Author Archives: Ethan Phillips

About Ethan Phillips

Ethan Phillips, editor of Canada Fact Check, is an independent policy analyst with 35 years experience researching and writing on Canadian public policy issues.

Reining in Canada’s Financial Giants – Are Consumers Getting a Fair Break?

While arm’s-length regulators at both the provincial and federal levels do the heavy lifting when it comes to regulating Canada’s financial services, it is ultimately politicians such as Ontario Finance Minister Charles Sousa and Federal Finance Minister Bill Morneau, who are accountable for protecting the interests of consumers in their dealings with Canada’s banks and other  financial institutions.

Introduction

In an important piece in the July 31 issue of the New Yorker Magazine on the decline in the prosecution of white collar crime in the U.S., author Patrick Radden Keefe cites a telling 2002 incident involving ex-FBI director James Comey. Keefe relies on the description of the incident contained in the journalist Jesse Eisinger’s recently published book, “The Chickenshit Club”.

Keefe writes:

When James Comey took over as the U.S. Attorney for the Southern District of New York, in 2002, Eisinger tells us, he summoned his young prosecutors for a pep talk. For graduates of top law schools, a job as a federal prosecutor is a brass ring, and the Southern District of New York, which has jurisdiction over Wall Street, is the most selective office of them all. Addressing this ferociously competitive cohort, Comey asked, “Who here has never had an acquittal or a hung jury?” Several go-getters, proud of their unblemished records, raised their hands.

But Comey, with his trademark altar-boy probity, had a surprise for them. “You are members of what we like to call the Chickenshit Club,” he said.

What Comey was saying, of course, was that avoiding risky prosecutions aimed at reining in Wall St. might have been seen as career enhancing under the previous U.S. Attorney responsible for keeping an eye on Wall St. but with Comey as boss, such an approach was going to be a career killer.

This post is the first of a series of Canada Fact Check investigations asking the question: does Canada have a Chickenshit Club problem when it comes to the development and enforcement of financial services regulation?

The answer for impatient readers? The next 12 – 18 months will tell and Canada Fact Check will be there to tell the inside story.

Here’s what we know now.

Finance Minister Morneau’s response to CBC investigations of hyper-aggressive bank sales practices

On March 6, the CBC’s Erica Johnston broke the first of a number of CBC stories on shady sales practices in Canada’s banking industry. The CBC reports revealed a constant pattern amongst big banks and credit unions of signing consumers up for products or services without providing all the required information, particularly about fees, costs and penalties related to the products. In many cases, bank employees were signing people up for products without even notifying them.

On March 15, in response to the CBC reports, Finance Minister Morneau turned to the Financial Consumer Agency of Canada (FCAC) and announced that the Agency would be conducting a separate industry review to examine Canada’s financial institutions’ sales practices. The FCAC has the primary mandate to represent the interests of consumers on “systemic” policy matters effecting federally regulated financial institutions such as banks, trust companies, life insurance companies and property and casualty (auto, property, etc.) insurance companies.

The FCAC has indicated that it expects to publish its initial findings by the end of 2017. Furthermore, FCAC officials expect to conclude the review of bank sales practices in June, 2018 and will publish a final report soon after. Finally, FCAC may conduct additional specific investigations flowing from the industry review. For example, if a FCAC  follow-up investigation determines that a specific violation has occurred, the Commissioner may make public the nature of the violation, which financial institution committed it, and the amount of any monetary penalty levied by the FCAC on the financial institution. Continue reading

The Liberal hydro rate reduction program: sound policy or just a shell game?

The March 2 hydro rate reduction announcement by the Ontario Liberal government was widely compared to converting a 20-year personal mortgage to a 30-year mortgage. Your short-term payments may go down but in the long run you end up paying a lot more.

On March 2, the Ontario Government announced its latest package of initiatives designed to reduce hydro rates. The key initiative in the package (the re-financing of the Global Adjustment) was widely compared to converting a 20-year home mortgage to a 30-year mortgage and amounted to little more than a cheap accounting trick designed to bribe Ontarians with their own money. The re-financing initiative was the latest in a series of Liberal hydro initiatives that set aside sensible electricity policy and instead, embraced private-sector style financial engineering in order to pursue political – as opposed to policy – objectives.

The purpose of this post is to provide some context and analysis to the March 2 announcement as well as other recent Ontario government initiatives on the hydro file.

Policy Context

To achieve rate reduction, the Ontario government had three broad approaches to energy policy to choose from. It could have:

  • Dealt in a targeted way with the affordability challenges of those paying an unacceptably high proportion of their household income on home energy costs. This may very well have involved additional assistance for a good chunk of the ratepayer base but it certainly didn’t need to include an increased hydro subsidy for everyone;
  • Dealt with the “structural” inefficiencies that have contributed to spiralling system costs and therefore steadily rising hydro bills; or
  • Engaged in a range of complex financial engineering exercises that simply shift current energy costs to future generations of ratepayers and tax payers.

Clearly, a high profile measure such as the re-financing of the Global Adjustment (the key March 2 announcement) falls into the “financial engineering” category.

