Monthly Archives: January 2015

For city staff management, it’s business as usual

Posted January 30, 2015

David Kendrick writes in the Mercury suggesting several points on which the new city council should focus.

He identifies the biggest expense item as the cost of city staff including salaries, wages and benefits. Those costs consume some 80 per cent of the total property tax revenue received by the city.

A case in point is the growth of the city staff over the past eight years that was not commensurate with the growth in population. In fact, it is not even close. More than 500 new city full-time equivalent (FTE) employees were added in that period. That’s a 34.5 per cent increase compared to a 5.7 per cent increase in residents.

At city hall today it’s business as usual with departmental budgets being prepared under the same rules and purposes of the previous administration. For example, in three years, the water department staff has increased by 31 and is requesting another two employees in the upcoming 2015 budget.

The principles of zero-based budgeting are totally ignored. Instead of budgeted funds not spent in the calendar year, they are tacked onto the next year. This blinds council when it comes to judging the efficiency and productivity of each department.

The use of reserves also creates a false impression when used to solve unrelated and unexpected financial problems.

The most recent case of this was the statement by Chief Administrative Officer, Ann Pappert, that the Urbacon $8.9 million legal settlement will not impact property taxes. Instead the money will come from three reserves and replenished through tax revenues over the next five years.

This is the same CAO who chastised the Mayor who dared to speak with subordinates without her permission.

Did the people get this right? We did elect a new mayor as head of the municipality who has every right to speak to his staff without checking with the CAO first.

Mr. Kendrick made reference in his column about the 2012 petition prepared by the citizen’s activist group, GrassRoots Guelph (GRG), requesting a provincial audit of the City of Guelph’s finances and operations. While the Minister of Municipal Affairs and Housing rejected the audit, she did state that it was a “local matter” and should be settled by the two parties.

The city’s communication department released a comment claiming the province felt the city’s financial situation was sound. The Minister’s letter did not contain such a claim.

The city refused to meet with GRG. The organization demanded that the meeting be held in a neutral location with citizens invited to attend and participate. GRG has gone into hiatus until this summer when a review meeting of the steering committee will be held.

For the record, the data contained in the petition was the result of financial analysis by a professional individual. The analysis compared the data prepared by the city’s finance department each year as mandated by the province. Known as the Financial Information Report (FIR). For three years the closing numbers did not match the opening numbers in the following year. We are not talking about a few thousand dollars here, but often a disparity in the millions, in successive years.

The required audit by Deloitte and Touche did not make note of this disparity because of the terms of their contract with the city. The terms of which are not made public.

The fact that the city has gone through five Chief Financial Officers in eight years and now is searching for another, speaks of a lack of continuity and management irresponsibility.

This situation remains in place today. It is another reason for an independent review of the city finances to determine a starting point for the new administration to complete its mandate.

The senior staff was reorganized because two left and the remaining three were given additional responsibilities and named deputy CAO’s immediately after the election. It was done without consultation or consideration of the new council.

It’s another example that despite the realignment of council, for the senior city staff, it’s business as usual.

Looks like the inmates plan to continue running the asylum.

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Kathleen Wynne makes the Pinocchio grade with her Beer Store explanation

Posted January 26, 2015

The Premier was quoted recently that receiving donations from the three foreign breweries that have a monopoly selling the suds in Ontario, “cannot be a consideration” when deciding what to do about the beer sales monopoly.

Elections Ontario said the beer barons donated $385,000 in the last two years to all three political parties. The United Food and Commercial Workers (UFCW), representing the beer store workers, donated another $140,000 to the Liberals and the NDP.

So, now we know the price of retaining a monopoly.

And here’s the payoff. Some 80 per cent of the annual $3 billion beer sales in Ontario is sold through The Beer Store. Most of that comes from beer brands sold by the three monopoly owners.

The Premier appointed former head TD Canada Trust banker, Ed Clark, to head a panel to discover and unlock value of various provincial assets. He has made it clear that the beer deal has value. He also says in his recent report: “The Beer Store structure steers unfair value and material advantages to its owners at the expense of taxpayers and consumers.”

The Premier says she cannot control political fundraising. But her government can, by adopting the Elections Canada system that prevents donations from lobby groups to influence a political outcome.

“All I can do is run our government the way we can with the most integrity possible,” she said in an interview.

Wynne’s record of integrity ranges back to the 2010 provincial election when, as a member of the McGuinty cabinet, she went along with the demolition of the two natural gas power generation plants in Mississauga and Oakville. The end cost to Ontario was more than $1 billion. Why? Because the residents in the area fought the construction and there were four Liberal seats that were in danger of being lost.

