Quotulatiousness

February 21, 2013

RCAF still confident that Sea Kings will last long enough, hopefully

Filed under: Cancon, Military, Politics — Tags: , , , , — Nicholas @ 10:27

Sea King unit patchDid you know that the Canadian military is still waiting for the delivery of their new helicopters? This leaves the military brass with little to do but put on a show of confidence and perhaps cross their fingers behind their collective backs:

The head of the Royal Canadian Air Force says he’s confident the military’s 50-year-old Sea King helicopters can stay in the air long enough for their troubled replacements to arrive.

“It’s good for a while,” Lt.-Gen. Yvan Blondin said of the Sea Kings, in an exclusive interview with Postmedia News Wednesday.

“In the short term, the Sea King can fly. Eventually I’m going to replace some equipment on it if I want to keep it flying longer, but I’ve got flexibility.”

That flexibility will likely be needed amid recent reports that the air force won’t receive the first of its planned Sea King replacements, U.S. aerospace giant Sikorsky’s Cyclone maritime helicopters, until 2015 — seven years later than scheduled.

Here’s the long, twisted history of Canada’s attempt to replace the venerable Sea King helicopters:

  • In 1963, the CH-124 Sea King helicopter (a variant of the US Navy S-61 model) entered service with the Royal Canadian Navy.
  • In 1983, the Trudeau government started a process to replace the Sea Kings. That process never got far enough for a replacement helicopter to be ordered.
  • In 1985, the Mulroney government started a new process to find a replacement for the Sea Kings.
  • In 1992, the Mulroney government placed an order for 50 EH-101 Cormorant helicopters (for both naval and search-and-rescue operations).
  • In 1993, the Campbell government reduced the order from 50 to 43, theoretically saving $1.4B.
  • In 1993, the new Chrétien government cancelled the “Cadillac” helicopters as being far too expensive and started a new process to identify the right helicopters to buy. The government had to pay nearly $500 million in cancellation penalties.
  • In 1998, having split the plan into separate orders for naval and SAR helicopters, the government ended up buying 15 Cormorant SAR helicopters anyway — and the per-unit prices had risen in the intervening time.
  • In 2004, the Martin government placed an order with Sikorsky for 28 CH-148 Cyclone helicopters to be delivered starting in 2008 (after very carefully arranging the specifications to exclude the Cormorant from the competition).
  • Now, in 2012, we may still have another five years to wait for the delivery of the Cyclones.

February 18, 2013

Reason.tv: 3 reasons to build the Keystone XL pipeline

Filed under: Business, Cancon, Environment, Government, USA — Tags: , , , , — Nicholas @ 12:30

Few energy projects have inspired the level of vitriol surrounding the Keystone XL Pipeline, that would run 1,700 miles from Alberta, Canada through the United States to refineries on the Gulf of Mexico.

The oil sands of Alberta are estimated to hold 170 million 170 billon barrels of petroleum, the largest reservoir of black gold outside of Saudi Arabia.

Because the pipeline crosses an international boundary, President Barack Obama has the final say over whether to give the project a green light.

February 16, 2013

Contrasting the State of the Union Address to the Speech from the Throne

Filed under: Australia, Britain, Cancon, Government, USA — Tags: , , , — Nicholas @ 11:40

Mark Steyn looks at how the republican method compares to the constitutional monarchy’s method:

“I’m also issuing a new goal for America,” declared President Obama at his State of the Union on Tuesday. We’ll come to the particular “goal” he “issued” momentarily, but before we do, consider that formulation: Did you know the president of the United States is now in the business of “issuing goals” for his subjects to live up to?

