Life in Canada

Projects & Initiatives: Alternative Federal Budget
January 26, 2012

OTTAWA—The twin claims by Conservative political leaders that the damage done by the recession to the Canadian economy and labour market have been repaired and that Canada survived the recession much better than other countries are both false, says a study released today by the Canadian Centre for Policy Alternatives (CCPA).

The study, by economist and CCPA Research Associate Jim Stanford, finds that, after adjusting for population growth, neither GDP nor employment growth have yet to recoup the ground lost during the 2008-09 downturn.

“In the labour market, in particular, the pace of employment-creation has lagged far behind the pace of population growth. After adjusting for population growth, less than one-fifth of the damage from the recession has been repaired, and things have gotten worse in the last 18 months, not better,” says Stanford.

“No wonder most Canadians think we’re still in a recession. From the perspective of the labour market, we still are.”

According to the study, real per capita GDP remains 1.4% lower as of the third quarter of 2011 than it was at the beginning of 2008—and several thousands of dollars per person below where it could be today on the basis of pre-recession growth trends.

“Real per capita GDP is still lower in Canada than it was at the beginning of 2006, when the Harper Conservative government first took power,” Stanford says. “By this measure, during almost six years of Conservative ‘economic stewardship,’ Canadians have experienced no economic progress whatsoever.”

Failing to take account of population growth also distorts international comparisons of economic and employment performance. Adjusting for differential population growth shows Canada’s GDP performance is only mediocre when compared to other OECD countries. Of the 34 countries in the OECD, Canada ranks only 17th—right in the middle—for growth in real per capita GDP since 2007. And after adjusting for growth in the working age population, Canada also ranks 17th (out of 33 reporting countries) in terms of employment growth.

“The claim that we’ve done better than other industrialized countries in surviving the recession is false. In fact, we’ve barely kept up with the pack,” Stanford says.

“The incomplete and relatively weak state of Canada’s economic recovery should make policy-makers think twice before embarking on a campaign of fiscal austerity,” Stanford concludes. “To do so would clearly further undermine output and employment, which are still weak. Instead, the top priority should be placed on expansionary measures to strengthen the economy.”

The Obama administration's decision this week to impose a further delay in approving TransCanada Corp.'s $7-billion Keystone XL pipeline project brought howls of outrage from Republicans and the oil industry, and “profound disappointment” from Prime Minister Stephen Harper. The State Department did invite the company to reapply when it has completed the rerouting of the pipeline around the ecologically sensitive Sand Hills region in Nebraska – essentially punting the final decision until after next November's elections.

Stung, the Harper government has lashed out at foreign environmental groups, characterizing them as “radicals” and “jet-setting celebrities” fuelling pipeline controversies in Canada. Federal regulators are now holding a public review of Enbridge Inc.'s Northern Gateway pipeline, and the government has warned that foreign groups are financing delaying tactics to undermine the development in the oil sands.

The Harper government itself has actively lobbied in state, federal and European capitals to oppose policies that it views as detrimental to Canadian oil. Yet it has good reason to worry about the globalization of the opposition. The stakes are enormous, and not only for the Prime Minister's home province.

Oil is now Canada's largest export by far, and the country ranks third in total crude reserves behind Saudi Arabia and Venezuela. Meanwhile critics worry that the oil boom is transforming the country into something of a petro state, driving the loonie higher at the expense of Central Canadian manufacturing.

In the U.S., activists have targeted fossil-fuel production and use, with campaigns against coal, oil and the controversial “fracking” extraction of shale gas. But oil is the most politically divisive.

U.S. groups such as the NRDC have been active in Canada, and foreign foundations have funnelled money to Canadian environmental groups and activists, in some cases specifically to organize opposition to the Gateway pipeline through B.C.

Even in Europe, the Canadian government is battling an effort within the European Parliament – backed by well-organized activists – to pass low-carbon fuel regulations that would rate oil-sands crude as the world's worst from the standpoint of greenhouse-gas emissions.

