MB Budget 2013: Five Lies

Lies ... So many lies ... It makes me sad.

I am not happy about the PST hike -- few people are -- but for me the worst aspect of this week's budget announcement wasn't the tax increase itself but all of the lies that accompanied it. I appreciate honesty. I may not like what you're doing, but if you're honest about why you're doing it and have a good reason for doing so, I will not resent your actions.

But that is not the case here. There is a tremendous arrogance in how the government delivered this budget that I'm finding hard to articulate, so let's just get on with the show ... here some of the more grievous lies from this week's budget announcement:

LIE: The tax hike is required for flood infrastructure. Direct quote: "this revenue will help protect Manitobans against flooding." There are 13 consecutive paragraphs in the budget speech about flooding, leading up to the tax increase announcement.
FACT: Spending on water-related infrastructure is actually decreasing $11 million from last year -- from $59m to $48m. This amount also represents a very small fraction of the revenue that will be generated from the tax increase.

LIE. Holding a referendum on the tax increase would make us miss construction season. Direct quote: "We have to get on with it now. The construction season is in front of us."
FACT: This has got to be one of the worst excuses I have ever heard from a politician. I don't even know where to start. How exactly is this supposed to make sense?  You see .. much like pizza at New York's famed Grimaldi's Pizzaria, you can only pay for flood infrastructure in cash, and we ... um ... don't seem to have any cash on us. Do you have any cash Greg? No? Ya, neither do I. Gosh, where are we going to find all that money so we can protect Manitoba families from flooding? This really is quite the conundrum. I think the only solution is to instantaneously raise $48 million on July 1 with a PST hike so that we can get those construction crews working!
As already mentioned, flood infrastructure spending is going down from last year, and in any case these projects can be financed. A referendum has absolutely no bearing on whether a dike gets built this summer.

LIE: Our sales tax rate is still 3rd lowest in Canada. Direct quote: "Our PST will remain third lowest in the country."
FACT: We aren't even the 3rd lowest in Western Canada.
Alberta: 0%
Saskatchewan: 5%
BC: 7%
Manitoba: 8%  ← 4th lowest
Or .. you could look at it this way: we are 4th highest in Canada, lower than only Quebec, PEI and Nova Scotia.
FUN FACT: Two other provinces are decreasing their sales tax, including Nova Scotia. By July 2015 we will be tied for the 3rd highest sales tax rate in Canada.

LIE: The global economy is to blame. Direct quote: "But the economic outlook remains uncertain. The source of that uncertainty lies outside our borders."
FACT: As I've progressed through life I have learned that there are certain phrases that you never want to hear. Phrases like:
"We regret to inform you.."
"I just got my results back.."
and 
"While we have weathered the recession better than most provinces, the global economy remains uncertain.."
If you have the opportunity to pour yourself a scotch before hearing the remainder of any of those sentences I highly recommend it. Anyhow, on with the facts .... revenues for the year that just passed came in at only $200k less than what was budgeted for 2012/13, and those revenues were 3% more than the year before. In other words, the government's revenues are pretty much exactly as anticipated when the Premier said "Ridiculous idea that we're going to raise the sales tax. That's total nonsense, everybody knows that."


LIE. We are on track to balance the budget by 2016. Direct quote: "It will allow us to deliver a balanced budget by 2016."
FACT: The budget does indeed show Manitoba achieving a balanced budget in 2016/17. How? Through spending restraint unlike any we have seen from this government in the past. Spending growth projections are:
2014/15: 1.3%
2015/16: 2.1%
2016/17: 2.1%
For reference, the smallest increase the NDP has budgeted since it came into power in 1999 is 2.5%, and they have averaged spending increases of 4.6%. While it is technically possible for the government to keep this promise, they know very well that they will not.

The Manitoba Government subsidizes strippers

It's true. Just ask Finance Minister Stan Struthers.

Struthers has been the Government's point man in a very public battle with the Manitoba Jockey Club over the future of the Assiniboia Downs race track. The government intends to cut what it calls "subsidies" to the Jockey Club by "at least $5 million". To the jockey club, this could mean the end of horse-racing in Manitoba. To the government, this is just cost-cutting:

"We understand that the MJC is disappointed with the government's intentions, but we have a duty to spend public funds responsibly."

You see? The government is just being responsible in this time of austerity.

Except ... hang on to your seat ... that's not exactly true! I know .. I am sorry to have shattered your faith in our elected officials. I will make it up to you somehow.

More than one person has pointed out that what the government is calling "subsidies" or "funding" is actually the venue's share of VLT and other gaming revenue collected on-site. One of those people is Wayne Anderson:

"If these funds are grants, then so are the funds flowing to the hotels, legions, aboriginal casinos and the Jets from VLTs, slots, etc."

The places receiving this so-called funding includes strip clubs like Teasers, which in addition to featuring "Sleek & Sheek, Sexy, Exotic & Erotic, Applebottom babes, Big bang bootys, MilkJugs, Curvy, Mind Melting Hourglass figures, Long Legged Ladies, Big Bouncing boobs, Shocker Knockers & fun all the way around" also offers VLTs for your gaming pleasure. Each VLT could net Teasers up to $50,000 per year in revenue, thus the government is likely funding "nipple popping snow shows" to the tune of hundreds of thousands of dollars a year.