Strange how the monarchical urge persists even in a republic two-and-a-third centuries old. Many commentators have pointed out that the modern State of the Union is in fairly obvious mimicry of the Speech from the Throne that precedes a new legislative session in British Commonwealth countries and continental monarchies, but this is to miss the key difference. When the Queen or her viceroy reads a Throne Speech in Westminster, Ottawa, or Canberra, it’s usually the work of a government with a Parliamentary majority: In other words, the stuff she’s announcing is actually going to happen. That’s why, lest any enthusiasm for this or that legislative proposal be detected, the apolitical monarch overcompensates by reading everything in as flat and unexpressive a monotone as possible. Underneath the ancient rituals — the Gentleman Usher of the Black Rod getting the door of the House of Commons slammed in his face three times — it’s actually a very workmanlike affair.

The State of the Union is the opposite. The president gives a performance, extremely animatedly, head swiveling from left-side prompter to right-side prompter, continually urging action now: “Let’s start right away. We can get this done … We can fix this … Now is the time to do it. Now is the time to get it done.” And at the end of the speech, nothing gets done, and nothing gets fixed, and, after a few days’ shadowboxing between admirers and detractors willing to pretend it’s some sort of serious legislative agenda, every single word of it is forgotten until the next one.

Nova Scotia Islands

Filed under: Cancon, History, Media — Tags: , — Nicholas @ 10:34

I got a press release to let me know that “Nova Scotia Islands” will be shown on CBC this Sunday. It looks interesting:

Nova Scotia Islands will have its world broadcast premiere on Sunday, February 17, 2013 at 12 Noon on CBC TV’s Land & Sea.

Islands are part of the geography and history of the Maritimes, nowhere more so than Nova Scotia. Jutting out into the Atlantic Ocean, there are more than 3,800 islands that lie scattered along nearly 5,000 miles of coastline.

Nova Scotia Islands is a half hour documentary that explores some of the most interesting islands in the province, their little known histories, and in some cases their uncertain futures.

February 15, 2013

No wonder many Canadians skip jury duty

Filed under: Cancon, Law — Tags: , , , , — Nicholas @ 11:18

I’ve only ever been summoned for jury duty once, and that was about 20 years ago (I was lucky to not be in the pool for the Homolka case, which was in the courts at that time). I showed up on Monday morning, sat around reading my book for a couple of hours, then was dismissed. Repeat on Tuesday and Wednesday, then we were told our services wouldn’t be needed for the rest of the week. I was lucky not to lose any pay for performing my “civic duty” thanks to my employer-of-the-time, but most people are not so fortunate:

Let’s talk about jury duty. That much-despised civic responsibility in which we are asked to play a role in one of the world’s best justice systems.

Being summoned is viewed by many as an unwelcome interruption of their daily lives and, often, a punishing financial burden. It is ignored by hundreds, if not thousands, of Canadian every year.

And why? Well, most suggest a mix of lost wages and low compensation plays a role in it. Not to mention the hassle of having to listen to people talk all day long. But is it really worth chasing and punishing those who refuse to serve? And if so, shouldn’t something be done to make serving less punishing?

How bad is the pay? Pretty bad indeed:

Those selected to serve on jury duty have no protection from lost wages, although their employer is legally mandated to give them time off. And the compensation they receive is minimal.

So how much do jurors get paid? It is not a lot.

In Nova Scotia, jurors receive $40 a day plus mileage. Ontario pays jurors $40 a day once they have served more than 10 days, and $100 for every day over 49.

Alberta provides $50 per day of service, as well as travel expenses and possibly accommodations. The Northwest Territories gratefully pays $80 per day.

Quebec jury members get a much more generous deal:

Quebec residents called to participate in jury selection receive the cost of public transit or mileage and parking costs. They can also receive more than $45 for meals and as much as $138 to cover overnight accommodations.

Those selected to be a juror receive $103 for every day of the hearing and deliberations. That amount increases to $160 on the 57th day of service.

There are bonuses for working into the night and for Sundays and holidays, childcare allowances and psychological therapy after the trial.

H/T to Bob Tarantino for the link.

A self-described hippie who loves capitalism. Ladies and gentlemen, please welcome Neil Young!