Yet the environmental community is simply following the pattern of the international oil industry, which seeks to influence policy wherever it has operations. And they are also following a known script for global campaigns, whether to save the Brazilian rain forest, to protect tiger habitats in Asia or, indeed, to halt logging in British Columbia's Clayoquot Sound.

Canadian oil producers are now finding they have to respond to the heightened international campaign against them, said David Collyer, president of the Canadian Association of Petroleum Producers, speaking from Washington, where he was meeting U.S. colleagues, Canadian embassy staff and analysts to assess the political climate for Canadian oil exports in the 2012 election year.

“It's a global business, and it's hard to draw boxes around these things,” he said. “Ultimately, it is for Canadians to decide whether those voices are relevant to the debate or not.”

Who's winning?

International groups have seized on the Alberta development as a potent symbol in the much bigger fight over climate change. Mr. Collyer argued that the groups have been acting out of fear, trying to win a battle to show that they are not losing the war.

Since the optimistic days of the Green Group summit, the U.S. Senate has failed to pass climate legislation, Mr. Obama has proved disappointing on emission regulations and international climate talks have faltered.

In turn, the environmental campaign has provoked a public-relations response in Canada: the founding of EthicalOil.org, a group with close ties to the Harper government and the industry. The group has been highly critical of the foreign groups that have financed campaigns in Canada.

“These groups unfairly target Canada and our oil sands because it's an easy, risk-free target for them,” EthicalOil spokeswoman Kathryn Marshall said.

But Rick Smith, executive director of Toronto-based Environmental Defence and an attendee at the 2009 Green Group summit, said the Canadian activists sought out the support of U.S. colleagues to help even the playing field against the hugely powerful oil industry.

“Canadian environmentalists were working on these issues long before we saw any greenbacks,” Mr. Smith said. “It was really the aggressive expansion of the tar sands themselves that has made this into a continental issue and an international issue.”

Canadian officials play down the climate impacts, saying the oil sands represent only 5 per cent of total emissions in Canada and that this country accounts for only 2 per cent of global emissions. But critics say the country's per-capita emissions are among the highest in the world, and Ottawa will not be able to reduce them if oil-sands production grows as expected.

Choke point

Shortly after the Airlie meeting, the NRDC's Ms. Beinecke visited Fort McMurray, Alta., along with Margie Alt, president of Environment America, a green umbrella group. Both women say they were awed by the sheer scale of the bitumen mines run by Suncor Energy and Syncrude.

“Clearly the overriding concern of the environmental community globally is climate change,” she said. “And it really doesn't matter where it comes from or where you burn it.”

But she said it is wrong to assume that the NRDC has an inordinate focus on Alberta's oil producers. The sprawling environmental charity – with a annual budget of $100-million (U.S.) – has offices across the United States and one in Beijing. It works on the full range of environmental issues, including coal mining, shale gas and hydraulic fracturing, renewable energy and clean oceans.

But Ottawa and Alberta can expect environmentalists across borders to keep up the pressure, whether on a Keystone revival, the Gateway project or any future proposal. Having gotten nowhere persuading governments to rein in oil-sands growth in the first place, they will keep looking to block the infrastructure it takes to get the oil to market.

Of heroes and cowards

By Janice Kennedy, Ottawa Citizen
January 21, 2012
Right now it's not a great time for anyone harbouring a belief in the fundamental goodness of human nature.

This week, a ship's captain is said to have abandoned his sinking vessel before his passengers. In Montreal, a respected retired cop is alleged to have tried selling a list of informants' names to the Mafia. An officer in the Royal Canadian Navy is charged with espionage.

The implicit betrayal of trust is breathtaking.

A few months ago, video from China showed 18 passersby deliberately ignoring the battered body of a toddler hit by a car - betrayal of trust on a whole other level, breaching humanity's deepest common bonds.

It is tempting to wonder just what the heck is going on. Has our natural sense of honour or morality been so eroded by the impersonal world we've created - where real communication is subsumed by the superficial shorthand of cybergadgetry - that we're losing touch with our humanity?