Thank you, Stan!

The government's decision to cut revenues to the Manitoba Jockey Club is peculiar, given that the government had only just negotiated a new agreement with them less than two years ago. This agreement allows the MJC to retain a much larger share of their VLT revenues than most institutions. The actual percentage is hard to know without more information, but it's greater than 75% -- probably in the 85-90% range*

It is fair to question whether the MJC should get such a large cut of the revenues. The rationale (in the government's words) was to "strengthen the Assiniobia Downs as a key component of the Manitoba’s diverse tourism, agricultural and thoroughbred industries". The $5 million drop in revenue would essentially put Assiniboia Downs on the same footing as hotels and bars, which get to keep only 20% of the revenue that they generate from VLTs.

Why should the jockey club get a more generous deal? Well for one thing, they may not be able to survive without it. Indeed, the Jockey Club accuses the government of trying to bankrupt it with this move, paving the way for the Red River Exhibition to take over the property. I haven't figured out what vested interest the provincial government has in seeing the Ex control the Assiniboia Downs property, but that appears to be the goal.

Also, horse racing is a small but unique part of the entertainment fabric of this province, and as such it would be hypocritical of the province to not give them a special deal. After all, Manitoba Lotteries is building a dedicated casino, er ... gaming centre, to provide financial support to the Jets.

As an aside, Manitoba First Nations get to keep 90% of their gaming revenue -- everything less a 10% fee to cover administration costs. This increased amount is "provided as a contribution to promote sustainable social and economic benefits and opportunities with the First Nations communities" ... like a vacation to Rome for the Chief, the Chief's wife, and 5 friends. (The government's position in that particular case was that the band can spend the revenue however they wish, but I think most people would prefer that VLT revenues stay within the province to support local communities and institutions, like for example Teasers, where you can see "one of the wettest shows on stage, where the girls take hot steamy wet showers, bathe and washing every succulent curvy part of their sexy moist soft bodes.")

Where was I? Oh yes ... the Mantitoba Jockey Club.

If the government wanted to reduce the Club's share of the revenue for what appeared to be legitimate reasons, I wouldn't be writing this post. If, for example, the government felt that gambling at the Downs was cannibalizing gambling at venues where the government gets a bigger slice of the pie, and could therefore generate more revenue through this action. If that's what they have in mind they've done a poor job articulating it.

In actuality, the government has an interest in supporting gaming activity at Assiniboia Downs because there is money to be made there. Common sense tells you that VLTs are likely to do particularly well at a horse race track where the primary activity is synonymous with gambling.

The numbers support this: VLT revenues at hotels and bars, both inside the city and in small towns, has been on the decline since 2009; while gambling at the Downs has been increasing...

Whatever the government's intentions, it is not going to go as smoothly as they planned. If the Jockey Club is going down, they're going down swinging. This past weekend they printed a half page ad in the Winnipeg Free Press and have launched a lawsuit against the government. Never mess with a Jockey, my mother always told me.

Whether horse racing will survive when all is said and done, I don't know. I suspect it will, even if the Red River Exhibition takes over the race track. The government will ensure that there is some sort of funding through some means.

If not, we have other things in these parts to entertain us. Like strippers.

*MJC's take of VLT revenues in 2010 was $5.5m or 75% of $7.3m total revenues. The current agreement provides the MJC with up to $6.5m, which would be 89% of total revenues if total revenues were to remain steady. source.

It's so simple: Bus Fares and Waterparks

This is so obvious that I'm sure somebody else has pointed this out already, but just in case ...

There are a couple of big stories coming out of Winnipeg City Hall these days. One has to do with a 20 cent transit fare increase to fund the first leg of the rapid transit corridor from downtown to the University of Manitoba. As one would expect, this has generated a storm of protest. People are upset, a web site has been created in opposition to the proposal, old men are breaking their hips in protest ... it's getting ugly out there folks. And what does this transit fare do for us? It nets us $7 million (rounded off) in annual revenue to put towards the rapid transit line.

Meanwhile ...

The mayor is at long last thinking of giving up on his dream of having an indoor water park in Winnipeg, assisted by $7 million of public money, should a white knight not step up (or sashay out of the water .. kind of like this) in the next month.

In case you forgot where the money came from:

the money for the water park was taken from a $43-million pot of multi-lateral money destined to fund the first stage of Bus Rapid Transit.

... the same first stage of bus rapid transit that the 20 cent fare increase is supposed to help.

Sam says "There's lots of other projects we can do." Hey ... I know a project!

Dan Lett, in the column linked to earlier, argues it should be spent on hockey rinks and community clubs. Not a bad idea, and other people may have other thoughts, but putting the cash back where it belongs will allow us to shelve the ridiculous transit fare increase and will buy us another year to allow Sammy and Greg to work through their embarrassingly disfunctional transit funding courtship.

Sometimes the simplest solution is the best solution.

