Image: Canadians Occupy Parliament over Flaherty's lie about "tax leakage" from income trusts
Canadians' vanishing retirement incomes
BY PAUL WILLCOCKS,
NOVEMBER 26, 2011 3:07 AM
Canadians have lost a lot over the years. A generation ago, most people could count on buying a home for the equivalent of about three year's salary. That dream is gone.
And a generation ago, most people could count on retiring with a guaranteed pension from their company. They knew how much they would get, and, with Canada Pension Plan and old age security, they could count on a comfortable retirement.
It's extraordinary how that has been taken away, with no real debate.
Companies decided defined benefit plans - ones that paid a guaranteed retirement income - were too costly.
Employee and company paid into defined benefit plans. If the reserves looked like they might not provide the promised benefits in future, they had to be topped up.
So companies pushed to eliminate the plans, or change them to defined contribution plans. Employees and company would contribute and the funds invested. The pension would be based on however much money was in the fund on retirement. There was no obligation to provide an income. (Government workers, including MPs and MLAs, still have defined benefit plans. Politicians believe you should pay for guaranteed pensions for them, but not that you should have one.)
And work changed, from long-term employment with big companies to much less certain work, often parttime or on contract, and without any pension.
Only one in four British Columbians has a workplace pension today.
This huge change in the social contract hasn't been discussed. And while workplace pensions have been slashed, there has been no corresponding increase in public retirement benefits. Those benefits are low compared to other OECD countries, in large part because Canadians could once count on workplace plans.
The Harper government has offered a token response to the pension problems with legislation allowing new pooled pension plans.
It's a lame response to a real problem. The new plans would give small business the opportunity to provide a pension plan by signing a deal with a bank or investment company.
The employees would have the voluntary chance to contribute, and the employer could also contribute if he chose (not that likely, I'd say). The investment firm would take its cut for managing the money and the savings would be available at retirement.
Some employers will offer the plan. Some people will sign on. But not many. And there is no benefit over RRSPs; people who have not contributed to their own retirement fund, for whatever reason, are unlikely to opt into a voluntary pooled plan.
The government could have easily made the plan at least slightly better. It could have allowed the pooled plans, and had the funds managed by the Canadian Pension Plan investment experts. That's similar to the approach taken in Saskatchewan, where such a plan already exists. That's also the model promised by the B.C. government in 2008, and never delivered.
That would have provided excellent money management at the lowest cost. Instead, the Harper government offered the banks and the investment houses the chance to manage the money and collect the fees.
That's strange, because earlier this year Finance Minister Jim Flaherty called for an investigation into the high fees charged by providers of Canadian mutual funds and other investments. A study found Canadians pay more than twice as much in management fees as Americans. Those costs significantly reduce the money being available for retirement. Now Flaherty is opening a new market for them.
This isn't just an issue for those nearing retirement age.
The giant baby boom bulge is now nearing 65. In 1971, there were 6.2 British Columbians of working age for every person over 65. By 2034, there will be just 2.4 working-age people for each person over 65.
If boomers push for better pensions, the cost will fall heavily on those still working.
Footnote: The best option would be an increase in CPP benefits, now capped at about $935 a month. That would require increased contributions by employees and employers.
© Copyright (c) The Victoria Times Colonist
Saturday, November 26, 2011
Posted by Brent Fullard at 10:20 AM
Thursday, November 24, 2011
Erudite, authentic Hill Times columnist Stanbury, ‘a giant’ in academic area of democratic reform, dies at 68
W.T. Stanbury was one of those remarkable minds who don’t come along too often, says Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives.
By KIRAN RHINES | Nov. 21, 2011
W.T. Stanbury, who had written a popular weekly column since 2002 for The Hill Times and was considered a “giant” in the academic world of government accountability, died last month at his home in Mexico from a terminal illness. The former economist, professor, and prolific author died on Oct. 27 at the age of 68.
Mr. Stanbury had a long, industrious career in business and economics. He received a bachelor of commerce from the University of British Columbia, and his MA and PhD degrees in economics from the University of California at Berkely. He was a professor of commerce and business administration of the University of British Columbia from 1970 to 2000.
Between June 1978 and August 1980, he also worked as director and later research director of the regulation reference at the Economic Council of Canada. From there he became director of the regulation and government intervention program at the Institute for Research on Public Policy. Mr. Stanbury also served on the Royal Commission on Electoral Reform and Party Finances from 1989 until 1991.
“Though he was a professor of economics and not a political scientist, he had come to focus his active curiosity and lively intelligence on the structure and operations of the Canadian political apparatus,” said Thomas Hall, a retired House of Commons procedural clerk, and collaborator with Mr. Stanbury on several columns in The Hill Times over the years.