Or are those deeply conservative voices right, after all? Could it be that this postmodern landscape of liberals and loonies really is an amoral place, devoid of the social and spiritual ethos that once shaped our civilization?

So much hand-wringing to do. So little time.

Follow the mainstream news, and you could get seriously depressed, convinced that the human race is headed only one place. And it's getting there in a handbasket.

Which is why an occasional dose of therapeutic perspective is indicated. With it, you realize that, dismaying news stories notwithstanding, the awful is actually aberrational.

Look around, as I did this week after an email got me thinking, and you realize there are in fact a lot of people on this planet who keep the faith every day, sometimes almost heroically.

One of them is Ottawa's Patrick McDougall, the indefatigable oneman crusade who provided my email dose of perspective. I wrote about McDougall, a retired CBC announcer, some years ago, when he was in the thick of his battle against charlatanism and those who would exploit the vulnerable.

He had taken up arms in the name of his beautiful daughter, who died of breast cancer in 2003. Desperate and willing to try anything, McDougall's daughter had gone to a local company that made extravagant claims about its products for cancer patients. She put much of her money, and even more of her trust, into an "alternative" approach that derided conventional medical therapies as it plied her with what were essentially vitamin and mineral supplements.

It was an obscene abuse of hope, the one delicate thing that drives and supports cancer patients. Because McDougall understands that so well, he insists that the hopers must never be dismissed as "naive, cowardly, stupid or even hasty." If you've ever received that terrible diagnosis, he says - as he has himself - you know that "it's terrifying beyond all description. You are more than ready to consider any alternative to surgery, chemotherapy and radiation, no matter how expensive or outlandish."

Which makes you easy pickings. For 10 years, McDougall has worked tirelessly to expose those who would prey unscrupulously on the vulnerability of others. He has researched exhaustively and lobbied tirelessly - by letter, in person, on air - trying to persuade provincial and federal governments that "alternative therapies" should be regulated and snake-oil salesmen should not be allowed the free rein they have.

But he has not prevailed. In fact, his email this week claims he's conceding defeat. He's 82 and tired of banging his head against the wall.

Since Ontario loves self-regulating professional "colleges" so much, he says, it should establish a CCCC (College of Cancer Cure Charlatans). He sounds almost bitter.

But I don't believe him. In his daughter's memory, he has made it his life's mission to protect cancer patients from those who would exploit their fragile hope. As long as that exploitation continues, it's difficult to imagine Pat McDougall staying quiet.

Is that heroic? Probably. It's also a nice antidote to recent nasty news stories, and a good dose of perspective.

For every spectacular coward in command of a sinking ship, there is a Capt. Sully Sullenberger, landing a stricken Airbus on the Hudson River in 2009 and guiding 155 people to safety. For every corrupt cop and treasonous officer, there are countless good, and sometimes heroic, men and women in police and military uniforms.

Even that horrific story out of China has its ray of light, a 58-year-old woman who stopped and tried to help the dying child. This week, she brushed off the notion that her actions were special, saying, "I just think we should save others."

Clearly, she is not alone. After this week's dismaying reports apparently signalling the end of civilization as we know it, her comment is a calming corrective.

Janice Kennedy writes here Saturdays.

Here is a deal: You set aside a dollar for your retirement and, in return, Canadian taxpayers will give you $23.30 to supplement that nest egg. When you turn 55, you can begin collecting this pension, provided you have worked for six years.

It might sound like fantasy, but it is not. This is the gold-plated pension plan enjoyed by members of Parliament. MPs earn a base salary of $157,731 a year but, according to the Canadian Taxpayers Federation, the annual contribution to their parliamentary pension fund adds up to $248,000 a year.

At a time when many Canadians have no pension plans at all, and those who do are seeing them eroded, the sweet pension deal enjoyed by MPs at the expense of taxpayers is a colossal embarrassment and should quickly be reformed.

In case MPs haven not got the message that they need to lead by example when it comes to pensions, the Canadian Taxpayers Federation and the C.D. Howe Institute are there to reminded them.

Gregory Thomas of the CTF put it succinctly: “This is a ripoff on a massive scale.