MANITOBA ELECTION: STILL UNDECIDED?

I don't blame you. Choosing between the parties in this provincial election is like choosing between a light grey Chevy Malibu and a dark grey Chevy Malibu. If only a bright red Dodge Challenger SRT8 was available...

So far in this election, the boldest idea has come from the Green Party: free bus fare. The second boldest idea has come from the Liberals: relax Sunday shopping laws. Both the Greens and the Liberals are holding back on the excessive spending promises, meanwhile the NDP and PC parties are dropping money bags from helicopters. Unfortunately, neither the Liberals or Greens have a chance in this election. John Gerrard may get re-elected as the Liberal's only seat, meanwhile Green Party leader James Beddome is an underdog in Wolseley and no other Green candidate even has a shot.

The realistic discussion pertains to the NDP and the PCs, but when you look at the two main parties from a high level they look pretty much the same:

CRIME
NDP: more cops on the street
PC: more cops on the street

HEALTH CARE
NDP: more doctors and nurses
PC: more doctors and nurses

ECONOMY
NDP: won't balance the budget
PC: won't balance the budget

TAXES
NDP: minor tax credits with no significant tax reform
PC: minor tax credits with no significant tax reform

EVERYTHING ELSE
NDP: spend lots of money
PC: spend lots of money

Rather than campaigning on ideas, the NDP is campaigning on things the PCs might do, and the PCs are campaigning on things the NDP failed to do. The only difference is the NDP has a track record, and the PCs do not. Whether you think that track record is good or bad may be your deciding factor in voting, but if you're looking for something to tip the balance, this should be it:

BIPOLE III

I haven't blogged about Bipole III 2,587,398 times because I think it's just that interesting. I've written about it because it's an irreversible and extremely costly decision, and also because I have a very low tolerance for idiotic behaviour. The NDP government has routinely addressed problems by throwing money at them rather than making any sort of difficult decision, and this is the most extreme example of that, except in this case there is more at stake than just money.

Let's just cover the main aspects:

COST: The west route will cost about $1 billion more. That's "billion" with a "B". This is if we build additional capacity with Keeyask and Conawapa. If we scrap our export plans because they turn out to be too high-risk or may result in losses for Manitoba Hydro, then the East side route will not require converters, saving us an additional $2 billion, for a total of $3 billion savings.

FOREST: The argument is that the last piece of "pristine" boreal forest east of Lake Winnipeg need to be protected. A) the forest east of Lake Winnipeg is not pristine. There are mines and communities and roads and other things. B) Even if it were "pristine", there are thousands of square KMs of pristine forest elsewhere, from Labrador to the Northwest Territories, in the vast Boreal forest. C) Even if it were the last piece of pristine forest in Canada, the government has already promised to damage it even more than a HVDC line would by zigzagging a new road right through it. D) There are scarce aspen parklands to the west of the lakes. I don't know to what extent the preferred route impacts them, but I know it was a concern in the routing study. E) The west side route plows through as much forest as the east side route. In terms of the quantity of lumber produced, it's a saw-off. (haha, get it? "saw off". Anyways ...)

LINE LOSSES: The amount of electricity burned off in transmission depends on the how close to capacity the lines are running, but whatever the amount, it will be much greater for the west side lines. The cost in lost exports will be in the tens of millions of dollars each year. These lost exports have another cost too: pollution. The wasted 'clean' hydro energy will not displace 'dirty' fossil fuel energy in the US, resulting in thousands of tonnes of additional green-house gas pollution each year. How green is that?

CARIBOU: Yes, there is a threatened caribou herd on the east side of the lake. Based on the 2005 Caribou survey, there are also four or so caribou herds that might be impacted by the west-side line, at least three of which are threatened. Furthermore, these herds have less territory to maneuver than the east-side herd, who's territory extends right into Northern Ontario.

UNESCO: A) A UNESCO official is on record as saying that the east side route will not preclude UNESCO designation. B) the government hasn't even applied for UNESCO designation. C) the east side line would only graze one corner of the proposed UNESCO site, and D) In what way is a UNESCO designation worth $1 billion anyhow?

LAND USE: Aside from forest, there is agricultural land to consider, and to this point, the west side route involves huge compromises. Land owners will need to be compensated; route adjustments will probably be required to avoid owners who refuse to be bought out (since Hydro will not expropriate), further increasing the cost; aerial spraying will be difficult or impossible to do safely along the route, impacting farm productivity; etc ...

EXPORTS: The argument that an east side line will somehow risk exports to the US is laughable. Environmental groups can't stop the US from buying every drop of oil sands petroleum that we can give them. On what grounds could they prevent the US from buying clean power? There are parties who are associated with power producers in the US who want the exports blocked because Hydro is a competitor, but they don't give a shit what side of the lake the route goes down. Honestly. It's preposterous. In fact, this Hydro report suggests that export sales could be compromised by the west side route, because it can't supply reliable power.

RELIABILITY: The west side route would be much less reliable because A) it is in an area of the province that is more prone to tornados and other weather-related disasters, and B) it's a longer route and therefore has more potential to be damaged.