Filed under: Books, Business, Cancon, Media — Tags: , , — Nicholas @ 09:29

In sp!ked, Patrick Hayes reviews Neil Young’s new book, Waging Heavy Peace: A Hippie Dream.

Neil Young, the man who penned wistful lyrics about silver spaceships flying and about sleeping with Pocahontas, is, he openly admits in his autobiography, ‘a material guy’. After completing a project, he would ‘buy a car or something to celebrate’. He lavishes praise on Bill Ford, the executive chairman of Ford Motor Company. He gushes about the disruptive nature of new technologies. And he speaks romantically about developing business plans and navigating ‘the waters of venture capitalism’. When raving about being able to buy a green card to live in the US, Young even goes as far as to announce: ‘Capitalism rocks.’

In fact recently, he tells us, he has been dreaming more. Since his life-threatening brain aneurysm in 2005, when he decided to ditch his various narcotics, he dreams ‘every night, not like before, when I induced dreams in the waking hours to snatch them in their innocence and commit them to song and melody and words captured’.

While he has far from quit songwriting, kicking the drink and drugs has given Young a new sense of mission, something that makes him feel alive – in fact, a mission that makes him question whether he has ‘been asleep’ over the past 40 years. Young is currently ‘trying to rescue recorded sound so people can feel music again’. While a huge fan of the internet, Young has become increasingly infuriated that current methods of reproducing music digitally keep very little of the quality of the original. But he is never one to sit back and moan about how things were better in the days of vinyl. He has instead become obsessed with finding a solution.

And, with additional time due to a broken little toe, he also decided to tick another box by following in the footsteps of his father, famous Canadian author Scott Young, by writing a book. In this instance, an autobiography, with a second book tentatively titled Cars and Dogs planned, but ‘no matter how many books I write, I will eventually get to fiction’. He comments on the ease of writing: ‘No wonder my dad did this… writing could be just the ticket to a more relaxed life with fewer pressures and more time to enjoy with my family and friends – and paddleboarding!’

February 14, 2013

Crony capitalists make pitch for industrial policy in defence purchases

Filed under: Business, Cancon, Government, Military — Tags: , , , , , , — Nicholas @ 11:02

Canada doesn’t really have a defence industry — certainly not in the sense of Britain, France, or the United States. We have some companies which happen to make products of use to the military (armoured vehicles, for example), but our government is not tightly tied to the fortunes of these companies in some sort of maple-flavoured Military-Industrial Complex. Some movers-and-shakers want to change that:

It goes without saying that the proposal to siphon funds to defence contractors is gussied up in industrial-policy jargon. For instance, we’re told how defence industries are “important sources of technological dynamism and innovation [and] leading-edge participants in global value chains.” (Who today isn’t part of a global value chain?) Also in keeping with current industrial-policy trendiness, the government is instructed to be strategically selective in KIC-starting the sector. “KIC,” you see, stands for “Key Industrial Capabilities,” which is what we’re told we should focus on.

But despite the alluring bells and whistles, the message to firms selling to the government is clear: Either pay up or forget about getting the contract. From now on, if the committee gets its way, how you plan to spread the industrial booty around the Canadian economy will weigh directly in the balance with how your product performs. The new fighter jet doesn’t accelerate quickly enough to elude missiles? Well, never mind that, it comes with a new plant in Mississauga. Shells pierce the new tank’s armour? Too bad. But the innovation spinoffs for Thunder Bay are just too good to pass up.

You might think that interpretation extreme. Surely safety for our soldiers and value-for-money for our taxpayers come first. But what else could be meant by the recommendation that bidders specify the industrial benefits they’re offering as part of their bid itself, rather than as an add-on after the performance characteristics of their product or service have won them the contract?

Suppose that instead of causing defence contracts to be inflated with offsets for Canadian industry, this committee consisting of a high-tech CEO, a former chief of staff at national defence, an IP specialist in a defence company, a retired general and Paul Martin’s one-time policy guru recommended levying a 5% tax on all government defence purchases and using the revenues thus generated to subsidize Canadian defence contractors?

