While this issue has been hashed over a lot, I felt it was necessary to put in my view.

The Own the Podium program has been a huge success, with Canada winning more gold medals than any other country has ever won at the Winter Olympics.  While we didn’t win the most total medals (the USA and Germany bested us there), who cares which country that won the most bronze medals?

The Own the Podium program was successful for exactly the reason apologies were being offered a week ago.  The push to be the best is what gave us success.  I suspect that Canadians and the Canadian Olympic Committee are happier today with this success than anyone predicted.

While it was heartbreaking to see Mellissa Hollingsworth break down after her failed attempt at skeleton, one cannot fault her dedication to succeed.  Sometimes you have to put everything on the line to win, and in endeavours where hundredths of a second count it doesn’t always work.  Ms. Hollingsworth, Devon Kershaw (50 km x-country) and the alpine team’s failures to win medals wasn’t because they didn’t try.  It was because they were unwilling to settle for anything less than a gold.  I have great pride in all our athletes at these games (and all the volunteers who made it successful).

I am disappointed in those commentators and officials with the COC who felt it was necessary a week ago to apologize and be critical of our performances to that point.   From the beginning, the expectation was that Canada’s best chances for medals were in the final days.  Did they have to be so stereotypically Canadian that we had to question our motives and methods before the job was even done?  We are the greatest country in the world.  We have the potential to be better.  We won more gold medals at the Winter Olympics that Germany and the United States, who have 3 and 10 times our population respectively.

We owned the podium.  Stop apologizing.

Last week, the Parliamentary Budget Office published a Fiscal Sustainability report, that lays out the reality that anyone with a little knowledge of math has known for a long time.  The problem is that there are many in Ottawa and the media who think that Kevin Page’s preferred solution, higher taxes, is the right one.  And they would be wrong.

(OK, Page did say in the report that government had to either raise taxes or cut spending, but then states that recent tax cuts (corporate, GST) were irresponsible and unsustainable.  Seems clear to me what side of the fiscal tent he sits on…)

Recent events around the world, particularly in Greece, show us that high taxes and high government spending are unsustainable.  The Wall Street Journal said it best:

The central contradiction in modern liberal politics is that Otto von Bismarck’s entitlement state for cradle to grave financial security is no longer affordable. The model has reached the limit of its ability to tax private income and still allow enough economic growth to finance its transfer payments.

Whether it be Greece, the rest of the EU, the United States or Canada, we cannot afford the growing size of government.  Even Keynes, who believed government should grow during recessions, believed that government should never consume more than 25% of the economy.  Today we are well above that, and much of Europe is above 50%.

It disappoints me that commentaries like this get written, decrying the lack of policy vision in Canada, then demanding more government to solve the problems.   I agree there has been a dearth of good policy (or new policy) coming from Ottawa – but I would ask that our leaders look towards a country that had the most success avoiding the recent economic downturn and has seen both sustained economic growth for 20 years, while not just balancing the books but paying off debt:   Australia.

Australia is the least regulated economy in the OECD, has the lowest government debt, and has the most open and free trade.  While the current Rudd government makes noises about reversing many of the good policies of the Howard era, we should ignore that and move in the direction of less government, less regulation, lower taxes and freer trade.  And that means we need to cut government spending at all levels and let the free market do more.   It is for this reason that I vehemently oppose any proposals to expand government (such as Iggy’s recent call for government run daycare and preschool).  We don’t need it.  We never will.  And we can’t afford it.

I do commend the Globe editors – this editorial is very good.  It calls out the government to make hard choices.  But it lets them off the hook until “current agreements expire in 2014″.  The longer we wait the worse this gets…

The federal Finance Minister, Jim Flaherty, today released revised rules for mortgages to try to avert a housing bubble.  His mechanism is to make it more difficult for people to buy houses without taking more equity and to make it so that borrowers need to meet a higher bar of being able to pay back the house (5 year fixed rate vs. a shorter term or variable rate).