It certainly is unbecoming for federal politicians to have a pension plan that is outside the stratosphere of what any ordinary Canadian — the very person whose taxes pay for the parliamentary pension plans could even dream of.

Not only that, but it is, in some ways, a fantasy pension plan. With essentially no assets set aside to pay future benefits, according to the C.D. Howe Institute, it has a deficit as high as $1 billion. Which also falls to taxpayers.

This plan subjects taxpayers to financial risks few appreciate, and undermines the federal government"s authority to lead Canada"s search for a better retirement income system, says a C.D. Howe institute report.

The institute also argues that since MP pensions represent a hidden salary, that pension reform must take place, but MPs should be compensated for the loss in actual income. That will be a tough sell, the institute rightly notes.

It is important that politicians are adequately compensated in order to attract high quality candidates to the job. However, anyone seeking office simply because of the pension plan should probably be ruled out anyway. How would one know this.?

It is encouraging to see signs that some MPs, notably richer members of the Conservative caucus, are getting the message about how the public views their pension plan.

Just over 50 per cent of elderly patients in British Columbia residential-care facilities were prescribed anti-psychotic drugs over a two-month period last year, according to a report commissioned by the provincial government.

And the most commonly used anti-psychotic drugs were “atypical” medications – drugs developed over the past few decades that have been linked to serious side effects, including strokes and heart attacks, and that Health Canada in 2005 said were not approved for use in elderly people with dementia.

“I had a fit when I read in [the report] that 50 per cent of patients are on anti-psychotics, some of them being the ones that are not supposed to be prescribed to old people,” Gloria Gutman, research associate with Simon Fraser University’s Gerontology Research Centre, said this week.

B.C. Health Minister Michael de Jong was not available for comment.

But in an e-mailed statement Thursday, his ministry said it was developing province-wide guidelines for the medications.

The pending guidelines will ensure consistent provincial standards for how and when to prescribe anti-psychotic medications and “will also address the use of atypical anti-psychotics, particularly in relation to the Health Canada warning for use in seniors,” the statement said.

The report – A Review of the Use of Anti-psychotic Drugs in B.C. Care Facilities – was quietly released in December and includes six recommendations, including “increased oversight” of medication practices. The province commissioned the study last year following media reports about a family who said their mother had been drugged without her own or family members’ consent.

Anti-psychotics were developed primarily to treat schizophrenia and bipolar disorder, but are increasingly being used to treat aggression and other symptoms of seniors’ dementia.

The use of atypical drugs noted in the report is part of the broader, complex issue of how to care for the increasing number of seniors with dementia who live in residential-care facilities, said Martha Donnelly, who heads the University of British Columbia’ geriatric psychiatry program.

With health authorities focusing on the cost-savings and health benefits of helping elderly people stay at home as long as possible, long-term care facilities are increasingly home to those with moderate to severe dementia.

“You have a very sick population in these facilities to deal with – and the staff have not necessarily had all the training that’s necessary,” Dr. Donnelly said. That problem is compounded by some older facilities that don’t have private rooms or secured outdoor space.

While saying there is a place for anti-psychotic drugs, even atypical ones, in long-term care settings, Dr. Donnelly said she’d like to see their use decline – but that it takes time, staff expertise and training to fully consider and implement the alternatives, and those are all in short supply.

Dr. Gutman also cited staffing issues as a factor in the high rate of anti-psychotic use.

“If you’re so short-staffed that all they can do is keep somebody dry and fed, they’re not going to have time to give the person-centred care,” she said, referring to an individualized approach.

The report does not address the rising use of anti-psychotic drugs, said Doreen Bodnar, who went public with her concerns about her mother, Hilda Penner, in 2011. Ms. Penner died last year.

The report found 50.3 per cent of seniors in long-term care facilities had been prescribed anti-psychotic drugs in the study period, compared with 37 per cent in 2001/02 and 47 per cent in 2006/07

But Ms. Bodnar is encouraged by the report’s recommendation that the ministry should educate doctors, facility staff and the public around the issue of consent.

