The damage is already done

The damage is already done

Published 20 minutes ago
Toronto Star

Re: Flaherty right to worry about burden on young, May 11

When I read your article’s opening line — “Jim Flaherty has stated the first principle for any national initiative to help Canadians increase their retirement income should be: Do no harm” — I couldn’t help but wretch in disgust. This is the same Jim Flaherty who broke the Conservative “promise” never to touch trust units, thus wiping out nearly $35 billion from investors and retirees alike.Do no harm? No government in Canadian history has done more harm to retirement incomes than the Conservatives, led by the dictatorial duo of Jim Flaherty and Stephen Harper.Income trusts were an ideal vehicle that provided retirees a dependable and steady stream of income, while at the same time allowing Canadian-owned corporations the ability to raise capital for further growth and expansion.And what has happened since the Halloween Day massacre? Retirees have seen their life savings vanish and many once-prosperous Canadian-owned companies are now in the hands of foreign owners.Do no harm? It’s way too late for that, Mr. Flaherty.

Alan Rogers,
Mississauga

McCallum doesn't shoot blanks. Those are real bullets he fires into good ideas

Pollster Bruce Anderson has an article in today’s Globe entitled “John McCallum shoots economic blanks for Liberals”, which argues that the Liberals are unable to exploit the bad economic times to their political advantage because John McCallum shoots blanks. While I agree with the symptoms. I don’t agree with the diagnosis, as those are real bullets that John McCallum fires into every good populist idea that crosses his path. Two examples are noteworthy. The Liberals support for HST and the Liberals pathetic handling of the income trust file. Handled properly, these two issues alone could have propelled the Liberals into a 10 point advantage over the Conservatives, but the Liberal think they can propel themselves into victory by kow towing to a handful of Canadians like Ed Clark (he of the HST) and the Life Co CEOs who were intent on killing income trusts for their narrow self interests. Sheesh. Good luck with that strategy.

My most recent encounter with John McCallum was in Peterborough a few months ago during the time that Parliament was prorogued and the Liberals were engage in a faux exercise of pre budget consultations. William Barrowclough (pictured above) of Peterborough and I formally presented John McCallum with the concept of the Liberals getting behind the win win win proposal known as the Marshall Savings Plan that had nothing but upside for Canadians and was hailed by Diane Francis of the Financial Post and others as “brilliant”. What was John McCallum’s argument for not embracing the Marshall Savings Plan? He argued it was “complicated”, and promptly fired a bullet into a great idea.

My response to John McCallum at that meeting was to say that the Marshall Savings Plan (MSP) is no more complicated than an RRSP, as the Marshall Savings Plan is simply an RRSP with one change and a change that accelerates tax collection for Ottawa at a time when budget deficits scream for the $6 billion in annual tax revenue that the MSP would have provided for. In so doing, John McCallum fired a bullet into an idea that would have addressed Canada’s deficit crisis AND Canada’s pension crisis. How dare Bruce Anderson argue that John McCallum shoots economic blanks for the Liberals.

Meanwhile what became of that petition that was handed to John McCallum in Peterborough by William Barrowclough that was signed by over 3,000 Canadians that called for inclusion of the Marshall Savings Plan in Budget 2010, a measure that also was supported by 79.3% of Canadians in a Environics Research Poll? Did John McCallum think we were just shooting blanks when we went to the immense effort to gather 3,000 signatures, only to have it completely ignored?

John McCallum shoots economic blanks for Liberals
May 11, 2010

Bruce Anderson
Globe and Mail

Liberals looking to understand why their party has made no headway in the last year could do worse than to focus on why they seem to have a tiny "share of voice" on economic issues.

Some ask what it will take for Michael Ignatieff to hit 35 per cent in the polls, if a recession, two prorogations and a massive deficit aren't enough. Solid, clear ideas, in-the-moment agility and a penetrating communications style are all important. As is assembling the right talent on his front bench and making their efforts count.

Last week was another one where people around the world felt rising anxiety about the economy, as concerns about a debt crisis and global contagion spiked.

Yet, the day after stunning stock-market gyrations threatened yet again the retirement savings of many middle class Canadians, in the House of Commons the only questions asked about the economy were asked by Conservative back-benchers, and answered by the Finance Minister's parliamentary secretary. The Liberals used their time to grind on a handful of issues that, given the context, were not likely to generate column inches or TV and radio clips.

Over the weekend, the political news in Canada was about Mr. Harper's approach to the G20 meeting, his conversations with German Chancellor Angela Merkel and his determination that nation-state indebtedness must be a focal point of the upcoming meeting in Canada. The coverage was straight up, there was no opposition point of view on offer, and the impression left is of a Prime Minister as a bigger-picture kind of guy, developing constructive relationships with the most important leaders in the world.

Mr.Ignatieff, for his part, was in the news for being sworn in as a Privy Councillor, and for touting the virtues of high speed broadband in rural Canada.

John McCallum, his finance critic, is rarely in the news. To be fair (I don't know him) I wanted to be sure this wasn't owing to media filters, so I took a quick tour of his website. Listed there are a handful of news releases, speeches, and questions he has asked (including a number of non-functioning links), but nothing more recent than March of 2008. I'm sure that the realitiy is he hasn't been silent for two years, but at the very least, this is not the level of promotion you might expect from someone with such a key responsibility.