I sent the original Globe and Mail URL to Jon saying, “The very last thing Canada should be attempting is to use government money to build a ‘defence industry’. Let the military buy what they need on the open market — regardless of country of origin — at market prices. The fetish to have a domestic defence industry is pure crony capitalism clothed in a “patriotic” fig leaf.”

The LCBO crowds out another private business

Filed under: Cancon, Economics, Media, Wine — Tags: , , , — Nicholas @ 09:50

In the latest Ontario Wine Review, Michael Pinkus writes an obituary for Wine Access magazine and hurls “J’accuse!” at the Ontario government’s liquor monopoly for the murder:

Now there are some of you out there who will be asking how can the Ontario Liquor Monopoly put an Alberta-based magazine out of business — well it’s actually quite simple, if you’re willing to connect the dots: if you only have a certain amount of advertising dollars to spend in Canada how much are you going to allocate to the largest population in the country (Ontario); even more to the point, how much do you put into the Liquor Board willing to buy more product if you’ll spend more of your ad budget with them versus a magazine that might (or might not) increase your sales.

I have long advocated for the LCBO to cease publication of this magazine. Don’t get me wrong, it’s a beauty of a publication — my wife fawns over the pictures every issue — but it’s a publication that competes against private enterprise, and the LCBO is after all an extension of the government — so what I, and many others have said is unfortunately true: the government in essence, taking thousands of dollars out of the hands of the companies that pay taxes, their own populace, and competing against them. Sure I hear many of you saying “finally my tax dollars hard at work”: but ask yourself this question: how would you like the government competing against your business?

People don’t see the problem with Food & Drink magazine because they aren’t in the publishing business and are not affected by its publication, but consider these numbers: in the Holiday 2011 issue of said magazine, an almost Sears catalogue sized edition, there were 308 pages total, 140 of those were advertising (not including product placement and promotions within editorial / advertorial which is no doubt paid for as well — and don’t forget the 6 hefty inserts included inside the plastic wrapper) … that’s money that was not spent with privately run magazines that could have, and most likely, would have. Here are some more numbers to boggle the mind. According to the Luxury Media Sales website a full page in F&D magazine is $20,588 (2012 rate) — that’s a lot of money the government of Ontario is taking from their tax paying private enterprise magazines (in a democratic, free market system — who would believe the government is competing against their own populace). Think about that kind of money funneling out of your business sector, your chosen profession or what you do for a living (it’s close to 3 million dollars – 140 x $20,588) … do you think you’d be making the kind of money you are now? Would you welcome that kind of competition? And before you crassly answer “sure, the government can’t do anything right” also put in the fact that they’re the biggest game in town and control what you sell. The nightmare scenario is the closing of your business due to unfair competition and lack of revenue (but it’s the government, so what can you do) — in the publishing game you just shuttered a magazine because of lack of revenue and unfair competition. If you’re RedPoint Media you close down Wine Access magazine.

So, in Clue fashion, who killed Wine Access? It was Colonel LCBO, in the wine cellar, with the government monopoly privilege.

February 12, 2013

The Bluenose II in court

Filed under: Cancon, History, Law — Tags: , , , — Nicholas @ 12:14

The descendents of the designer of the original Bluenose are in court to demand the “copyright, and the moral rights in the copyright work” of the vessel which probably should be called the “Bluenose III“:

The Bluenose sank to the bottom in 1946; the replica Bluenose II was built in 1963, and then rebuilt in recent years and launched from the Lunenburg wharf this past September amid much fanfare and, as the province’s accountants could tell you, serious cost overruns.

No matter. This was a gala affair. Only Joan Roué and her father, Lawrence J. Roué — grandson of William J. Roué — were not among the smiling guests and proceeded to file suit against the province, the boat designers and boat builders in October, alleging that despite “the province owning the vessel … Joan and Lawrence Roué allege that they are respectively entitled to the copyright, and the moral rights in the copyright work” associated with the latest incarnation of the famous schooner.