ENERGY SECURITY: Should the Interlake lines go down, the west route would NOT be able to support our energy commitments, whereas the east-side route could carry the load.

TECHNICAL: Lastly, there are other technical aspects of the Bipole line that I can't begin to explain because I don't understand them, but what I understand is this: Hydro engineers prefer the east route. In fact, the east route is not just preferable ... it is the only route that makes sense from a technical perspective. In addition, the west route could require us to build another bipole line 25 years sooner. (source)


In the televised debate, Greg Selinger berated Hugh McFadyen for his "reckless" plan to move the bipole line to the east side. Only Greg would call accepting the advice of engineers, reducing pollution, protecting our energy security and saving $1 billion reckless. The venom and conviction with which Greg lied about the east side route was almost shocking. This isn't a matter of opinion. This isn't a case where each side has equivalent pros and cons that have to be weighed. This is a case where the east side route is superior in every tangible respect, and the costs of going the other way are enormous and long-lasting.

So if there is one issue in this election that should turn your vote, make it this one.

*edit*
here are a couple of other related blogs
stumbling
TTNTBS
dobbin
ice & grain with a good post

UPDATED: Bipole, Beers, and (sigh...) more math

UPDATE: I talked to Hugh McFadyen about converters. He conceded that they are planning to build new converters for the east side route, but that for technical reasons they would not be as expensive as the west side converters ... they just don't know how much less expensive. I'm not about to make a wild guess, so I'm leaving my number alone, but consider it a starting point. It could be much higher. Given that the west side converters could cost upwards of $2.6b, even a small % difference in price would make a big difference to my number.

Also, under the other things to consider category: I heard suggestions last night that Hydro is using an estimate of $1000/acre as the price for acquiring farmland for their right of way, which might not be bad if you're buying a whole section, but if you're only buying a strip of land through the middle of a field, not many farmers are likely to bite. Hydro said it will not expropriate land, so expect the cost of negotiated settlements to increase greatly.

****

Every time I do a post on Bipole III I think it's going to be my last, but invariably they keep pulling me back in. They = every politician who is confusing the fuck out of the population.

There is of course a ridiculous discrepancy between the competing estimates of what the additional cost will be of building our new HVDC power line down the longer west side route versus the more direct east side route. The PCs say it will be $11,748 per family. The NDP says it will be $13.68 per household. As you might imagine, virtually every assumption in these calculations is different: the route costs, inclusion of line losses, amortization of costs, population figures, etc.. I was tossing around the idea of bridging one number to the next, in much the same way as that old video (which I can't seem to find anywhere) showed Courtney Love transforming from a hot starlet into a disgusting junkie. However, that would have been much too much work, so instead I'll calculate my own numbers from scratch.

I am doing this because I have not really seen any good analysis of this data out there in the Media. The Press has been reporting the numbers and doing some peripheral commentary on them, but the reader must still be left thinking "so who am I supposed to believe? What is the REAL number?"

The best analysis I have seen so far comes from up-and-coming blogger Westerner with his Land of Ice and Grain blog. Westerner has been doing some good work with his blog, and I encourage you to read his post on Bipole III because it has good critique of some of the methods used by the two parties, and lots of links to lots of data sources.

So here we go. I am going to try to keep this as simple as possible:

TRANSMISSION COSTS

This is my source for the west side costs.

Original: $1133 million

Addendum: $1477

New March 2011: $1451

New leaked estimate: $1516*

I will forego the leaked estimate in favour of the new official estimate:

West side: $1451 million

Cost of the east side line:

The PCs say $600 million, plus $188m for licensing costs. I could not find this amount in my scan of the source that they listed, so I'm not sure I trust this number, but I suspect that it is an original estimate -- not an updated one suitable for a comparison.

This Free Press article says that Hydro pegged the additional cost at $571m. At the time, the official estimate for the West side was still the original estimate of $1134m, which puts the East side cost at 1134-571=563 ..even less than the PC estimate. I suspect, however, that they were basing it on updated costs, perhaps the 2009 CPJ addendum costs which place the West side transmission at $1477m, which means the East side would be $906m. It is hypocritical for Brennan and the NDP to use updated costs for the East side route, but original costs for the west side route. I will go with newest March 2011 numbers because I used those numbers for the west side as well. $1451-571=880. This puts the cost per km almost on par with the west side route.

East side: $880 million

Incremental cost: $571 million

LINE LOSSES

This one is pretty simple: the number being used by the PCs based on a leaked Hydro report is $300m. I haven't heard anyone dispute this number (which means it's probably higher) so I'll use it.

In Brennan's $13 estimate, by the way, he treats line losses as follows: "I did not include what Mr. McFadyen was talking about, increases losses that occur, I excluded that." Way to go, Bob. "What Mr. McFadyen was talking about" in reference to the waste of enough electricity to power every household in Brandon. Aren't you due for retirement or a heart attack or something?