Here is the problem – this is a band-aid solution to the housing problem that doesn’t address the fundamental problems:

• We have too much debt
• Debt is too easy to acquire
• Interest rates are too low, making debt appear less risky (it is only truly less risky if it is very short-term debt)

A simpler solution is for the Bank of Canada, and central banks everywhere, to consider changing the measures that are used to guide the setting of interest rates.  Today, there are three criteria that the BoC is using to set interest rates:

1. Inflation (CPI)
2. Economic Growth
3. The value of the Loonie

The problem with these is that the Inflation rate has been compromised by politics.  They removed “volatile” prices like food and energy, which means that the remaining prices are more greatly affected by things that are deflationary, such as electronics.   Economic growth is likewise a dangerous measure, especially if that growth is being built with a large current account deficit or increase in debt levels.  And the third is simple ridiculous.  Maintaining a low Canadian dollar protected Canadian business from having to spend money on improving efficiency and productivity – but we should have known we could not rely on that forever.  Also, the value of currencies is likely to shift significantly over the next few years as Europe, Japan and America deal with their giant fiscal problems and China grows into the largest economy on Earth.

A better method for setting interest rates would be for the central banks to use the same kinds of measures that the free market would (i.e. if we didn’t have central banks) – RISK.  If there is a rising level of debt, there is a rising level of default risk.  Lenders (i.e. bondholders) would demand a higher interest rate to counter the risk profile.  Central banks should do the same.  If the level of private and public debt is rising to quickly, interest rates should be increased to slow or cease said growth.  The painful part may be that we are so far gone that economic contraction may be necessary to unwind the debt.  Imagine for a moment that we didn’t have CMHC (or Fannie Mae or Freddie Mac in the US) insurance for mortgages – would banks be rushing to offer mortgages with zero down and low interest rates?  I don’t think so.  The risk profile for banks would be very different and the housing market would likewise be very different.

Therefore, the Bank of Canada and the Minister of Finance should sit down and decide what a reasonable debt level is for Canada – preferably by asking the banks what they would be comfortable with if they had to lend with no insurance policies from government.   Then raise interest rates until debt levels fall.

There have been a few stories in the news lately concerning the Alberta Oil Sands and the various moves toward or away from this resource.  A couple of interesting stories:

Canada looks to China to exploit oil sands rejected by US

BP risks investor outrage at ‘dirty’ oil deal

Chinese, Korean and Japanese firms have been interested in the oil sands for a while now, and some other firms from outside Europe / USA have slowly been investing as well, such as TAQA of Abu Dhabi.  In the BP story, apparently RIL of India may be willing to pay even more than BP for the assets of Value Creation.

Shell seems to be “slowing down” investment, and shareholder resistance to StatOil and BP investment are well documented.  The question for Canadians is – are we ok with all these foreign firms investing in the oilsands?

I would say YES, and even more that we want to encourage investors who are interested in exporting the products of the oil sands outside the North American market.   One of the dangers facing the oil industry in Canada is the Low Carbon Fuel Standard (LCFS) movement in the US, whereby states and business want to avoid using so-called dirty oil that has a high carbon footprint (I of course find is most interesting is when California went this route they exempted the oil from the Kern River field which has some of the highest CO2 emissions per barrel in the world, simply because it is in California…)  A good way to mitigate this risk to Canada’s economic growth is to develop other markets for our product.  And with investment coming from Asia, this should provide more impetus for Enbridge to build the Northern Gateway Pipeline from Edmonton to Kitimat, BC.  This will protect producers in the oil sands from being solely dependent on the fickle US market and may cause those in Washington to question they have looked a gift horse in the mouth…

Jeffrey Simpson, writing in the Globe and Mail, sometimes surprises me.  He hits the nail on the head that Canadian businesses need to look beyond the US market and find more customers overseas – even if that is hard.

Mr. Simpson wrote a good book review a couple of years ago, on the same subject.  But my question is, does he now accept and understand that the government is a big part of the problem – coddling local industries and throwing wrenches in trying to pick winners – that he tried to pass off as the lesser of the complaints in the book.   While I agree that Ms. Mandel-Campbell’s book pointed out the failings of Canadian business people on the international stage, I can understand if one company is badly run – it really only affects that one company.  But when the government gets involved it screws up everyone.  Be it the wheat board, the dairy marketing system and tariffs, the way EDC is structured or government intervention in international trade in an attempt to protect/help a single “national champion”, the government isn’t helping.  They are part of the problem.

We need to get rid of marketing boards, cultural protections for bookstores and broadcasters, restrictions on foreign investment and foreign competition and put the EDC on the footing to HELP Canadian businesses export – and not by demanding domestic borrowers or foreign buyers be restricted to EDC financing or other Canadian suppliers who may not be competitive.

Alberta Ardvark has written a very funny, very pointed commentary:

Alberta Ardvark: If we had a Liberal government.