It made the difference between defeat and victory as the McGuinty government won enough to retain power, including those four seats in Mississauga and Oakville.

She was also involved in the Liberal government’s decision to invite private enterprise to build wind-powered and solar powered generators across the province. The 20-year price guarantees were double the cost of hydro and nuclear power.

The result is Ontario has become awash with electrical generation and is forced to sell its surplus power to adjoining jurisdictions mostly to border states at a loss.

This has driven up the price of electricity to the consumer. Ontario now has the highest priced electricity in North America. And the price goes up another 10 per cent this year. Every consumer is paying for the stranded $34 billion debt accumulated by the Old Ontario Hydro. That’s on top of the 13 per cent HST we are paying for electricity.

Let’s not forget the $1.9 billion spent on smart meters of which there was no cost benefit to consumers because the meters failed to reduce power usage.

Closer to home, there was the buyout of $458 million to rollback of teacher’s contracts negotiated by the McGuinty government, Education Minister, Liz Sandals, brought the good news to the teachers last fall who were working to rule at the expense of students. The teachers are now entering another contract negotiation with the province.

All this and the annual deficit is still stuck at $12.5 billion after four years, with less revenues and little possibility of achieving a balanced budget. Except the Liberal Finance Minister keeps predicting that the Ontario budget will be balanced by 2017.

Either this guy is a magician with the numbers or he knows something we don’t know. Both theories may be true.

Watch for increases in taxes and user fees in the spring budget. It’s his only hope because the Grits refuse to cut costs and spend more that they are bringing in.

Yes, our Premier has made the Pinocchio grade.

 

 

 

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Why America wants Canadian oil – Part Two

Posted January 24, 2015

A spokesman for Valero Energy Corp., the giant oil refinery operation located on the U.S. Gulf Coast, said there is a specific demand for heavy sour crude because for those able to refine it, “it is significantly cheaper than the benchmark grades of crude oil.”

Most of the heavy sour crude currently being processed at Valero is coming from Mexico, South America (Venezuela) and Russia, with increasing amounts coming from Canada.

“We would rather it came from Canada because it’s closer,” Said Bill Day, director of communications for Valero. “It’s less expensive to transport it, it’s more reliable, a better trading partner, and so forth.”

The U.S. Energy Information Administration data shows the importation of Canadian oil will rise from 3.2 million barrels per day in 2014 to 3.4 million in 2015. The Energy department report projects the demand for Canadian crude will flatten out to as low as 3.28 million barrels per day by 2020 then rise gradually to 4 million barrels per day by 2040.

This projection of increasing Canadian crude shipments is estimated without the benefit of the Keystone XL pipeline that has awaited U.S. government approval for more than three years. In fact, construction of new pipelines in the U.S. is already receiving increasing amounts of crude from Canada.

Does the President of the United States not read these reports supplied by his own officials?

The U.S. “Annual Energy Report 2014” states, “the future increasing demand for diesel fuel increases the value of heavier crude in U.S. Refineries.”

Heavy oil accounts for some 43 per cent of Canadian production and 65 per cent of exports, according to the Association of the Canadian Petroleum Producers. This group says the big growth in energy demand will come from the Southeast Asian nations.

“Our industry needs to have access to where our customers are,” says Tim McMillan, president of the Petroleum producer’s organization.

So where does this leave the government of Canada?

The Finance Minister, and former Energy Minister, Joe Oliver, recently told a Calgary audience that Canadian oil exports to the U.S. will decline over the next few years. He went on to say that it was another reason for Canada to develop the infrastructure – read that pipelines – to move its oil to new foreign markets. Even Prime Minister Harper opined that Canada selling its oil to other markets besides the U.S. would be “the last thing Americans would want to see.”

At the same time, the government endorses the Keystone XL pipeline into the U.S. and supports the Northern Gateway and East Energy pipelines taking oil to each side of the country for export.

It’s called sucking and blowing at the same time.

The Canadian government handling of the whole Keystone issue has been a public relations disaster, with a toxic mix of threats, lying by omission and ignorance of the facts.

How can the Canadian Minister of Natural Resources, Greg Rickford, gush to an American audience in Texas: “Our government welcomes today’s latest milestone, contributing to already historic volumes of Canadian energy being supplied to the United States.”

An accompanying news release stated the new U.S. pipelines will help boost Canadian Oil reaching the Gulf Coast to 600,000 barrels a day from the current 200,000 barrels a day.

It’s hard to understand why the Canadian Minister of Natural Resources fails to read the official data supplied by the U.S Energy Information Administration, projecting Canadian oil imports at 3.4 million barrels this year.