“One of our articles, on judicial appointments, in [The Hill Times] even led to correspondence and a conference call with the Baroness Prashar, who was then chair of the English Judicial Appointments Commission,” Mr. Hall said. “Bill joked that if I stuck with him, he’d introduce me to new people and things. That he certainly did.”
Over the span of his illustrious career, Mr. Stanbury wrote more than 250 publications, including more than 30 books, on a wide variety of subjects such as competition policy, government regulations, and intervention on the market, and government implementation of financial policies.
“He spoke the truth and tried to cut through all the hype and nonsense in evaluating government policy,” said Brent Fullard, president of the Canadian Association of Income Trust Investors. “That made him a bit of a rarity. There’s too few people out there who speak truth to power and he did so with authority. I have enormous respect for him and the approach he took.”
Mr. Fullard and Mr. Stanbury had maintained a professional relationship since 2007. Both men did advocacy work against the income trust tax implemented by Prime Minister Stephen Harper’s (Calgary Southwest, Alta.) Conservatives in 2007.
Mr. Stanbury wrote many articles that criticized the tax. In his last days he wrote one last book, which was an in-depth analysis of the income trust tax. It was his dying wish to have it finished before he passed away, said Mr. Fullard. The book is on the verge of being published in an electronic edition on Amazon.com.
He was also the author of many other books, including Business-Government Relations in Canada: Influencing Public Policy, Canadian Competition Law and Policy at the Centenary, co edited with R.S. Khemani and Money in Politics: Financing Federal Parties and Candidates in Canada.
“He was a giant in the academic area of democratic reform, and thankfully was expressing his knowledge and views much more publicly in recent years with his Hill Times column,” said Duff Conacher, founding director of Democracy Watch.
Mr. Stanbury’s weekly column was called “Stanbury’s View” and was a critical analysis of government policies. More academic than journalistic in style, his columns were always jammed full of references, notations, facts, quotes, and they usually offered a scathing critique of the government’s lack of transparency, accountability, the income trust tax, increasing government secrecy, or the increasing power in the PMO/PCO, among a host of other topics.
“It’s a tragic loss for Canadian democracy, in general, and the world of ‘access,’ in particular,” said Michael Drapeau, law professor at the University of Ottawa and a former colleague of Mr. Stanbury’s.
“Professor Stanbury was a giant. I admire him for his academic and erudite qualities and, his warm and friendly disposition. Thoughtful, authentic, and devoted always to making society a better, fairer and open environment for everyone,” he said.
“He’s one of those remarkable minds that don’t come along too often,” said Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives. “He will be hugely missed.”
Ms. Yalnizyan and Mr. Stanbury had been emailing back and forth for the last year-and-a-half, discussing common economic interests. He contacted her after coming across some of the economic research she wrote about in her blog, Ms. Yalnizyan said.
Ms. Yalnizyan described him as her mentor.
“He would push and prod, and you’d always come out of a conversation much enriched for the discussion and a little bit more intellectually honest actually,” she said. “You can run but you can’t hide from the facts.”
Mr. Stanbury stayed in touch with his colleagues and wrote his columns from his home near Guadalajara, Mexico.
He moved there after his retirement and lived there with his common law wife Hebina Hood and their dogs.
John Chenier, co-founder of The Lobby Monitor in Ottawa, said: “I was quite shocked to hear of Bill Stanbury’s death. His passing will leave a big hole in the public discourse conducted through The Hill Times.”
Kate Malloy, editor of The Hill Times, said Mr. Stanbury’s column will be missed by many readers, especially those who like to closely follow accountability in government and federal politics.
“Every week and year after year, Bill would file his sometimes massive column. I could always count on slotting a full page, at least, which is a lot of space for a column. We would argue about word count and he wasn’t happy about having to cut it down, but he always filed on deadline and he always knew exactly what he wanted to say,” said Ms. Malloy.
Ms. Yalnizyan said he was a successful investor and wanted to live in a warmer climate as soon as possible.
“He loved to rub it in my face by showing me pictures of roses blooming in his garden in January,” she said.
Posted by Brent Fullard at 3:29 PM
Monday, November 21, 2011
Isn't it strange that Canada's Auditor General Sheila Fraser refused to investigate whether the Harper government's claims of tax leakage from income trusts was a valid policy argument or not? In her role as Canada's Auditor General she was asked on numerous occasions by numerous groups and many thousands of Canadians to do so and refused. She even refused the written request of the Liberal Members of the Finance Committee to report on the validity of tax leakage, or not, thereby making a total mockery of her mandate which is described on her website as "Parliamentarians need objective and fact-based information about how well the government raises funds." Evidently not!