In recent days, the Liberal Party of Canada has made a couple of statements indicating they think that the Government of Canada should be spending MORE of our tax dollars on new programs. Considering the problems we are having funding the programs we already have, this is hard believe – except that these are Liberals who believe more government has got to be a good thing. Read the rest of this entry »

George F. Will writes and EXCELLENT column in the Washington Post and published today in the National Post.

He clearly lays out why the Supreme Court of the United States was correct in it’s decision to overturn the ban on independent expenditures during elections.  He puts it most clearly here:

The Federal Election Commission, which administers the law that rations the quantity and regulates the content and timing of political speech, identifies 33 types of political speech and 71 kinds of “speakers.” The underlying statute and FEC regulations cover more than 800 pages, and FEC explanations of its decisions have filled more than 1,200 pages. The First Amendment requires 10 words for a sufficient stipulation: “Congress shall make no law … abridging the freedom of speech.”

The politicians and bureaucracy in America have been corrupted by power and need to go back and read their own Constitution and the writings of those who laid the foundation or wrote it, like Paine and Jefferson.

Canada can learn from this too… How many times have courts in Canada struck down similar regulations here only to have politicians reimpose them?  Too many.  And our current federal political financing system is corrupt too – giving entrenched political parties public monies removes them from having to raise funds themselves or be accountable to anyone.  And preventing third parties from advertising during elections protects the parties.

I am amazed how many people don’t understand the fundamental reason Jean Chretien changed the campaign finance rules – under the new rules, it is much more difficult (if not impossible) for a new party (a la Reform) to start from scratch again.  If you don’t already have seats in the House and already get a significant portion of the popular vote, a party is beggared by the system.  He was protecting the Liberals, Conservatives and NDP from new competition – because he knew that even the Conservatives would be corrupted by power and become mushy-middle, big government hacks just like himself…

OK, given that the evidence is now out on climate change, I am very disappointed that the Government of Canada insists on going along with the charade of Copenhagen by committing us, in a non-binding way, to a reduction of 17% in CO2 emissions from 2005 levels by 2020…

Let’s work out how much that is going to cost…  Since we didn’t reduce emissions from 2005 through 2009 (they went up, even with the reductions from economic contraction), we have to cut deeper now.  That means that to meet the goal, reductions must be of 1.75% every year starting in 2010.   The total reduction in emissions will need to be 744 Million tonnes.  From studies I’ve been involved with indicate carbon capture and storage will cost between $40 – 100 per tonne.  So this will cost at a minimum $30 Billion (today, inflation will drive this up).  The government’s own study in 2007 said that the price of CO2 (carbon tax or credit value) needed to change behaviour sufficiently to reduce emissions would be $195/tonne.  That pushes up the cost over the next 10 years to $145 Billion.  That’s $14.5 billion per year that will be REMOVED from the economy.  And that excludes any knock-on effects that reduce economic growth because investors would rather spend their money in countries that don’t waste money on things like this.  Or impose such regulations.   And it excludes the knock-on effects of the blackouts we are going to have because we can’t build enough nuclear plants in 10 years to counter-act the shutdown of all the coal-fired power plants we will have to shutdown to meet the goal.  An wind and solar aren’t going to replace the coal-fired because they aren’t reliable enough (wind) or don’t work well in the darkness that is a Canadian winter (solar).

Do you want to pay $15 Billion a year to make us “look kinda ok” on the world stage?  Or should we say no and stop chasing this non-existent problem?

I am fascinated by this news story from Toronto.

A group representing dozens of lawn care companies trying to bring charges against Ontario’s environment minister and senior bureaucrats over the province’s controversial pesticide ban is now calling for charges against 23 activists.

Group spokesman Jeffrey Lowes of MREP Communications said Wednesday that information has been laid for criminal charges against 23 individuals….

…The activists worked with the Ontario government to ban pesticides using alleged false and misleading information to undermine the industry, Lowes said.

The documents filed on Tuesday allege the activists knowingly presented false and misleading information about the health and environmental risks associated with pesticide products, knowingly misled the public, lawn care industry and government officials, and impeded access to Health Canada approved pesticide products through fraudulent means.

Hmmm.  I wonder if this has been happening in Calgary too?  I’ve written on this subject previously (here and here) – and while Calgary’s city council avoided such a ban (here), there are still forces at work trying to change that.