Does Rickford not talk to Oliver or Harper?

Let’s get these choirboys singing from the same page.

Those loyal Tories in Calgary must be cringing with this wind-blown rhetoric that the late Lil Abner would say: “ It’s confusin’ but amusin’, “

 

 

 

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The myths of the big oil glut and U.S. Canadian relationships – Part One

Posted January 23, 2015

For a U.S. president who has spent but nine hours in Canada in the past six years, it is easy to understand why he takes us for granted. We are such milquetoast patsies to the Americans.

In his earnest appeal during the State of the Union speech to reach out and establish trade treaties with Europe and the Pacific economic rim of growing countries, he neglects to include America’s biggest trading partner – Canada.

While the U.S president brags about the surging U.S. economy, he fails to mention the effort of Canada to establish a badly needed second bridge over the Detroit River to handle the huge volume of trade that is being delayed. The project has been stymied by U.S. federal government intransigence to build a $200 million customs and immigration terminal on the Michigan side of the border.

The Canadian government has already pledged funding for building the bridge even the Michigan portion, plus the expressway entrances on the Ontario side to expedite the two-way increasing trading volume.

But the U.S. reaction to the customs plaza, needed on the Michigan end of the bridge is noncommittal. Do they really expect Canada to pony up the money to complete that customs terminal that will benefit both countries?

Now the U.S. is insisting that any project requiring materials that are manufactured outside the United States cannot be used unless it’s made in America.

The total dishonesty of this new law, called Buy American, is in the proposed renovated ferry terminal located in Northern B.C near the Alaska panhandle. It already exists on Canadian crown land that is leased back to the Alaskan Marine Ferry Service until 2063. The terminal is badly in need of upgrading and the Canadian government is prepared to undertake those renovations.

However, the Alaskan Governer insists that only U.S. steel and materials can be used under the U.S. Buy American law in renovating the ferry terminal.

Let’s get this straight. This is a terminal originally built by Canada on Canadian land and leased to the Alaska ferry service. Under this cockamamie logic, do all Canadian airports, being constantly upgrading, are now liable to only buy made in USA materials because U.S. based planes land in Canada?

Does it mean that any trucks transporting goods into Canada must be made in the U.S?

Under the Buy American law, does it mean that all hockey players in the U.S. must now only use equipment made in that country?

These actions are in clear defiance of the 36-year North American Free Trade Agreement (NAFTA) that U.S based trade unions have been battling ever since. It is the ultimate goal to set up barriers of protectionism that is misguided and illegal under NAFTA.

The ultimate final blow to Canadian sovereignty is the refusal to allow the Keystone XL pipeline to be built through the U.S. to transport Canadian crude to Gulf Coast refineries. Yep, the opponents are now saying the TransCanada pipelines must only use American-made pipes. They already know that the pipes have been sitting on the Canadian side of the border for three years, awaiting permission from the U.S. government.

In his State of the Union speech, Obama made a single reference to the pipeline proposal paraphrased “America is more than a pipeline.” He didn’t have the guts to even name it. Nor does he really know the facts about why his country wants our oil.

That’s what we get with a U.S. president who grew up in Hawaii has spent nine hours in Canada since his election in 2008.

When the U.S. President wants something, such as fighterjets to attack ISIL in Iraq, we’re just a phone call away.

Well, maybe we ought to tell the Alaskans the ferry terminal renovations are off the table.

Let the regular market forces determine the flow of crude to the U.S. that is showing no signs of decline. Concentrate on shipping our oil through B.C to the Pacific markets, and via Energy East to Montreal and New Brunswick and open up the European markets.

As for the new Michigan U.S. customs plaza, let’s build it with our money lease it back and own the whole project so we control the traffic and tolls.

Tomorrow: Part two of the great oil glut. How the U.S. remains a growing and major market for Canadian oil.

 

 

 

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An oil carbon tax, to be or not to be, that is the question

Posted January 20, 2015

A recent column in the Mercury presented a case for creating a carbon tax in Ontario.

The writer, a reformed peak oil believer, makes the case that with oil now priced so low, it is the perfect time to fire up another tax on already overtaxed Ontario citizens.

He pointed out how well the seven per cent per litre carbon tax at the pump works in British Columbia. The proceeds are returned to taxpayers with matching reductions. He claims its revenue neutral. He also said that fuel consumption in B.C. has dropped by 16 per cent while it has risen by three per cent in the rest of Canada.

Now for the rest of the story.