Incremental cost: $300 million

CONVERTER COSTS

Here is where the biggest confusion lays. Bob Brennan, in a waffling sort of way, is on record as saying that new converters are needed for both routes. The NDP doesn't waffle on this at all. They say converters are required for both sides, period. End of story. The PCs, on the other hand, do not include converters in their estimate. Who is right?

Here are Brennan's exact words:

Mr. Brennan: When we originally looked at the proposal to build the line down the east side, it was at that point being tied in to the existing conversion equipment, and at that point, it was–the converter stations, without considering new generation being added to the system or the reliability associated with something happening to the existing converter stations, it was not included at that point.

When we went to the west side, there was a need to have conversion equipment which, in our opinion, took away reliability issues that we had at that time and at the same time provided for new generation to be able to come down the line at that point in time. So conversion equipment should be considered on both sides in our view.

At first, I thought Brennan was full of shit. The routing study only mentioned converters for the East side as an afterthought, to mitigate the unlikely catastrophic loss of the Dorsey station. The secret leaked report that the PCs cite for some of their numbers also says that the converters are not required for the east side, but then it also says the following (section 5.1):

Converters would be required on the east route to facilitate additional northern generation to be sent south but would not be required to, at present, solve the reliability concern for HVdc line outages.

So there you go. It seems implausible that the routing study would not take into consideration added capacity, but I am now inclined to believe that converters are indeed required for the east side, even though the original design point was to tie it into the existing Dorsey converters. Perhaps the construction of new converters could be delayed for the east side, thereby saving money, but let's assume not:

Incremental cost: $0

TOTAL INCREMENTAL COST: $871 million

This is lower than what the Canadian Taxpayer Federation is reporting, but my research assistants here at Anybody Want A Peanut assure me that it is a fair and conservative figure.

Now, since everybody insists on doing this as some sort of per capita cost, I might as well too. The PCs use a family of four (total pop/4). Brennan uses some household number from the future. I personally like Westerner's idea of using rate payers. I think it is the most logical way to do it. There are about 510,000 rate payers, so the average cost per rate payer is:

$1,708 per ratepayer

There's your number. I give you permission to use this free of charge. You don't even have to give me credit.

This is still far from the end of the Bipole III story. The costs are sure to continue increasing, the process of buying farmers out of their land is only beginning, and there are numerous adjustments one could take to account for the time value of money, among other things.

There are also the very major issues that the West route is far less reliable, in that it is much more susceptible to natural disasters, unable to carry the load should the interlake HVDC lines get blown down again, whereas this is not a problem with the east route; and building down the west side would require a new Bipole IV line to be build 25 years sooner according to this report. All of this is potentially very costly and favours the east route.

***

There is a "Beers and Bipole" doohicky Monday evening, June 27, hosted by the Canadian Taxpayers Federation, and featuring Hugh "I'm not Filmon" McFadyen, Jon "the good doctor, but gosh I wish he had more charisma" Gerrard, James "who?" Beddome, and Minister Stan "my boss is too busy for this shit, but I have no idea why Wowchuk can't make it" Struthers. That ought to be interesting, if you find this kind of thing interesting. If you made it this far in post I can assume that perhaps you do, so go and grab yourself a beer, and listen to the politicians continue to confuse the fuck out of everybody. Beer: the cause of, and solution to, all of life's problems (except probably Bipole).

(credit goes to Homer Simpson for that last line.)

* Leaked estimate was $4.1m total cost. Converter costs went up 132%, which puts them at $2584m, which leaves $1516m for transmission costs.

Economics: it's all about optics -- 2 part special !

part 1
Well this is just shocking: Survey suggests Economic Action Plan didn't create many jobs

The Conservatives have long boasted that the Economic Action Plan helped save hundreds of thousands of jobs during the recession. But the parliamentary budget officer has found that the recipients of the money don't see it that way.

See, the Conservatives big problem here was pretending that the Action Plan was actually going to work. If they were smart, they would have instead said "look, we don't want to do this because everyone knows that Keyensian economics is a steaming pile of crap, but the Liberals, NDP and Bloc forced us to."

In case you don't remember, their economic update almost exactly two years ago contained no fiscal stimulus. They were going to let monetary policy do it's thing, and try to limit budget deficits. But, the opposition parties had a conniption and banded together threatening to bring down the house and form government. So here we are, billions more in debt with apparently few jobs to show for it.

So like I said, the Conservatives might have been better off implementing it in a more begrudging way. However, that would have been bad for us because, as the AWAP Economic Policy Division theorized last year, if -- if -- stimulus works at all, it works by creating more optimism: people see money being spent and they get encouraged that the economy is being kick-started and they spend their own money. That would all be undermined if the government admitted that it's policy was going to fail.

Bottom line: This stimulus package was never implemented to create jobs. It was implemented so that people could see the government implementing something.

part2
Manitoba scrapped it's small business tax today. Back when they put this in the budget I questioned the benefit of doing it. I mean .. 1% .. is that really too onerous?

The old argument goes that we should help small business because they employ the most workers (besides the government, I guess), but could that be because we punish larger businesses for hiring workers with our regressive payroll tax? I encourage you to read Brian Gilchrist's new blog post that demonstrates this (and points out a blatant error with the CTV story). Small business may be the engine of our economy in Manitoba, but if I were a province I would rather be crusing around in a V12 Jaguar than putting around in a 2CV.

