Wednesday, May 27, 2009

Flaherty's miscues give us reason to worry


Gerry Barker
Guelph Mercury

One might describe Finance Minister Jim Flaherty as the Alfred E. Neuman of Canadian politics.

Neuman, the Mad Magazine icon with the jug ears and stupid wide grin, was famous for the expression: "What me worry?"

For starters, the ebullient Flaherty who breezed through the country saying the recession is mild and we'll come out of it better than any other country, has now changed his tune saying it is more serious and deeper than first presumed.

"Relatively speaking," he recently told the Canada-UK Chamber of Commerce in London with a straight face, "this is a mild economic recession."

He'd better say a ton of Hail Marys for that big one.

The member from Whitby-Oshawa announced spending $9.3 million to clean up Oshawa harbour. He was met with a blistering protest from members of the Ontario auto industry who are facing either not having a job, huge reductions in pay or pensions, or job "furloughs" at no pay.

But Flaherty's biggest lie is about the issue that won't go away.

He ripped $35 billion from Canadian investors when he announced Oct. 31, 2006, that income trusts, the income of which millions of Canadians relied on for support, were to lose tax status in 2011.

He acted without a shred of evidence that there was "tax leakage" as he proclaimed. His senior department officials argued that the government was losing up to $500 million a year in revenue because of the legal tax treatment of income trusts. The rationale ignored the 38 per cent of income trusts held in RRSPs and RIFs that would eventually be totally taxable.

It was an artful dodge. Even the Bank of Montreal and Royal Bank of Canada concurred with a major independent study, instituted by former finance minister Ralph Goodale, that there was no income trust "tax leakage." The minister stuck stubbornly by his decision.

Already there has been fatal fallout as the Tories, stigmatized with the fiscal rape of investors, failed to win a majority last October. Conservative investors defected in the thousands. It cost Stephen Harper control of Parliament.

How did this happen? The furious arguments of insurance and corporate lobbyists were determined to destroy the tax status of competing income trusts. Chief focus among these were the annuity products sold by insurance companies whose sales had taken a beating in the past 10 years because of soaring public investment in income trusts.

Without any public input or debate in Parliament, Alfred E. Flaherty met the enemy and, guess what? They is us!

It was the greatest government theft of private wealth in history. And the Tories wonder why their bunker mentality has resulted in their job approval polls slipping behind the Liberals.

The Tories cut the GST, costing Canada $10 billion in lost revenue in an effort to seek a majority. Yet they knowingly bray that this specious income trust $500-million "tax leakage" has a basis of fact and evidence. But they refuse to reveal the underlying "evidence" for the public to evaluate and comment.

Canada's recession has two faces: The monetary one in which the economy has fallen off the cliff; and the political one, where government wanders aimlessly, like Diogenes, hopelessly searching the world for an honest issue.

You cannot surround yourself with fawning "yes" men and expect to meet the most serious economic crisis the country is experiencing since the Great Depression. You don't prorogue Parliament for two months in the face of shattering economic collapse just to save your government.

Aux barricades, mes amis!

Gerry Barker's column appears regularly in The Mercury.

5 comments:

Anonymous said...

Hi CATI
Tell me what you really want..
"Tax and spend Liberals" or "Cut revenues create deficit Conservatives"
Admittedly the former has a ring to it but the later has a distinct ring (clang) of truth.
"Deficit Jim" has a ring to it based on what he produced for Ontario. Never forget he is / was a lawyer not and economist as his boss likes to convey his expertise.
Both Deficit Jim and (richard)Steve are first and foremost idealogues.
Could it be that Jimmy so badly wants his wife to be the ON premier that he gave the province $4.3 billion in hopes of screwing McGuinty on the HST in the 2011 election? You bet and that is part of the $50 billion deficit...

Dr Mike said...

Thank God for smaller publications like the Guelph Mercury which actually still have a voice of their own.

The rest of them might as well be filed in the round green filing cabinet under your desk.

Dr Mike

CAITI said...

Anonymous:

Great point about the $4.3 billion used for kick starting the HST!!!!

I think I will blog about that keen observation provided by you.

Thanks!

Brent.

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Anonymous said...

Wow, a ToStar publication is actually capable of fair reporting?

Even though this article was well done, this publication is far from independent. The Guelph Mercury part of ToStar's most profitable division METROLAND. This particular division of ToStar focuses on local news. Sadly this article is an excellent example of ToStar hypocrisy.
If a community is known to be CON, such as Whitby/Oshawa their editorial content will reflect that. Flaherty & Colin Carrie's CON asses are kissed on a regular basis by Whitby Oshawa This Week. CAW and NDP don't spend enough, so they are always made to look dumb in the local rag. Sometimes Metroland tries to create the illusion of being fair, by reporting on an issue from a liberal point of view. When they do, mistakes are made deliberately. Or weaker writers are assigned to cover issues that will generate support from liberal minded people. Both are very popular Metroland tactics used on a very regular basis.

Residents of Guelph are generally known as open minded , liberal thinking, people and would not be willing to pay their carriers for CON content. This community also has a higher education level than other areas, so again ToStar /Metroland are smart enough to know, they better employ decent writers in Guelph. Other areas the writing will reflect the community's overall education level. Something like this would be considered too sophisticated for readers by Whitby Oshawa This Week's editorial board and would never be printed in Durham Region. The Flaherty's are both excellent clients and are rewarded in positive editorial content in exchange for that ad revenue.

Since ToStar / Metroland are capable of publishing a fair article on income trusts - why can't they publish something like this in the Toronto Star? Or better yet, why isn't this article published in all Metroland publications across Ontario? Sadly I know the answers to those questions.

I am pleased to see there is fair reporting and something is being done for the Income Trust issue. However I think it is equally important to be aware of what kind of a company Mr. Baker writes for. As Income Trust Investors, we can never forget about that ToStar share split and why that company was so against fair reporting on Income Trusts. And part of the reason the CONs did so well in Ontario during the last election is thanks to ToStar's Metroland division. Through this series of papers they were able to support CON candidates and help ensure a CON victory.

Finally anyone who owns the Yellow Pages Trust should also be aware of ToStar / Metroland. The ToStar CAN Pages and Gold phone books are competition to the Yellow Pages. They can probably deliver it cheaper as they do it through their Metroland carriers.

Due to ToStar's hypocrisy on Income Trusts and playing both sides between CON and Liberal values in order to increase ToStar shareholder profits instead of focusing on fair reporting and accuracy with news - all ToStar products including Harlequin are banned from my household.