“What was in our favour is that all of these people – doctors, nurses, whatever – they need to have consent to use a chemical restraint,” Ms. Bodnar said.

In preparing the report, researchers also heard concerns about staff safety. In a November bulletin on dementia and caregiver safety, WorkSafeBC said one in 10 long-term-care workers suffers a work-related injury each year; being hit, grabbed, bitten and kicked was second most-common cause of injuries. The first was over-exertion, usually from lifting.

An estimated 80 per cent of people in long-term care have dementia and the condition currently affects more than 70,000 people in B.C.

Public opinion

The public have been very critical of Nova Scotia Power since it has been privatized. There have been eight rate increases over the last decade, with a more increases currently proposed.

These rate increases have been proposed with the claim to cover investments in renewable energy, grid maintenance, environmental efficiencies in its coal generating stations and increased costs of purchasing cleaner coal.[19] With each increase, however, stockholder dividends have increased and the power outage frequency has not improved. In some cases, the utility has lost power in otherwise normal seasonal weather blaming such things as "salty fog" and "wet snow" for outages, leading to further frustration among the public.[20]

While debates on Nova Scotia's electricity industry usually focus on Nova Scotia Power as a vertically integrated near-monopoly, there are six communities entirely outside its distribution area, all of which have the authority to buy wholesale from other sources. These cooperate as the Municipal Electric Utilities of Nova Scotia. These are increasingly active advocates of community economic development, and have consistently opposed granting NS Power more control of the province's electric rate structure and regulatory system. They seem to be impotent in my opinion.

Infrastructure updating has been an ongoing issue since privatization leading the utility to fall behind its neighbours in New Brunswick and Newfoundland in creating a "smart grid" to allow more competition into the market, ability to offer other services and efficient method for transmitting energy.[21] Given the monopoly held by the utility on providing power, the rate increases are seen as a way to increase profit share to its stockholders at the cost of businesses and private ratepayers in the region. The utilities largest energy customer, NewPage in Cape Breton has recently laid off workers citing inability to make a profit in the current environment, specifically citing the constant power rate increases as the number one concern.[

The deteriorating health of Canadian pensions in 2011 is likely to convince more employers to shift burdens to employees this year and force an increase in retirement ages, according to pension consulting firm Towers Watson.

The company said Wednesday that low interest rates and plunging stock markets weighed heavily on defined benefit pension plans, which promise to pay a certain level of post-retirement income.

And that "double whammy" of poor performance is likely to continue in 2012, it said.

Data from the firm's tracking index found that the funded ratio of a hypothetical defined benefit plan in Canada fell 16.2 per cent from 86 per cent at the start of last year to 72 per cent at year-end.

For Canadian employers that offer defined benefit plans —including some of the country's best known companies — the drop means larger plan deficits for 2011 and higher pension costs in 2012, said Ian Markham, a senior actuary at Towers Watson.

"The employer side of it will be saying we are having to put an absolute ton of money into our pension plans and it has to come from somewhere," he said.

If pension plan values do not recover over the long term, retirees may face lower pensions and benefits.

"What that means is either Canadians are going to have to face a lower standard of living in retirement, or they're going to have to keep working longer," Markham said.

An aging workforce that may not only weaken workplace morale, but result in an even higher youth unemployment rate, he added.

"With so many people hanging around, then there's going to be less young people being hired," he said.

Research from Statistics Canada released late last year found that a 50-year-old worker in 2008 could expect to stay in the labour force another 16 years — 3.5 years longer than would have been the case in the mid-1990s.

Only about 4.5 million Canadians now have guaranteed benefits, most in the public sector. Many companies in the private sector have found the cost of guaranteeing benefits under defined benefit plans too expensive and, in some cases, a threat to their survival.

Many companies have already opting out of defined benefit plans in favour of defined contribution plans, which don't provide a guaranteed level of retirement benefits.

Some of Canada's largest companies —including Air Canada (TSX:AC-B.TO - News) and Canadian Pacific Railway (TSX:CP.TO - News) have been vocal about problems they face due to massive pension plan deficits.