One of the greatest beneficiaries of the Harper government's move to kill income trusts and Sheila Fraser's dereliction of duty and one of the groups that lobbied hardest for this regressive government policy was Manulife Financial, since they were having a hell of a time selling their inferior retirement investment products in the face of Canandians' growing preference for income trusts. So what was Manulife's strategy? Engage in massive government lobbying and position yourself to benefit from the litany of falsehoods about income trusts, such as the allegation that income trusts cause tax leakage, which any Auditor General worth her salt could have easily proven was a crock of nonsense.
Is is any wonder that Sheila Fraser has now been appointed to the board of Manulife?
Here's the letter from the Liberals that Sheila Fraser ignored:
For Immediate Release
February 29, 2008
Liberal Finance Committee Members call on Auditor General to Examine Government's Claims of Income Trust Tax Leakage
OTTAWA - Liberal Members of the Standing Committee on Finance today called on the Auditor General to investigate the tax leakage claims that the government used as the basis for its October 31, 2006, decision to tax income trusts.
"I think that this government's stonewalling has gone on long enough and it's time that Canadians got to see that the Government simply made up its story that income trusts cause federal tax leakage," said Liberal Finance Critic John McCallum.
"Prime Minister Stephen Harper promised to Canadians that he would never tax income trusts. Then he went back on his word, costing Canadians billions overnight and in the wake of his silence on the issue we feel that only the Auditor General can shine some light into this matter."
All four Liberal Members of the Finance Committee signed a letter to Auditor General Sheila Fraser asking her to investigate the matter, particularly the government's unproven allegations about income trusts causing tax leakage.
"This has clearly become much more than just another instance of the government not doing its homework before acting. It has become a full-blown scandal and cover-up," said John McKay, Member of Parliament for Scarborough-Guildwood. "We have tried virtually every tool at our disposal to get the government to show us how they came to their conclusions about tax leakage and the Auditor General may be Canadians' last resort."
An Access to Information request asking for the Department of Finance's assumptions, data and methodology resulted in the release of only 23 pages of documents that are almost entirely blacked out.
A direct request from the Finance Committee to see the data was met with two thick binders of superfluous information that did not contain the data or methodology originally requested.
A written question was placed on the Order Paper asking the government to recalculate its estimate of tax leakage using the 15 per cent federal corporate tax rate that will actually be in effect in 2012, the year after the income trust tax begins, as opposed to the 21 per cent tax rate that was in effect at the time of the announcement. The government's response to the question indicated that that this would be a hypothetical calculation and therefore impossible to do.
"That's not a hypothetical, that's what the federal tax rate will be," said Garth Turner, Member of Parliament for Halton. "If the government can't manage to run the new 2012 corporate tax rate through their calculators then I have no reason to believe they ran the old one through their calculators in October of 2006."
In 2006, Stephen Harper ran on a campaign commitment to never tax income trusts. The Conservative election platform characterized any attempt to impose such a tax as, "An attack on retirement savings."
"That election commitment was obviously a falsehood. Unfortunately the voters who believed it and invested even more money in income trusts lost a significant portion of their nest eggs," said Massimo Pacetti, Member of Parliament for MP for Saint-Léonard-Saint-Michel.
"Even today, 15 months after they broke their election promise, Members of Parliament still hear from the thousands of Canadians whose retirement plans were shattered by this deception. Liberal Members of Parliament continue to stand up for them."
Here's perhaps the reason why:
Sheila Fraser appointed to Manulife Board of Directors
TORONTO, Nov. 3, 2011 /CNW/ - Manulife Financial Corporation and The Manufacturers Life Insurance Company announced today that Sheila Fraser has been appointed to their Boards of Directors, effective November 2, 2011. Ms. Fraser will sit on the Audit Committee and the Conduct Review and Ethics Committee.
Ms. Fraser served as Auditor General of Canada from 2001 to 2011. Prior to joining the Office of the Auditor General as Deputy Auditor General in 1999, she was a partner at Ernst and Young for 18 years.
Her contributions to the accounting and auditing profession include her current role as member of the International Federation of Accountants-International Public Sector Accounting Standards Board (IFAC-IPSASB). She has also chaired two committees of the International Organization of Supreme Audit Institutions (INTOSAI) as well as the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.
Ms. Fraser earned a Bachelor of Commerce from McGill University, is a Chartered Accountant and among her many honours has received the designation "Fellow" from the Institute of Chartered Accountants of Ontario and the Ordre des comptables agréés du Québec.
"Ms. Fraser's financial background, management experience as Auditor General of Canada and leadership roles on international accounting issues make her an important addition to Manulife," said Manulife Chair, Gail Cook-Bennett. "We are delighted to welcome Sheila Fraser to our Boards."
Posted by Brent Fullard at 9:17 AM
Thursday, November 10, 2011
Stockwell Day has signed on as a Director of HOMEQ Corporation, who are engaged in the field of reverse mortgages, where seniors strapped for cash resort to selling their homes for 40 cents (or less) on the dollar. I consider that a scam and an act of financial desperation/exploitation.
