Thursday, December 27, 2012

C-428: A Bill #IdleNoMore and First Nations Should Support

The #IdleNoMore movement has drawn a lot of attention, but like the Occupy movement, is vague on its grievances and demands. The movement's supporters often reference various government bills which would modify some First Nations-related laws without looking closely at what those changes are and whether they would be a net benefit to First Nations people.

Bill C-428 is a private member's bill aimed at improving certain sections of Canada's racist Indian Act. The Indian Act restricts the rights and freedoms of people in Canada based on their race. Many of these restrictions were initially intended to protect Indians from being taken advantage of by non-Indians, for example, by preventing the sale of an Indian farmer's crops to a non-Indian who might swindle them. However, in trying to protect Indians, the Indian Act unfairly restricts Indians and limits their opportunity for prosperity.

Let's step through the major clauses of bill C-428 and outline the improvements each clause will bring to the Indian Act and to the lives of ordinary Indians living on reserves.

C-428 Section 5:

Repeals sections 32 and 33 of the Indian Act which makes it an offense to sell or barter any cattle, animals, grains, root crops, plants or their products which were grown on a reserve to any person who is not a member of that band. Why shouldn't people living on reserves be allowed to sell their crop? That doesn't make any sense. This change will allow bands to generate income from farming on reserves.

C-428 Section 7:

Repeals sections 42 to 47 of the Indian Act which allow the minister to interfere with the wills and estates of any deceased Indians as well as how property is passed on. Why should a federal minister be involved in personal family affairs just because it's a First Nations family? This change removes the minister's power to meddle in this area, allowing an Indian's will to be executed privately, just the same as anyone else in Canada.

C-428 Section 8 and 9:

Repeals section 82 and 85.1 of the Indian Act. These sections place restrictions on how band councils may pass laws. In particular, section 85.1 requires a referendum of all electors of a band in order to pass prohibition by-laws on the reserve. Although a minor change, this removes these restrictions and provides bands with more freedom to self-govern on their reserves.

C-428 Section 10:

Replaces section 86.1 of the Indian Act. This provides transparency for band members into the by-laws passed by their band councils. Any by-laws will have to be posted on the internet, circulated in the reserve's publication, and a copy provided to band members upon request, just as municipalities do today.

C-428 Section 11:

Repeals section 92 of the Indian Act which makes it an offense for commerce to be conducted on reserve between band members and missionaries on reserves, school teachers on reserves, or certain government employees. The original intent of section 92 was to protect Indians from being swindled by outsiders. I think bands are smart enough to conduct commerce freely and fairly, just like anyone else.

C-428 Section 18:

Replaces sections 117 to 121 of the Indian Act. These sections required children to attend school, prescribed which types of schools children must attend, how religious schools were chosen, imposed strict notification requirements if a child is to be absent and even empowered truant officers to not only find truant children, but even obtain warrants to enter homes to find truant students. It's all kind of creepy that such laws would exist in Canada at all.

All of these sections will be replaced with two simple, common sense clauses that allow children to be absent from school with reason if the school principal is notified, or if the child is being home schooled.

These are the main changes that bill C-428 would bring to the Indian Act. Since private members bills are limited in what they can change, it doesn't solve every problem, but these changes seem mostly positive and should benefit all band members.

Private members bill aren't sponsored by the government and MPs are traditionally allowed to "vote their conscience" when it comes to private members business  rather than being forced to vote the party line. This means bill C-428 will need support of MPs across all parties. If you support these changes, make sure you write or email your MP to tell them.

Wednesday, August 22, 2012

Feeding The LTC Money Drain

Last weekend I made an adjective-laden assertion on Twitter that a "bloated inefficient union monopoly results in poor service," by which I was referring to our friendly neighbourhood London Transit Commission. Local tweep Shawn Adams challenged my premise, asking me to elaborate.

There have been increasing complaints about London's transit service; I think we can agree that it's suffering. Instead I'll give my reasoning why public sector unions and government monopolies often result in poor service, as well as focus on areas of concern with the LTC itself.

When unions operate in the private sector where there is healthy competition, a natural balancing mechanism exists. There is a limit to how far they can push and how much they can demand. If they demand too much, or if they go on strike, they risk their employer losing customers and going out of business.