To which the province responded — and I am paraphrasing here — “are you people kidding me?” while contending in court filings that William J. Roué’s storied original design perhaps wasn’t all that original to begin with, and, even if it were a singular masterpiece, that he had already been paid for it decades ago.

I posted about the “new” Bluenose II last year, explaining why I think they should have incremented the number in the vessel’s official name:

Wooden sailing ships are subject to far more wear and tear than modern vessels: they’re like the old tale of the farmer’s axe (even though everything’s been replaced over time, it’s still the same axe). This means that heritage sailing ships need lots of careful maintenance throughout their lives, and major re-builds at long intervals. In the case of Nova Scotia’s iconic Bluenose II, however, it’s sometimes more than a “rebuild” […] So, just to sum up: she’s being built to a different design (even though outward appearance is much the same), using different materials. In what way can you call her the same ship? The point made in the article, that the masts and sails were some of the “originals” being re-used is odd: those are among the parts that need replacing more often. And the mahogany and walnut saved from the last boat are almost certainly decorative elements, not structural ones.

February 11, 2013

Senate report calls for tariff cuts

Filed under: Business, Cancon, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 12:57

In the Financial Post, Terence Corcoran looks at the good and not-so-good aspects of a recent Senate report on the reasons Canadians pay so much more for goods than Americans (even when the goods are identical and the currencies are trading at par):

Retail prices in Canada, seemingly across the board, are higher. Even with the Canadian dollar at par, the price of everything from running shoes to televisions and Chevy Camaros to books is said to be above U.S prices. One bank report once put the Canada-U.S. price gap at 20%.

Somebody’s gotta do something, everybody agrees. Enter the Senate committee with one of the most hard-nosed, market-driven overviews of how and why Canadians pay more for goods at retail. The report dodges and fudges some key issues, especially farm product supply management, which was seen by the committee and the retail industry as too politically hot to handle.

[. . .]

Even in this, however, the committee pulls its first punch. The recommendation to “review” such tariffs — watery phrasing in itself — also suggests “keeping in mind the impact on domestic manufacturing.” Sorry, folks, but you can’t have it both ways. Tariffs are protectionist devices for manufacturers that consumers pay for. If you want to reduce the price to consumers, the $3.9-billion in protection for manufacturers has to go. End of discussion.

What makes The Canada-USA Price Gap even more valuable is its compact insights into the many causes of higher retail prices in Canada. The economy is a complicated and often unfathomable series of market and price relationships beyond the power and even understanding of policy makers. The report recognizes that fact time and again.

A boxplot of First Nations misery

Filed under: Cancon, Economics, Government — Tags: , , , , , — Nicholas @ 09:17

Over the weekend, Colby Cosh posted this depressing box-and-whisker plot (aka “boxplot”) from statistical data on First Nations communities:

First Nations boxplot

Why did I want to look at this information this way? Because Canada actually performed an inadvertent natural experiment with residential schools: in New Brunswick (and in Prince Edward Island) they did not exist. If the schools had major negative effects on social welfare flowing forward into the future we now inhabit, New Brunswick’s Indians would be expected to do better than those in other provinces. And that does turn out to be the case. You can see that the top three-quarters of New Brunswick Indian communities would all be above the median even in neighbouring Nova Scotia, whose FN communities might otherwise be expected to be quite comparable. (Remember that each community, however large, is just one point in these data. Toronto’s one point, with an index value of 84. So is Kasabonika Lake, estimated 2006 population 680, index value 47.)

On the other hand, and this is exactly the kind of thing boxplots are meant to help one notice, the big between-provinces difference between First Nations communities isn’t the difference between New Brunswick and everybody else. It’s the difference between the Prairie Provinces and everybody else including New Brunswick — to such a degree, in fact, that Canada probably should not be conceptually broken down into “settler” and “aboriginal” tiers, but into three tiers, with prairie Indians enjoying a distinct species of misery. (This shows up in other, less obvious ways in the boxplot diagram. You notice how many lower-side outliers there are in Saskatchewan? That dangling trail of dots turns out to consist of Indian and Métis towns in the province’s north — communities that are significantly or even mostly aboriginal, but that aren’t coded as “FN” in the dataset.)