It seems to me there's a fair bit of talent in the Liberal caucus, and given the importance of economic issues, Mr. McCallum is the most baffling choice Mr.Ignatieff continues to make. The economy is likely to remain at the top of the public agenda for some time, but the team of Ignatieff-McCallum seems unable or unwilling to muster an argument or a point of differentiation about it. The conclusion one might draw is that they either don't know how they would improve upon Harper economic policy, or can't articulate the difference they would make if elected.

I'd wager there are at least 10 Liberal caucus members who could do a more energetic and effective job with the finance critic role. As Mr. Ignatieff works to build the skills to be a potent opposition leader (few are perfectly cut for that role), he can't afford to ignore underperformance on his front bench. Having overhauled his office in recent months, he might usefully apply the same diligence with his shadow cabinet.

Mark Carney exempted Goldman Sachs from Flaherty’s income trust tax

Flaherty’s income trust tax was structured by Mark Carney in such a way that only the little investor was taxed and the big guys were given a free ride. Not only were the big guys given a free ride, this tax was imposed in such a way that the big guys were able to prey upon the small investor and expropriate wealth from the small investor in the amount of some $35 billion. What else might you expect from the architect of Flaherty’s income trust tax, Mark Carney, given he spent his entire career at Goldman Sachs,  prior to his seeking an unelected role in government?

Mark Carney wouldn’t have dealt with a single Canadian retail investor in his entire career and evidently doesn’t care a wit about them and probably perceives them as ripe for the picking. 

Thanks to Goldman Sachs alumni Mark Carney, the mere act of taking an income trust private that was previously publicly held by Canadian retail investors is the means by which large institutional investors liker Goldman Sachs Capital Partners are able to do an end run around the Canadian government and all Canadian taxpayers and avoid paying the 31.5% tax created by Mark Carney, and the person at Finance responsible for the income trust file.

This is nothing more than creating a UNLEVEL playing field, which is the exact opposite outcome of what Flaherty professed his policy was going to accomplish.

Meanwhile these very takeovers of public income trusts by foreigners like Goldman Sachs Capital Partners has diverted the profits of these businesses from the hands of taxable Canadians and into the hands of non-taxable foreigners, with the result that Flaherty has (to date) created $1.2 billion in annual tax revenue loss (ie tax leakage) to solve an alleged tax leakage problem of $500 million. A problem that never existed in the first place, as Flaherty’s bogus tax leakage numbers ignores ALL the taxes that are collected from the 38% of income trusts held by average Canadians in their RRSPs. 

The policy rationale for the tax is a blatant falsehood, as income trusts do not cause tax leakage. It is Mark Carney's contrived tax leakage analysis that causes tax leakage. Mark Carney's tax leakage argument is a false construct whose only purpose was to make it easier for Mark Carney and his political masters to "sell" this policy to the public and dupe the public into acceptance, in order to achieve its real ends that only serve narrow interests.

Goldman Sachs Capital Partners have been investors in a number of publicly traded income trusts that were taken private, like CCS Income Trust. 

The rip off goes this way. Flaherty announces a tax that wipes off $35 billion of the value of Canada’s 220 income trusts including CCS Income Trust, since all the existing investors of these public trust are faced with a permanent 31.5% tax. Mark Carney has seen to it that this adversity can be exploited by others by the mere act of taking these trusts like CCS private and out of the public market, something that is beyond the reach of retail investors. Why would the same business be taxable at 31.5% as a public income trust, but taxable at 0% as a private income trust, unless the goal was to deprive public investors from alternatives that Mark Carney wants to be the exclusive domain of large private investors like Goldman Sachs? Plus it was done in a way that wealth was transferred from private investors to private investors. $35 billion of wealth to be precise. 

Mark Carney's scheme allows investors like Goldman Sachs Private Capital to scoop up these artificially devalued income trusts from unsuspecting Canadian retail investors and by the mere act of taking them private, the new investors like Goldman Sachs Private Capital are able to evade the payment of Flaherty and Carney’s 31.5% tax.  

Generically  speaking, this type of investing that exploits one time exogenous events is called " Event -driven  Investing". I am sure Mark Carney would be happy to give a speech to his local Boy Scouts troupe about all the riches to be derived from Event -driven Investing. 

This is the same kind of rip off of taxpayers as occurred in Russia during the time of the privatization of Russian industry by a new group of favoured investors who came to be known as oligarchs, This is exactly where Mark Carney spent his formative years at Goldman Sachs, advising Russian oligarchs in how they can rip off the Russian people (via a so called "privatization", in which state owned assets were transferred at below market value to a group of hand picked cronies of the Russian political elite). At least that is what I was told by senior representatives of the Ontario Government were his "privatization" qualifications  at Goldman Sachs when he formed part of the team (along with myself) that had been assembled by the Ontario Government to privatize Hydro One, back in 1999, since Mark had no IPO or public equity markets experience that would have justified him playing any role, in such a large IPO privatization.

Mark Carney took those skills and applied them to Canada in order to deprive Canadians of $35 billion of their life savings and transfer that wealth to groups like his buddies at Goldman Sachs Capital Partners. 

The people at Goldman Sachs aren't successful because they are necessarily any smarter than the rest of us, just a lot more cunning and crooked in many cases and have the audacity to pull off tricks like Mark Carney’s income trust tax, that steals from the poor to line the pockets of the wealthy. 

Where is Canada’s Official Opposition in exposing these corrupt schemes like Flaherty’s income trust tax? Who in Ottawa is defending taxpaying Canadians from the rapacious schemes of groups like Goldman Sachs Private Capital and people like Mark Carney?