The writer fails to define what kind of fuels he uses in his B.C. example against the rest of Canada. He makes no reference to natural gas, a growing important source of energy. He is focused on fuel for automotive vehicles that use gasoline as fuel.

But what about trucks, buses, locomotives, power plants, aircraft, industrial plants, ships, boats, residences and businesses using oil or gas fuels for heating?

He assumes that oil in all its refined forms is responsible for global warming. The theory is, if the nations of the world reduce the dependence on oil and gas, the atmosphere will clear. Planet earth will be able to prevent the disastrous events that will cause oceans to flood coastal areas and severe weather conditions, currently being blamed on global warming.

Has the writer considered the amount of carbon gas that is spewed daily by more than 200 active volcanoes around the world?

What is happening is a natural evolution of planet earth. For millions of years it has constantly changed. There is no doubt that controlling petroleum-based carbon emissions will help to slow global warming but it is not the only cause of the changing global atmosphere.

Is the alleged reduction in B.C. due to introducing alternative energy sources such as wind farms and solar system arrays? The devil is always in the details.

In Ontario, successive provincial governments controlled by the Ontario Liberal Party have introduced sustainable energy projects to replace coal-fired power plants. Private corporations have developed almost all of these wind and solar farms. Under a government scheme, it guarantees them to charge twice the water and nuclear cost of power generation for 20 years.

One of the negatives of this development is that they are generating too much power and it is sold to other jurisdictions, chiefly in the U.S., at below cost, fire sale prices. The problem is you cannot store unused electricity. The provincial government has proposed a 10 per cent across the board increase in electricity in 2015 with further increases planned in the next three years.

This has made Ontario power generation the highest cost of any major jurisdiction in North America. Just look carefully at your Ontario Hydro bill at the list of charges, other than electricity, you have to pay, including the debt reduction charge to pay for mismanagement of Ontario Hydro in previous years. That stranded debt is $35 billion and there is no sign that it is being reduced because the government won’t tell you. Where is the money going?

It’s akin to paying twice for power, even power used years ago.

So when the Mercury columnist suggests that Ontario citizens pay more taxes for fuel consumption, why would anyone in their right mind give the Wynne provincial government control of such a cash stream?

The record of the McGuinty and Wynne governments is best described as being disastrous. Throw in the $12.5 billion annual deficit and you don’t have to hold an MBA degree to figure out the cost, every year of carrying that deficit, plus the highest debt in the province’s history.

Those costs do nothing for the citizen’s of Ontario. Until the Wynne government stops spending more than it is taking in, the problem will not go away but grow exponentially.

When the Ontario finance minister states that the $12.5 billion deficit will be eliminated by 2017, he sounds like the man from La Mancha, Don Quixote, and the impossible dream.

 

 

 

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The ugly side of supply management and how it drives up everyday prices

Posted January 15, 2015

When the Toronto Star recently published details of the deal that controls the supply of beer to Ontarians, it raised serious issues of the corruptive policies of successive Ontario governments. None are excluded; they all went along with it.

The back-story was the undercover benefits this beer monopoly has delivered to politicians and political parties for more than 15 years. It is a pernicious deal that restricts the sale of beer in the Liquor Control Board of Ontario (LCBO) stores in the province to be limited to six-packs.

This leaves the Beer Store with an absolute monopoly to sell 12 and 24 packs, not only walk-in beer customers but also the entire commercial sector, including restaurants, bars and other public and private outlets.

The final insult is that the Beer Store is owned and operated by three foreign beer producers, Sapporo of Japan. Molson Coors of the United States and Inbev of Belgium. This allows some 150 stores in the province, to control the sale of beer in Ontario.

The Beer store monopoly sets the price of beer because it is the epitome of supply management. It is a gross abuse of free trade in our society. It lacks competition and fair prices for a product enjoyed by millions of citizens in Ontario.

So, why do successive governments fail to end this aberration? Because the Beer Store lobbyists provide members and all parties in the Ontario Legislature to enjoy special personal privileges. These include free receptions and entertainment in facilities run by the Beer Store lobbyists. Not to mention the funds donated to political parties, a practice the federal government does not allow.

This monopoly is not alone in Ontario.

Here are some other monopolies that have exclusive control of most things we eat.

The Milk Marketing Board controls the price of all dairy products including milk cheese, yoghurt, butter, sour cream, buttermilk, you name it, and it produces it and fixes the price. There is no competition. It’s a take it or leave it for consumers.

Add to that the Beef Marketing Board, The Pork Marketing Board the Poultry Marketing board and the Egg Marketing board.

These so-called supply management boards favour the producers not the consumers. They were originally set up to restrict foreign competition from destroying the Canadian agriculture industry. Pure and simple, it was blatant protectionism and a free-trade killer.