Besides, just how much does this really help a small business? How many jobs are going to be created by saving a business somewhere up to $4,000? I suppose if a small company was hemming and hawing over whether to hire another part time employee, this may tip them over the edge, but not all small businesses are cupcake bakeries. Many are individual consultants, accountants, etc. that set up as corporations for tax and liability purposes. They are unlikey to hire any new employees.

Also consider that all small business owners need to get paid themselves, and when they do get paid they get heavily taxed.

click to enlarge:

source

The government can pretend that they are friendly to small business owners, but that's really a bit of a myth.

The government can also pretend that they're interested in job growth, but that's also a myth. Our provincial neighbours have small business tax rates in the 2.5-2.4% range. Small businesses are not going to go flocking to other provinces if we tax them at 1 or 2%. If the government were concerned about jobs and economic growth they would instead focus on chipping away at the payroll tax. But reducing a payroll tax for big companies that earn more that $1.5m in income does not have the same panache as eliminating the small business tax for a bakery that makes soft moist oh-so-tasty cupcakes with colourful icing, and those little spinkly things on top. Mmmmmm.

How can anybody possibly disagree with reducing taxes on a cupcake bakery? It's impossible! ....Unless you're a twisted cupcake bakery hater.

Like I said, it's all about optics.


related: Dobbin

Hugh McFadyen should sue Greg Selinger

Why not? I probably would if I were him.

I'm refering to the negative campaign ads that the NDP is airing on TV, and now appearing in your mailbox as well. Pretty soon there will be billboards too:

Negative ad campaigns are standard operating procedure in politics now, and to some degree people expect a level of exaggeration or half truths. That doesn't make it right, but that's the way it goes. That said, you have to draw a line somewhere unless you want to end up with swift-boat style ads dominating political campaigns.

The TV ads say "We know McFadyen would overturn water protection laws and allow e-coli and urine to pollute our rivers and lakes." Bruce Owen has already wrote about this in the Free Press:

For the record, all he’s said is that the province could save $350 million by backing off its plan to require the City of Winnipeg to remove nitrogen from its wastewater. Phosphorus should be removed, but removing nitrogen too would have a negligible effect, he says. A bunch of scientists say the same thing.

Not to mention that there is already e-coli and urine polluting our rivers and lakes.

To what degree can you bend the truth in a political ad? Does there have to be at least a half truth? A shred of truth? A nugget? A photon? In civil law, the standard would certainly be set above "photon".

The Criminal Code says that defamatory libel "is matter published, without lawful justification or excuse, that is likely to injure the reputation of any person by exposing him to hatred, contempt or ridicule, or that is designed to insult the person or concerning whom it is published." I would say that the NDP ad fits that description quite well.

A valid defense against a charge of defamatory libel is truth. If what you're saying is true then you're off the hook. What the NDP ads say certainly is not. Not by any standard that would be recognized by the courts. I just don't see how McFadyen would lose if he chose to sue Selinger and the NDP for libel. That is, unless he had the misfortune of running into an NDP-friendly judge. Then it could back-fire on him in a big way.

That's risk no. 1. Risk no. 2 is that the public will view him as a pansy-ass whiner who can't take the heat of politics. Thus if he were to sue the NDP, he should do it on the down-low. Don't say anything about it publicly. Somebody will notice (probably a blogger with too much time on their hands) and it will come out with a splash. When asked about it, Hugh can play it cool and simply comment that there was no truth to the "fact" portrayed in the ads. That way he gets to confront the ads in a manner that is not forced or desperate.

The upside is huge. (Or "Hughe" in this case. Ha! See what I did there? With the "h"? You know, cause McFadyen's name is "Hugh, and um ... ya anyhow ...) Right, upside no. 1: the big kerfuffle about the untruthiness of the NDP ad will put a spotlight on the integrity of the NDP and call into question the factualness of everything else they have said.

Upside no. 2: it will bring the issue of the Water Protection Act into the front pages. The newspapers will be forced to explain what exactly Hugh called for in his press release, which will provide another opportunity to expose the collosal waste of money of removing nitrogen from the water.

Upside no. 3: should Hugh win, it could be for a substantial amount of money which could really hurt the bank balance of the NDP. The NDP could even be bankrupted if the stars aligned properly for the PCs. More than likely it would be settled out of court for some mutually agreed sum, but whatever that sum it still amounts to the NDP fundraising for the PC party.

Upside no. 4: ads are bound to be more truthful in the future.


techincal note: I don't know if a defamatory TV ad would consitute libel or slander. Libel is written, slander is spoken. TV ads are spoken, but they are read off a script, thus I am assuming libel would be the charge.

Arenas and splash parks

Contratulations to Pinawa Manitoba for winning the Kraft Celebration Tour show down with Steinbach for $25,000 to redevelop the local arena. Pinawa is a remarkable little deer-infested town that has produced doctors, musicians, a successful author, an MMA fighter, and two of your favourite bloggers, but alas ... no NHL stars. Perhaps a star will be crafted in the renewed Orville Acres Arena?