Unions operating in the public sector lack this natural safety buffer. When public sector unions negotiate or strike, they know the government won't go out of business. What's worse, the people on the other side of the negotiating table are negotiating with other people's money (OPM). This balancing effect is reflected in Canada's unionization rates. In the private sector, 16% of employees are unionized, while in the public sector, this number jumps to over 71%.

The problem is amplified when services are provided through a government monopoly. Whether it's the government itself with the monopoly, or an private company which is given a monopoly by the government (such as The Beer Store), the effect is the same. There are no alternatives to which consumers can turn, and no competition to punish inefficiencies. This leads to growing costs and poor service.

As public unions demand more, the operating costs increase, which get passed on to consumers. In a competitive market, consumers may switch to a less expensive alternatives, but in a monopoly there are no alternatives. Consumers are also left high and dry if a public union goes on strike, halting the entire service. If a cab company's employees went on strike, people would use another cab company. When the LTC goes on strike, as they did in 2009, riders are left without bus services. (Though I must admit, the 2009 LTC strike made my daily commute so much easier!)

Shawn asked for specific inefficiencies. Let's go back to the 2009 strike and look at the demands of the union. The union initially demanded a 20% wage increase over 3 years. A 20% increase, during a recession?! Even the 9% increase over 3 years the LTC offered was generous, but why shouldn't it be? It's not their money. Even "penny pinching" LTC General Manager Larry Ducharme's salary increased from $108,000 to $138,000 between 2004 and 2009, a whopping 28% over 5 years!

LTC drivers now pull down about $25 an hour. Compare this to other cities. The average wage of bus drivers and subway/transit operators in Windsor/Sarnia is $14/hr (2010), $15/hr in K-W (2010) and $16/hr in Toronto and Ottawa (2010). In 2011, private school bus operator Langs Bus Lines was offering $13.25 an hour for drivers.

But inefficiency is more than just excessive pay and waste. It's also about the quality of service produced for the money being invested — the "bang for the buck." The LTC has been able to reduce costs by running buses less frequently. Service hours have decreased 23% from 1991 to 2011. As a result, we get a diminished quality of service as riders must sometimes wait for extended periods to catch a bus, or be passed by as buses reach capacity. Complaints have more than doubled from 2009 to 2011.

So what's the solution? If it were up to me, I'd break up the monopoly and introduce competition in our transit services. Allow private operators to bid for contracts to service routes. The operators would still be funded by the city plus fares, but would do so in a competitive environment. Other cities, such as Milton, are already enjoying public transit provided by private operators.

Or, we can stick with our bloated inefficient union monopoly and keep feeding the LTC money drain.

Wednesday, July 04, 2012

Re: 10 Flaws in the 0% Tax Increase Plan

Last night I read a blog post written by Susan Toth entitled 10 Flaws in the 0% Tax Increase Plan (AKA Why Taxes Should Not Be a Bad Word). I engaged Susan in a discussion about some of the points in her argument. This lead to a deeper discussion about basic underlying principles.

While we had different views on many ideas, I felt Twitter's 140 character limit wasn't enough to fully explain my argument. I promised her a more detailed response, including why I disagreed with her 10 points, as well as an explanation of why I feel private competition is more efficient than government monopoly, and why private delivery of services can result in higher quality services than governments provide. I'll provide the latter in later posts.

Susan took a lot of time researching her points, and even provides sources for each. I commend her for that. Some of her points I even agree with, but others I feel the need to either present a counter argument or at least point out where Susan may have overlooked some details.

Flaw #1:

"A 0% tax freeze, when taking inflation into account, is actually a tax decrease. So lets start referring to it as such. In 2011, inflation was at 2.9%. So to actually maintain a 0% “increase”, we would have to start at 2.4% (using a 0.5% projected assessment growth- more on this later)."
The CPI increased only 1.2% in the 12 months up to May. Susan touches on projected assessment growth being only 0.5%. While this may be true, my own property taxes increased by 1.03% last year due to increased property assessment. City revenues also come from growing the tax base as new properties are built.

Using her own figures, assessment growth was 1.5% in 2009 but is projected to fall to 0.5% in 2011. Just as with households and businesses, we all needed to tighten our spending as the economy cooled. There's no reason the city should expect their revenues and spending to continue to grow at the same rate while everyone else tightens their belts.