I fear that the First Nations data for Alberta are of particular note here: on the right half of the diagram we can see that Alberta’s resource wealth (in 2006, remember) helped nudge the province ahead of Saskatchewan and Manitoba in overall social-development measures, but it doesn’t seem to have paid off very well for Indians. This isn’t a surprising outcome, mind you, if you live in Alberta; we have rich Indian bands and plenty of highly visible band-owned businesses, but the universities are not yet full of high-achieving members of those bands, and the downtown shelters in Edmonton, sad to say, still are.

February 8, 2013

PM’s long awaited (ghostwritten) book on hockey to be published in the US due to Canadian publishing regulations

Filed under: Books, Cancon, Media, Sports — Tags: , , , , — Nicholas @ 09:47

A double-whammy from the Globe and Mail‘s John Barber: due to protectionist media rules brought in during the Mulroney years, Prime Minister Stephen Harper’s book on hockey — ghostwritten by G&M columnist Roy MacGregor — will have to be published outside the country. Inline Update: The G&M has retracted the claim that the book was ghostwritten. Thanks to commenter Dwayne for the update.

Prime Minister Stephen Harper’s upcoming book on the history of professional hockey will be published in the United States rather than Canada because of prohibitions embedded in the government’s own cultural policy.

Simon & Schuster, the U.S.-based company chosen to publish the English-language edition of the Prime Minister’s book, is banned from publishing books in Canada under the Investment Canada Act. But the act does permit foreign-owned companies to distribute titles they have published in their home territories.

A single edition edited and printed in the U.S. will likely appear simultaneously in both markets, so Canadians will not have to wait to buy a copy.

“It’s ironic that he is publishing with a company that is forbidden by his government to have a Canadian publishing program,” Toronto literary agent Denise Bukowksi said. “But if North American rights are contracted in the U.S.A., they can get away with it.”

Three years ago, the Harper government announced a review of the policy, which the government of Brian Mulroney adopted to promote the growth of Canadian publishers at the expense of the multinational companies that then dominated the domestic market. The government has yet to announce changes.

Update: Hmmm. The story gets a bit more confused, as Roy MacGregor is quoted in this story denying any involvement:

Roy MacGregor, who has written 40 books, including the popular Screech Owl series, has talked with the prime minister about the book and describes him as “fanatically” knowledgeable.

MacGregor, who has worked as a ghost writer, says Harper hasn’t employed one.

“I can guarantee you there’s no ghost,” he said. “I’m sure it would come up. The reason it would come up is I know of his stated determination that no matter how long it took, he wanted to be the one that did it. He had research help but it was going to be him plucking away at the computer keys.”

H/T to Colby Cosh for that URL.

February 7, 2013

Almost a clean sweep of top Canadian military leadership

Filed under: Cancon, Government, Military — Tags: , , , , — Nicholas @ 00:02

As Andrew Coyne noted in a tweet, “In some countries, this would be big news”. Lee Berthiaume in the Ottawa Citizen on the upheaval at the top of Canada’s defence establishment:

Spring cleaning has come early at the Department of National Defence as the Conservative government announced Wednesday it was sweeping out a number of the military’s top officers — including the head of the Canadian Army and the Royal Canadian Navy — in a major shuffle.

The moves represent a dramatic change at the top as National Defence faces a major shift in focus from the days of the Afghanistan war and increasing budgets, to a state of deep budget cuts and limited deployments.

[. . .]

In addition to [vice-chief of defence staff, Vice-Admiral Bruce] Donaldson, those leaving include Royal Canadian Navy commander Vice-Admiral Paul Maddison and Canadian Army commander Lt.-Gen. Peter Devlin.