So while the people of Pinawa rallied together, campaigned, and prostituted themselves out for crucial votes to keep their arena functional; the village of Lorette was just handed $350,000 for a splash park.

I have nothing against Lorette. I have personal connections to that town, but it is a town of only 600-2000 people (depending on where you look). I can't find the census data for the town, but based on the data for the municipality, that works out to about 400 or so kids. That's a lot of money per kid -- for something that will only be used on nice days for about three months a year. What ever happened to setting up a sprinkler in the front yard? You could buy 400 sprinklers for $4,000 at Canadian Tire!

I'm all for spending on recreation -- it's important to keep families active and to give kids something to do besides drinking in the bush and learning how to steal cars. It will benefit us all in the long run. But I'm not for randomly spending huge chunks of cash (unless that cash is benefiting me personally).

Why Lorette? Why a splash park? Why not, say, a basketball court in Melita or an indoor soccer pitch in Dauphin? I don't understand ...

The province has a whole pool of this money: $16.5 million dollars deep. I would like to believe that they will spend it wisely and with careful consideration of the benefits, versus the apparent process of throwing a dart at a map of the province, followed by a roulette wheel with different kinds of recreational equipment. (Flin Flon needs vibrators? Ok ... make it so Number One.)

Somebody out there knows how these things are determined. Speak up, man.

Wages Moderately Frozen

I may owe Greg Selinger an apology. I joked earlier about his "moderate" approach to dealing with a budget deficit, including restricting union raises to only three times the rate of inflation. However, it appears as though the government has taken a more aggressive line in proposing a two year wage freeze for public sector unionized employees. Yes.... even the nurses.

This will be quite a shock to the nurses, who two years ago negotiated a contract that gave them a 10% increase over two years plus guaranteed them the forth highest wages in Canada.

It will be interesting to see this play out. Will Selinger have the fortitude to stand his ground against fierce opposition from his loyal union voter base, or will he cave in and cut a generous deal with the unions to keep them happy and guarantee their support in the next election? If they stand their ground, how will the opposition react? That could put McFadyen in a very awkward position of either acknowledging the fiscal responsibility of the government, or maybe further abandoning their conservative ideology by standing up for the unions against a reckless wage freeze, in a futile attempt to capture new support. I can't see that happening, actually, but I am curious to see what they will do.

I think there is method to the madness though. I suspect that in the negotiations with the union leaders behind closed doors will go something like this: "Look, this is just a two year freeze. You sign this and help us get another majority government in 2011, and you will not regret it. I predict 2012 will be a very good year for you." wink wink.

It's interesting at how the government is going about this: with minister Wowchuck taking the message directly to the media, as though it were a trial balloon of some sort. If it doesn't float, Selinger will throw Rosanne under the bus and claim it was just an unfortunate side effect of her hormone replacement therapy -- that he never intended to have a wage freeze.

However, if Selinger and Wowchuck can actually convince the unions to buy into this, with a potential reward two years down the road, that will really put the other parties in a bit of a pickle when it comes to differentiating themselves and grabbing those middle voters who don't really pay close attention to anything, but have vague notions about fiscal responsibility.

Moderation is the key to doing nothing

Thank God we have a responsible Premier here in Manitoba. Faced with a looming $592m deficit, our trusty Premier is committed to taking bold action though rigourous moderation:

"We're looking for moderation from everybody given the times," Selinger said. "Moderation is going to be a watchword going forward on things like collective bargaining. "We'll be looking to negotiate moderate collective agreements that recognize the limitations that we have fiscally." -fp-

Hey, I think I know what the word of the day is!

Gone (or at least postponed) are the days when we will sign collective agreements that guarantee our civil servants are the fourth highest paid in the land, in spite of our low cost of living. Say "hello" to the new moderate Manitoba, where collective agreements will be signed that restrict our government workers to a woeful increase of only 3 times the rate of inflation. Hey, it isn't pretty, but everybody has to feel the pinch!

But why stop there! The fiscal policy team at AWAP has formulated other moderate policies that we believe Greg Selinger should consider:

1. Wait for federal transfer payments to increase. C'mon Ottawa! Every other year the NDP has over spent you've been there to bail us out with windfall increases to equalization or other transfers. Don't let us down this time! We can only run a deficit for one year!

2. Smile and look happy.

3. Do nothing and hope the problem goes away.

For those of you radical right-wingers who believe we should attempt to spend within our means, freeze civil service wages, or trim the fat in our bloated bureaucracy: Shame on you! What are you trying to do? Ruin our economy? You should know that government spending is the engine that drives the Manitoba economy, and if we take our foot off the gas pedal we'll grind to a halt. Cutting spending is the last thing we should do!

Plus, if there's anything that Selinger has learned from Gary Doer, it's to not do anything that makes you look mean. Things like laying off a worker, or cutting down a tree on the east side of Lake Winnipeg. Selinger has to be especially diligent because he is not as adept at grinning as Gary Doer was. Oh that grin ... How it could always make us feel good. How I miss that grin ...