Thanks to people like Stockwell Day, Canadian seniors are more strapped for cash now than ever what with the protracted low interest rates providing them with less income from their limited retirement savings.
As a prominent member of Stephen Harper's cabinet, Stockwell Day participated in the destruction of income trusts, which had emerged as the Canadian capital market's solution to the problem of Canadians providing for themselves with sufficient income during retirement, rather than resort to means like reverse mortgages. That preferred solution was summarily taken off the table when the Harper Conservatives made the fraudulent argument that income trusts cause tax leakage, denying Canadians that choice and casuing great financial hardship.
Meanwhile here is what the duplicitous Stcokwell Day wrote while in opposition on the matter of income trusts:
November 8, 2005.
Dear Mr. Laxton
Thank you for expressing your concerns about the confusion the Minister of Finance has caused on income trusts.
Income trusts have helped numerous Canadian companies grow and flourish and enabled ordinary Canadians to generate more income for their retirement years. The federal Liberal government's reckless decision last September to cancel advance tax rulings on income trusts caused Canadian businesses to lose billions of dollars in market capitalization and Canadians to lose thousands of dollars of personal savings.
Canadians investing in good faith to save for their retirement deserve certainty, not a government review of how the Liberals can grab more taxes from them.
We know that Canadians draw regularly form their investments to supplement their retirement savings. When the value of their investments drops as a result of government indecisiveness, so does their retirement income. It is time the government stopped penalizing our citizens.
My colleagues and I in the Conservative Party are committed to maintaining income trusts as a valuable savings and investment tool for Canadians.
Thank you again for contacting me,
[signed Stockwell Day]
Stockwell Day, M.P.
Official Opposition Foreign Affairs Critic
Posted by Brent Fullard at 8:53 AM
Thursday, November 3, 2011
"It is imperative there is widespread democratic support for those measures," said Carney.
Sorry, Mark Carney was talking about Greek citizens and their bail out package, and NOT Canadian wheat farmers and their Canadian Wheat Board. Surprised?
Posted by Brent Fullard at 8:29 PM
THEN: Carney supports Greek referendum
November 1, 2011 | 16:04
By MARK DUNN, Senior National Reporter | QMI Agency
OTTAWA - Canada's top banker says he fully respects a bombshell decision by Greece to hold a referendum on a bailout package that sent global financial markets into a tailspin Monday.
Bank of Canada governor Mark Carney appeared before a Commons committee Tuesday, on the eve of a G20 summit in France, where the crisis in Greece has prompted calls for the country to be tossed from the European Union.
"If this is Greece's decision, we fully support that," Carney said about embattled Greek prime minister George Papandreou's declaration to let his countrymen decide whether to accept last week's eleventh-hour rescue package.
"It is imperative there is widespread democratic support for those measures," said Carney.
The worsening financial situation and the potential for Greece to reject the $180-billion bailout risks sending the country into default.
NOW: Papandreou scraps Greek referendum as internecine erupts in his party
Greece's prime minister clings on to power on day of drama, but is likely to lose Friday's confidence vote in Greek parliament
Helena Smith and David Gow in Athens
Thursday 3 November 2011 21.29 GMT
The Greek prime minister, George Papandreou, has been forced by open warfare in his socialist party to cancel a planned referendum on the latest bailout package for his near-bankrupt country as he fought for political survival amid mounting scepticism over the crisis-hit nation's future in the eurozone.
After a day of high political drama, intrigue, farce and rumour, Greece descended further into chaos as Papandreou, clinging desperately to power, insisted on holding a confidence vote in his administration on Friday. But, as his majority shrivelled to just one, he also said talks over the creation of a unity government were already underway.
Posted by Brent Fullard at 6:10 PM
Wednesday, November 2, 2011
My comment on: http://www.facebook.com/pages/Stop-The-Steamroller/311592005521756
Only a lunatic (i.e. Harper) would take such an unwarranted action of destroying the Canadian Wheat Board. Of which, the net benefit to Canada and all Canadians will be VASTLY negative. Any chance that Brian Mulroney, Director of US agri-giant ADM is behind this lunatic move? Canada's loss will be ADM's gain and others like it. Small farmers will be marginalized and their land acquired on the cheap by larger (foreign) interests, as the collective selling power of the CWB becomes a free for all in the marketplace for wheat, and farmers lose any control over pricing. Any economist worth their salt would predict that the outcome of this will be negative. I thought Stephen Harper was a "trained economist"? Instead he must be a trained anarchist...... or a total ideological fool.
Steamroller Steve strikes again! Just as he did with the gun registry, income trusts, the nuclear safety watch dog. The list goes on........
Posted by Brent Fullard at 10:08 AM