Maddison’s deputy, Rear-Admiral Mark Norman, will take over as commander of the navy; Lt.-Gen. Marquis Hainse, who was serving as deputy commander to the NATO headquarters in Naples, Italy, is the new head of the army.

Lt.-Gen. Walter Semianiw, who oversaw all Canadian military missions inside Canada and North America, including the Caribbean, is also on the way out, the apparent casualty of a Defence Department restructuring that started last year.

Canadian companies lobby the government for the right to install rootkits on your electronic devices

Filed under: Cancon, Law, Media, Technology — Tags: , , , , — Nicholas @ 00:01

Michael Geist reports on a recent lobbying attempt that should be thrown out with contempt if we lived in a just world:

The deadline for comments on Industry Canada’s draft anti-spam regulations passed earlier this week with a group of 13 industry associations — including the Canadian Chamber of Commerce, the Canadian Marketing Association, the Canadian Wireless Telecommunications Association and the Entertainment Software Association of Canada — submitting a lengthy document that, if adopted, would gut much of the law. The groups adopt radical interpretations of the law to argue for massive new loopholes or for the indefinite delay of several provisions. I will focus on some of the submissions shortly, but this post focuses on the return of an issue that was seemingly killed years ago: demands to permit surreptitious surveillance by the copyright owners and other groups for private enforcement purposes.

During the anti-spam law debates in 2009, copyright lobby groups promoted amendments that would have allowed for expansive surveillance of user computers. Coming on the heels of the Sony rootkit scandal, the government ultimately rejected those proposals (the Liberals had plans to propose such amendments but backed down), leaving in place an important provision that requires express consent prior to the installation of computer software.

[. . .]

The Canadian Chamber of Commerce and other business groups want to ensure that the anti-spam law does not block their ability to secretly install spyware on personal computers for a wide range of purposes. In doing so, these groups are proposing to turn the law upside down by shifting from protecting consumers to protecting businesses. The comment period on the draft regulations may have closed, but it is not too late to tell Industry Minister Christian Paradis or your local Member of Parliament to reject demands that would gut the anti-spam bill and legalize spyware for private enforcement purposes.

February 5, 2013

Ontario facing fiscal crisis that is worse than California’s

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 12:17

In the Financial Post, Jason Clemens and Niels Veldhuis look at the under-reported fiscal problems Ontario has to deal with … and soon:

‘I do not want Ontario to become like California,” Ontario Finance Minister Dwight Duncan once proclaimed. And it’s not hard to understand why — California is a fiscal nightmare. It has the lowest bond rating in the United States and its own treasurer, Bill Lockyer, referred to the state budget as “a fiscal train wreck.”

Yet, despite all that is said about California’s finances in the media and financial markets, Ontario is in much worse shape.

Back in 2002-03, the fiscal year before the governing Liberals took office, Ontario’s net debt (assets minus liabilities) stood at $132.6-billion. In the ensuing decade, the province’s debt ballooned by almost 78% to $235.6-billion (2011-12). Most worrying, however, is that if Ontario continues on its current path (status quo in terms of spending and revenues), its debt will balloon to over $550-billion (66% of GDP) by the end of the decade (2019-20).

[. . .]

On a per-person basis, Ontario’s bonded debt (the concept of net debt is not used in U.S. public accounting) currently stands at nearly $18,000, over four-and-a-half times that of California at $3,800. As a share of the economy, Ontario’s debt (38.6%) is more than five times that of the Golden State (7.7% of GDP). This is a stunning difference in the burden of debt, particularly given the attention and concern focused on California compared with Ontario.

While the two jurisdictions face similar average interest rates for their debt, the large difference in the stock of the debt means equally large differences in interest costs. Specifically, Ontario spends almost double what California does on interest costs in dollar terms and a little over three times what California spends as a share of the revenues collected, 8.9% compared to 2.8% of revenues. This is money that could have been spent on health care, education, public safety.

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