $35 billion and another billion or so to taxpayers in the form of capital gains tax lost. Right now the government desperately needs that kind of cash.

Total costs to all taxpayers in the form of reduced tax revenue will exceed the losses by Income Trust investors within 3-5 years and just keep piling up after that. Happy Halloween.

The not so “New Government” and definitely not accountable government has refused to release any evidence suitable for peer revue to back up its position, while the pile of credible reports that dispute it has continued to grow.

Not surprising, despite a mountain of criticism the government has not changed a single part of the plan.

Previous analysis has indicated that Income Trust investors could produce a swing in votes of at least 1%. Whilst the results of the recent election was not what many Income Trusts investors were hoping for their votes made a critical difference.

Harper lost his hope of a majority in Quebec, if he had played his cards right he could have built up a significant lead and been un-assailable, but as it was he left him self vulnerable in such a way that any number of special interest groups could have a significant effect and destroy his dreams of a majority.

Numerous ridings were decided with razor thin margins, you can bet that in each one of them a few hundred Income Trust investor votes were one of the critical factors.

Stevie is still nursing a few bruises from the election, Income Trusts are turning out to be an annoying little thorn in his side that just won’t go away, and unfortunately for Stevie, Income Trust investors are like elephants in that have very long memories.

Income Trust investors have had very little satisfaction so far, but now at least they get the perverse satisfaction of watching the Insurance and Pension industries that benefited from Flahertys’ horror brought to their knees, by a similar reduction in their stock portfolios that they experienced.

Recent market conditions have revealed that these “professional” investors that benefited from being excluding from the tax on trusts and in some cases lobbied for it, have been swimming without their trunks on, some for years.

They have failed to have sufficient reserves or adequate hedging to withstand previous or current market conditions.

Now these “professionals” are aggressively lobbying the government for taxpayers’ aid, the odds are that Jim will reluctantly relax the reserve requirements rules and hope they won’t be back, chances are that Jim will be reaching for his cheque book soon.

So much for free markets, less government regulation and leveling the playing field. Expect more statements similar to what the Bush regime makes on a daily basis, “its against our principles but what else can we do”.

That’s going to hurt.

The strange thing about this horror story is that both the monsters and the victims are wounded and running scared.

That is what you get when you play games you don't understand!

The really scary part of this story is that the same Jim who created this mess is going to be in charge of Canada's finances during some of the most challenging economic times in years.

Tuesday, October 28, 2008

Branding Harper

The conservatives have been successful in branding Liberal leaders with derogatory labels, such as "Mr Dithers" and "Not a Leader"

The is no shortage of similar material on Harper, in fact the material does not need to be factually accurate as the above labels indicate.

This excellent article explains how the conservatives probably did it, we need to learn this lesson well and apply similar tactics on our opponents or at the very least be ready to counter the tactic.

Its time we found a label for Harper and then like a bunch of rabid dogs keep on repeating the label until it sinks into his national identity, this is exactly what the conservatives have done in the past.

The label needs to be-
Believable even if not factually accurate
Understandable by some one with no interest in politics
Preferably humorous
The more graphical material to back it up the better