Markham said RRSPs and defined contribution plans are in the same rough shape as defined benefit plans, but are not measured by the index because it focuses on effects on corporate Canada.

To compile its index, Towers Watson tracks the performance of a hypothetical defined benefit pension plan that was fully funded in 2000 and uses a typical model that allocates 60 per cent to stocks and 40 per cent to bonds.

The financial heath of the plan is based on investment returns, which indicates the amount of assets the plan holds, and long-term interest rates on corporate bonds, which determines the amount of assets needed to pay future benefits to current plan members.

Towers Watson said the typical plan would have generated a 0.5 per cent return in 2011, while liabilities would have increased by 20 per cent, due to the decline in interest rates.

OTTAWA - The richest of the rich have gained more ground in Canada, and are now making 189 times the average Canadian wage, according to a new report.

The 100 highest paid chief executives whose companies are listed on the S&P/TSX composite index made an average of $8.38 million in 2010, according to figures pulled from circulars by the Canadian Centre for Policy Alternatives, a left-leaning think-tank.

That's 189 times higher than the $44,366 an average Canadian made working full time in 2010, the report says.(latest available figures)

And it's a 27 per cent raise from the $6.6 million average compensation for the top 100 CEOs in 2009, the report says.

Regular Canadians, on the other hand, have seen their wages stagnate over the past few years. In 2010, after adjusting for inflation, average wages actually fell.

"The gap between Canada's CEO elite 100 and the rest of us is growing at a fast and steady pace, with no signs of letting up," says economist Hugh Mackenzie, who authored the report.

"The extraordinarily high pay of chief executive officers is more than a curiosity. It actually is a reflection of a troubling redistribution of society's resources in Canada and the United States, and in most of Western Europe," he said in an interview.

He points out that in 1998, the top 100 CEOs were paid 105 times the average wage. Since then, the ratio has generally climbed up.

In 2008, it was 174, dropping back to 155 during the recession in 2009. The high-water mark was 2007, when it peaked over 190.

It means that by noon on Jan. 3, the average top executive will have already made as much money as the average Canadian worker makes in a year.

The driving forces behind the inequality gap are complex, and lie in the structure of executive compensation packages, Mackenzie says.

Consultants giving advice to corporate boards on how much to pay their CEOs only compare to other CEOs, perpetually driving up the average in the race to be above-average, he explains.

The corporate board members all run in the same circles.

And many companies use stock options for a large part of their executives' bonuses, a practice that not only drives up pay packages but also ties compensation to share price rather than company performance, Mackenzie notes.

"The process of paying CEOs is really quite incestuous."

Solutions are equally complex. Debate in the United States has raged over this subject since the sub prime fiasco of 2008, and the consensus seems to be that regulating the structure of compensation packages won't really work, Mackenzie says.

Instead, taxation is a better way to go, allowing corporate boards to compensate as they please, but putting governments in a position to claw back excesses and redistribute them as they see fit.

While Mackenzie does not expect Prime Minister Stephen Harper to hike taxes on the rich tomorrow, he does see some kind of policy response eventually.

"I actually see this kind of growing income inequality as inherently unstable. I think there will be a response," he said.

"The people at the very top of the income scale — and CEOs are at the top of the top — have really launched themselves into a kind of economic interplanetary travel. If the rest of us are on earth, they're off somewhere else in a different world. I think that's unstable."

The top earner on the list is definitely in a galaxy of his own. Frank Stronach, the honorary chairman of auto-parts manufacturer Magna International Inc., took home almost $62 million in 2010.

Excluding Stronach from the Top 100 calculation would bring the average pay package down by about $62,000, Mackenzie said. He did not say where....?

Number two on the list — Donald Walker, also of Magna — made $16.7 million in 2010.

The top banker was Richard Waugh of Bank of Nova Scotia, pocketing $13.8 million in pay, bonuses, options and perks.

But Mackenzie points out that the compensation information companies include in their circulars don't catch the pay packages of investment bankers, whether or not they work for publicly traded companies.