Flaw #2:

"0% will result in needing to find $25 million. Essential services or not, there will be cuts."
As Susan pointed out in Flaw #1, she's expecting the city to increase real expenditures by roughly the rate of inflation she stated, or 2.9%, while revenue grows by only the projected assessment growth of 0.5%. This isn't a cut. This is choosing not to increase spending to match inflation. Most people wouldn't call it a cut when the city gives a department $10 million in 2011, then gives them another $10 million in 2012. Similarly, when employees see their pay cheques increase 2.9%, they'd call that a raise.

I also disagree that there needs to be cuts to maintain services without raising the tax rate. Many of our services could be delivered more efficiently by fundamentally changing how they are delivered. Many services which are currently handled by city staff could be delivered more efficiently by introducing private competition. As a hypothetical example, instead of having city staff maintain city parks, let local lawn care companies compete in a bidding process for that work. This can reduce the city's costs to maintain parks while maintaining the exact same quality of service and also supports our local economy.

Lastly, I like to ask this of everyone who is opposed to cutting services. Is there not a single city service or other area where you would support cutting spending? Is there not one thing you would cut from the city budget if it were up to you? Not one? Metal trees? Light shows? Thames River fountain upgrades? If you can't come up with a single item to cut, you're just not trying.

Flaw #3:

"None of this is to say that finding efficiencies isn’t a goal. It should always be a goal. If we impose a tax raise, and find efficiencies, we can use the surplus to invest back into the city."
I agree with the first half of this point. Finding inefficiencies should be the goal. We won't find long term efficiencies by nibbling around the edges. If we only cut spending on an inefficient program, we'll just have a slightly smaller inefficient program. We need to "ReThink" how services are delivered in order to find true savings over the long term.

However, if we simply raise taxes, there'll be no need for departments to find efficiencies. They'll just carry on doing things just as inefficiently as before and we'll only be draining more money out of the economy.

Flaw #4:

"Going into debt will cost us more in the long term through interest payments on loans. Toronto’s tax “freeze” in the late 90s is generally understood to have contributed to the financial hole it now finds itself in"
Again, I agree with the first half. Borrowing money to run the city is not a solution. Debt is simply a tax on future taxpayers. However, I'd argue that Toronto's financial hole is largely attributable to the city kowtowing to their overpaid and overemployed public sector unions under a union-friendly NDP mayor.

Flaw #5:

"Maintaining a 0% tax increase will just mean a larger (and much harder to take) increase in taxes down the road."
This assumes that city spending continues to outpace revenue growth. We need to change this expectation if we're to maintain taxes at this level in the long term. Winnipeg managed to freeze taxes at 0% increase for 14 consecutive years and only this year are they looking at a 3.5% increase -- a relatively moderate increase after 15 years.

Flaw #6:

"Taxes are the price we pay for civilization. Given that much of London’s infrastructure is decades behind in maintenance and repairs, (as evidenced by sink holes!) the cost to fix problems will be far more than the cost of ongoing repairs and maintenance."
Taxes are the price we pay for government services, not civilization. Infrastructure upgrades are infrastructure maintenance are two separate expenses. Upgrades are capital expenses which add value to the city for future benefit, while maintenance is an ongoing expense to maintain those assets are current levels. Capital expenses can be funded by selling off assets which is not longer makes sense (in some cases, never made sense) for the city to own, such as the London Convention Centre or our city-owned golf courses which compete against the privately-run courses.

Flaw #7:

"It’s entirely inaccurate to say no one wants a tax raise."
Reference to the left-wing Toronto Star notwithstanding, I don't disagree that there are people who want taxes to rise, such as Susan, an no doubt the many staff employed by the city. There are also many people who want taxes to remain the same, or even be cut, such as many businesses or lower income families struggling to get by in today's economy. Property taxes are a regressive tax which affect lower incomes the most.

To everyone who "wants a tax raise," I'd ask if they'd be willing to personally pay extra money to the city -- above and beyond whatever taxes they already pay? Have they ever donated extra money to the city before in this fashion? If there's a segment of Londoners who are so gung-ho about wanting to pay more tax, let's give them the option. Provide a method for people to donate extra money to the city. Even give them the option of "earmarking" their donations to go towards certain services, such as subsidized housing. If there is truly a broad desire to pay more taxes, let's see these people put their money where their mouths are.