(sorry for the crappy graphic. I had time limitations and only MS Paint at my disposal)

The speech from the throne

The throne speech? Seriously, cherenkov? That's sooo November 2009. There's snow on the ground now. Get with the times, dude!

Ya, well ... I'm slow. What can I say? I had a doodle to make:
You're welcome. (For the visual of Greg Selinger with no pants. I know you were planning on thanking me.)

I see that the new Premier has callously disregarded my suggestions to take bold action with his time in office. Or perhaps he's just working up to it. However, I can't blame him. In fact, I could easily argue that he doesn't have a mandate to deviate from Doer's uninspired policy direction, since the people voted for Doer's policies, not the crazy schemes of the company bean counter.

However, that has left us with a pretty boring agenda containing more spending, more legislation, and little bitty tax cuts.

Oh ya .. and a helicopter! Helicopters are cool! I even have an idea about how to pay for it.

There are too many things to go through point by point, but a couple things stand out. For example:

> Legislation to create a list of known gangs to simplify court proceedings. Does this really require legislation? To me, it should be a little simpler than that: "Hey, Pat. Go create a list of gangs to simplify court proceedings. Have it on my desk by the 10th."

> New Home Buyer’s Protection Act. First announced under Doer. Won't do much other than increase the cost and pain-in-the-ass factor of buying and selling a house.

> Give municipalities power to seize vacant or derelict buildings. Don't they have this already? Huh. I guess not...

> Reduce small business income tax from 1% to 0%. Yes that's right: NO TAX. I have said before that this is ill-advised. Is 1% really too much to pay? Seriously?

Anyhow, I have to get back to work. Where did I leave the mop?

media: FP, CBC
blogs: curtis, fat arse

Opportunity for Selinger (and soup for me)

It would be easy to write off Selinger's leadership of the NDP as "more of the same". I know because I've done it. It was very easy. Took almost no effort at all. However, today I am in a good mood (see what a warm sunny weekend can do?) so I am going to give Selinger a chance, and some free advice:


The Manitoba PCs are weak, but the retirement of Gary Doer has opened a door for them and given them new hope. Still, the PCs need to differentiate themselves from the NDP and make an impression with the people of the province. If the average Manitoban has any impression at all, it's a vague notion that the PCs fancy themselves as being more fiscally responsible and pro-business than the NDP. There's that, but the unfortunate "bring back the Jets" campaign blunder has also put a big sticky "Gimmick" label on them. If they are to make a comeback, they really need to get back to basics, expose the economic, social and environmental ineptitude of the NDP, and propose real conservative policies to address those areas.

Selinger has an opportunity to simultaneously step out of Doer's shadow and put a bullet to the brain of the PCs by beating them to the punch. Suppose, if you will, that Selinger decides to reign in government spending, reopen the debate on the routing of Bipole III, cut corporate taxes, over-haul the administration of our health care system and index personal tax brackets. What would the PCs have left? Selinger could define himself as a pragmatic and responsible leader, leaving Hugh McFadyen with nothing but more cheesy gimmicks to win over voters.

Mayor Sam recently suggested that Selinger is open to re-evaluating the province's requirement that the city spend $350 million on nitrogen removal in their new sewage treatment plant -- a policy that, like Bipole III, actually wastes money while further damaging the environment. "He definitely has an open mind" says Sam. That's good news, if it's true. Perhaps he is willing to take a fresh look at all of the government's policies. Is it true though, or is he just faking it? Is he actually feigning open-mindedness, while secretly plotting new ways to spend money, destroy the environment, drive away private investment and sacrifice health care delivery for bloated health care bureaucracy?

I hope that Selinger really does have an open mind. An open mind and fresh perspective are mandatory if we hope to achieve anything close to our potential here in Manitoba. However, I feel that I am asking a leopard to turn himself into a zebra. Selinger is not a conservative. If he were, he'd be in the PC party, not the NDP party. Even still, many of the sort-comings of the previous administration were a result of laziness or political expediency rather than flawed ideology. Even as a moderate progressive, Premier Selinger could make a huge difference, should he choose to be a real leader instead of a Doer clone (without the grin), while at the same time making it all the more difficult for Hughy and the PCs to gain traction with voters.

Will it happen? I don't know. I'm not optimistic, but I'll give him a chance ...


bonus post: Siloam Mission gave me soup

I have given money to Siloam Mission because I am fortunate to have more than I need to get by. Imagine my surprise this afternoon to discover that Siloam Mission sent me soup!

It was a little foil packet of soup along with a letter asking me to sign the packet and mail it back along with a donation so they can feed it to their patrons. This is a silly idea. If you just bought the soup in bulk instead of individual foil packets, you could save enough money to buy a bunch of food right there. Plus, I looked at the ingredients and found this as the top three: maltodextrin, salt and flavor. High in sodium, low in energy and vitamins. This is not good food for a starving person.

Plus, I hate gimmicks, so I refuse to play their little "game" this time. I am sipping on the soup as I write this post, and I am disappointed but not surprised to inform you that it tastes like tin.