Even when the North American Free Trade Agreement was signed some 26 years ago, it failed to protect the consumer. It allowed these monopolies to function, making Canadian foods and beverages among the costliest in the world.

When you can buy a pound of butter in the U.S. for $3 why does it cost $5.50 in Canada?

The whole idea about NAFTA was to create a North American economy where the three partners, Canada, the U.S. and Mexico could freely trade their products and create a true North American free trade zone.

Well, during the debates in 1988 the various legislatures and the House of Commons, the Agriculture lobbyists convinced the federal and provincial governments that NAFTA would destroy agriculture in Canada.

The final agreement created a devastating strike to the Canadian consumer.

For example, why should consumers protect 13,000 dairy farmers in the country when there are products from our NAFTA partners that allow lower prices for consumers? Why should 35 million Canadians put up with this?

Why do the politicians continue to maintain these supply management monopolies to exist in 2015? Didn’t the Stalin soviets try supply management in the ‘30’s and ‘40’s? How did that work out?

In Ontario, all political parties share responsibility to change this economic drag on those people they represent.

Beer should be available in grocery stores, convenience stores and the LCBO.

Basic dairy and meat should be unleashed from the bounds of institutional control by non-elected marketing boards.

The time has come to free up true competition. It can start with Premier Kathleen Wynne, who can introduce legislation to end these monopolies. It won’t be easy but in closing them down, there are opportunities to export Ontario agriculture products to the rest of the world. Canada is a trading nation. Restricting competition becomes a drag on our economy.

You don’t have to look too far to see the effect in the past three months of the drop in price of petroleum products including gasoline.

That’s the effect of global competition and how it benefits the consumer. And Ontario has to get on board.

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How American environmentalists caused the oil price crisis

Posted January 13, 2015

American is still accepting shipments of Saudi Arabia oil. Despite the rationale that the source and supply of North American oil and gas is now totally sufficient to meet the continent’s needs.

Yet a determined group of homegrown environmentalists has captured the president of the United States to stop the flow of oil from Canada to U.S. Gulf refineries.

President Barack Obama has already stated he will veto any congressional legislation that reaches his desk that approves the Keystone XL pipeline to be constructed from Alberta to Cushing, Oklahoma.

He does so in violation of the North America Free Trade Agreement (NAFTA) that created the largest trading system in the world more than 35 years ago. It has created more jobs in Canada, Mexico and the U.S., than any piece of legislation passed between the partner countries in the past 200 years.

There is no such agreement with the Saudis or the Iranians who supply millions of barrels of crude to both Canada and the U.S. Yet both these countries are despotic politically with no regard to supply and the effect on world oil prices.

The Saudi’s wellhead price per barrel is reported to be $15. Add to that the cost of shipping the crude at an estimated price of $30. In the past four and one half months, this deliberate oversupply of oil has dropped the price per barrel to $47 at the wellhead. In that short time, the price of West Texas Light crude has dropped $53 since early September.

The fallout has put North American petroleum producers and associated industries in a perilous position as their wellhead costs range from $40 to as high as $80.

Despite this, the U.S. president has allowed a well-financed and organized lobby to drive the price of oil to levels that are no longer profitable for many producers. While the public enjoys much lower gasoline prices, the fallout to the economies of the NAFTA partners is devastating.The result is losses of jobs, less research and development and losses of key employees. All these fallouts will be felt for many years.

The environmentalist lobby doesn’t care so long as it can stop oil from Canada and the fracking oil recovery programs in the U.S.

They are content to allow oil to be shipped from OPEC countries at fire sale prices. Yet the president of the United States continues to resist home grown oil and gas development on the pretense that it will affect global warming.

So it is okay to accept the flaring of natural gas in Saudi Arabia, Iraq and Iran to contribute to global warming but not in North America where most natural gas is captured and sold.

The cost of this massive sell-off of oil will be long remembered as Obama’s folly. He has betrayed the trust many oil producers had when developing oil supply to make North America self-sufficient.

He can fix this by telling the OPEC countries currently selling oil to the U.S. to reduce or cease delivery so that demand can once again match supply.

The evidence is clear that the environmentalist lobby’s target is to shut down Canadian Oil Sands production because they allege it is a major cause of global warming. It has nothing to do with stopping the Keystone XL pipeline.

It is crass interference in the right of a sovereign nation to develop its resources. Therefore, if the president vetoes the impending congressional approval of the pipeline, he is in violation of the terms and conditions of the NAFTA agreement.

He may not want that as part of his legacy.

 

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