Flaw #8:

"A report written by tax expert and economist Hugh Mackenzie ... For most Canadians, the benefit they receive from tax cuts is outweighed by a significant margin by their losses from accompanying cuts in public services."
I didn't take the time to read the full report written by Hugh Mackenzie for the left-wing think-group, the Canadian Centre for Policy Alternatives. However, I'd point out that much of the benefit from lower taxes isn't directly realized by taxpayers alone. While taxpayers will have more money, they'll also spend more money on goods and services, which helps boost businesses, which creates jobs, which lowers unemployment, which raises people out of poverty, which grows the tax base. The Laffer curve illustrates how lowering taxes can actually raise government revenue and how raising taxes can reduce revenue. At one point, Britain had such high taxes that it was suffocating their economy and drastically reducing total tax revenue. They've since lowered their taxes and revenues have increased.

Flaw #9:

"User fees that often result from tax cuts/freezes disproportionately impact low-income families."
User fees proportionately affect the users of services. User fees can help to reduce waste caused by frivolous use of services. As an example, take health care, even though this is a provincial responsibility. If patients had to make a small co-payment, say 10% of the cost, whenever they went to a doctors office or to a hospital, it would reduce unnecessary visits, such as taking your child to the emergency room because they have a cold. Many European health care systems, such as the Swiss, use a co-payment system to great effect.

Getting back to the municipal level, the city already charges user fees for services, such as at the city's swimming pools. It's $2.50 for outdoor pools and $3.50 for indoor pools. Kids can go swimming for the cost of a bottle of pop. This seems reasonable, and could even be raised. (Better yet, privatize the pools and let businesses set the price and compete for customers -- bet I won't convince you of that one.)

Flaw #10:

"Even assuming individual households save up to, say, $500 per household. This extra $500 will not stimulate economic growth. The staff cuts and service cuts will deepen the economic crisis."
This last one was quite a bit longer, so I only quoted the part I disagree with the most, and by most I mean 100%. The assertion that reducing taxes by $500 per household will not stimulate economic growth is just plain wrong. It follows this assertion that increasing taxes by $500 per household will do not economic harm, which is also wrong. If it were true, we could just increase taxes indefinitely without any harm to the economy.

Staff cuts will deepen the economic crisis? Let's differentiate between makers and takers. Makers are the people working in the private sector to add to the productivity of our economy, such as manufacturing, resource extraction, sales, tourism, etc. The private sector grows the economy and generates wealth, from which governments take a percentage to provide public services. Fire protection, police services, subsidized housing, vehicle licensing, gun registration, human rights commissions, may be important services, but they generally do not directly add to the productivity of economy.

To say cutting public sector jobs would deepen the economic crisis is false. Cutting these jobs would reduce the tax burden on the makers and allow the economy to grow, creating more jobs for these recently cut public workers. If city staff were what's keeping the economy going, then wouldn't the solution be to give everyone a government job? Who would be left to pay for it?

Wednesday, March 07, 2012

Growing London's Economy: Reducing Barriers To Growth

In response to a comment I made about London's economic growth, or lack thereof, was asked by London Councillor Joni Baechler if I could provide some suggestions. I've come up with a few general suggestions to help attract new businesses to London and to encourage existing businesses to grow.

1. Commercial and Industrial Taxes

I've been pouring through the data in the BMA Municipal Study 2010 and have noticed a few areas where London could improve its competitiveness in terms of commercial and industrial taxes.

The BMA report provides several comparisons between other Ontario cities in many areas. In many comparisons, London has fairly competitive property taxes. However, when some new businesses are looking for a home, they may see London as less attractive than other nearby options. I looked at several metrics from the BMA report, but narrowed my focus of each to the following:
  1. How does London compare overall?
  2. Host does London compare to other cities over 100,000 in population?
  3. How does London compare to other cities in Southwestern Ontario?
  4. How does London compare to the nearby "competition?" 
    • That is: how do we compare to our neighbours of similar size who business may also consider investing in? My list of Nearby Competing Cities is: Kitchener, Waterloo, Cambridge, Woodstock, Sarnia, Windsor, St. Thomas, Guelph and Niagara Falls.
Using these four perspectives, I looked at the following comparisons from the BMA report:

Neighbourhood Shopping Centre Taxes:

Defined as: "Typically the smallest type of center comprised of retail tenants that cater to everyday needs such as drugstores, convenience stores and hardware stores." This is likely the most common type of business in London, making it key to our economy, yet we tax these businesses quite heavily:
  • Overall: 4th Highest
  • Cities with +100,000 population: 4th Highest
  • Cities in Southwestern Ontario: Highest
  • "Nearby Competing Cities": Highest
Hotel Taxes:
  • Overall: 4th Highest
  • cities with +100,000 population: 2nd Highest
  • cities in Southwestern Ontario: Highest
  • "Nearby Competing Cities": Highest
Motel Taxes:
    • Overall: 6th Highest
      • Cities with +100,000 population: 3rd Highest
        • Cities in Southwestern Ontario: 2nd Highest
        • "Nearby Competing Cities": 2nd Highest
        Standard Industrial Taxes:

        The manufacturing sector is a key part of London`s economy. While London has close to average tax levels on both standard and large sized industry, we have neighbouring cities with much more attractive taxes.
        • St Thomas is 29% lower ($1.67 vs $1.18 per square foot)
        Large Industrial Taxes:
        • Several nearby competing cities are lower: Kitchener $1.06 (-17%), Sarnia $1.11 (-13%), St. Thomas $1.14 (-11%), and Niagara Falls and Cambridge both at $1.17 (-9%), compared to London`s $1.28.
        Industrial Vacant Land Taxes:
        • London clocked in at $2,844 per acre, but again, some of our neighbours offer much more attractive options: St. Thomas $1,223 (-57%), Sarnia $1,775 (-38%), and Woodstock $1,864 (-34%).
        If we want to help our businesses grow and especially if we want to attract new businesses, we need to do better than average. We need to make London an attractive option to new business. Keeping taxes frozen at 0% won't cut it. City Council needs to cut unnecessary spending and work towards reducing the tax burden on our economy.

        2. Reduce Regulations

        An often hidden cost to business is the cost of complying with excessive regulation. While this is not a direct financial burden, many regulations require additional time or resources which does have a financial impact of business.

        Other municipalities as well as higher levels of government are adopting "One-For-One" rules for any regulations passed. The concept of these policies is simple. In order to enact any new regulation, an existing regulation must be repealed. This helps to keep to number of regulations from growing, but also directs attention towards cleaning up old regulations which may be obsolete, unnecessary, even harmful or simply not working as they were intended.

        The Government of Canada is even looking into adopting a "One-For-One" rule in their Recommendations Report - Cutting Red Tape…Freeing Business to Grow.

        [Edit: Starting last September, the British government enacted a "One-For-One" rule as well as requiring that a panel of business experts scrutinize new legislation before it is introduced. It's estimated that regulations cost UK businesses £88.3bn in 2010. Source:]

        3. Remove Parking Meters from Downtown

        Every time I visit London's downtown to shop at one of our downtown businesses, parking is always a problem. Having to pay for parking in order to visit a store discourages me from shopping downtown, especially if I'm not even sure if the store will have the item I want, or if I just want to browse. Many times, I'll opt to find what I want elsewhere in the city or simply buy online. Parking meters are a drain on our downtown economy.

        Remove all parking meters from the downtown core, offering 2 hour free parking on downtown streets instead. This will reduce direct revenue, but some of that loss will be saved by the reduced maintenance and enforcement costs. The revenue loss will be further offset by the increased tax base due to downtown growth.

        4. Community Involvement in Improving Roads

        Reports estimate that Toronto loses $6B per year due to gridlock. How much does London lose? While we aren't as big as Toronto, we're still a large city with a small-town road system and traffic congestion is a major problem in London.

        I'm not holding my breath on London ever getting a ring road, but there are many small improvements that can be made across the city. The people who best know about problem areas in our roads are the people who drive on these roads every day. We need to hear from them.

        As was done with our latest budget process, we need a way for Londoners to easily communicate their suggestions for road improvements. This may involve another App Contest to find the right tool, or is simply a User Voice instance where people can suggest ideas or vote on the ideas of others.