That said, the government has implemented several low-profile initiatives that deal directly with the real hydro affordability crises facing many Ontarians. Moreover, the government is beginning to explore some market design changes that deal with the “structural” inefficiencies that have driven up the overall costs of the system. Unfortunately, the perceived political need to dramatically reduce all Ontarians’ hydro bills in the short-term has won out. The result is that the more nuanced and targeted initiatives that address the real problems of affordability and unnecessary system costs are taking a back seat to the misguided (but splashier) financial engineering initiatives. Continue reading

Changing Workplaces: the coming mega-battle over Ontario’s workplace rules.

An interim report on Ontario’s workplace rules tabled many far reaching options for labour law reform including a new approach to collective bargaining aimed at smaller employers.

In the spring of 2015, the Government of Ontario initiated its Changing Workplaces Review to determine what changes, if any, should be made to the province’s labour laws in light of the fact that, in the government’s own words, “non-standard employment (which includes involuntary part-time, temporary, self-employment without help and multiple job holders) has grown almost twice as fast as standard employment since 1997”.

The specific focus of the Review is on possible changes to the Ontario Employment Standards Act (ESA) and Labour Relations Act (LRA). The ESA provides a minimum set of workplace standards that apply to all Ontario workers (albeit with many exemptions) while the LRA governs union-employer relations.

On July 27, 2016, Changing Workplaces released an interim report. The report canvassed a large number of issues affecting Ontario’s workplaces and provided a broad array of options to address each issue. For the majority of workplace issues canvassed, options presented included both maintaining the generally inadequate “status quo” as well as options that would significantly increase the protections provided to the province’s workers through fundamental and far reaching changes to the ESA and LRA.

In broad terms, the Interim Report:

  • concluded that there are “too many people in too many workplaces” not receiving their basic rights guaranteed under the ESA and LRA.
  • came to two general ESA conclusions: the administration and enforcement of the ESA should be strengthened; and there should be a comprehensive review and reform of exemptions from ESA protections. An example of the kinds of exemptions that the report is concerned about are the many occupations (liquor servers, etc.) that are exempted from ESA provisions related to minimum wage and hours of work.
  • reviewed what it deems a growing problem of employer misclassification of employees as independent contractors (and therefore not covered by the protections provided by the ESA or LRA), and the use of temporary workers (deployed through temporary help agencies, etc.) who are also not covered by many provisions in Ontario labour law. The potential options identified to address these problems include: expanding the definitions of what constitutes an “employee” and an “employer”; extending the ESA’s minimum standards to “dependent” contractors (a category of worker somewhere between an employee and an independent contractor); and reviewing existing ESA exceptions and special rules (including exemptions to overtime and hours of work).
  • examined a range of options that would support the enhancement of union rights, including the potential expansion of successor rights provisions to the contracting out of services, card certification (i.e. no vote required for union certification above a designated threshold of signed union cards), automatic access to first contract arbitration, and a possible prohibition on replacement workers (i.e. a ban on strike breakers); and
  • surveyed a number of issues related to termination of employment and severance pay. Significantly, one of the issues under consideration is whether the ESA should adopt “unjust dismissal” provisions, similar to those already in federal and Quebec legislation.

Although almost all the above interim report sections include options that would significantly change the rules governing Ontario’s labour market, perhaps the most surprising feature of the report was the prominence given to various options related to what the report calls “Broader-based Bargaining Structures”. This post will explore the debate on broader-based bargaining options  that the interim report has kicked off.

First, some background on Ontario’s current labour relations framework. Continue reading

Will federal tax review lay the groundwork for real tax reform in next budget?

Will a low profile review of federal tax expenditures lay the groundwork for tax fairness in the Spring federal budget?

Last Spring, federal Finance Minister Bill Morneau announced that his Liberal government would be undertaking a comprehensive review of tax “expenditures” found in the federal tax code. According to Morneau, the aims of the review are to simplify the system and make it more progressive. In the process, he hopes to find $3 billion in savings. A panel of “external experts” was appointed “to ensure that the review is informed by a range of perspectives”.

While little known to the general public, the review is of enormous importance. Every year, Ottawa spends about $110 billion on programs such as health transfers to the provinces, the Canada Pension Plan, Employment Insurance, and other line item programs that comprise the federal budget. These expenditures, as with all direct spending, are put before Parliament for examination. Through this “Estimates” process, information on the costs and impact of these programs is available to the public.

Far less visible and transparent is the roughly $100 billion the federal government forgoes annually in so-called “tax expenditures”. These exemptions, deductions, credits, rebates and surtaxes are not subjected to the same kinds of parliamentary accountability mechanisms that are applied to more direct government spending. Moreover, many of these expenditures (including all exemptions and deductions), while legally embodied in the federal tax code, have huge implications for the fiscal situation of the provinces in that they also define the tax “base” against which all personal and corporate income taxes are levied at the provincial level.

Given the sheer scale of these tax expenditures, there is a strong argument for subjecting this hidden tax spending to the same oversight and public debate as any other spending. This is especially true given just how regressive (i.e. favouring the affluent) many of these expenditures are. If the government wants to provide billions of dollars in tax breaks to the richest Canadians, it should have an obligation to justify these gifts to the vast majority of Canadians who don’t benefit from such largesse.

The last comprehensive evaluation of the federal tax system was the Carter Commission of 1966. It’s clearly time to take a top to bottom look at our tax system to see if it is the truly progressive system the public deserves. Continue reading

What should be done to make Ontario electricity rates more affordable

There is far more that the Wynne government can do to help Ontarians struggling with sky-high hydro bills. But will they do what needs to be done?

It will come as no surprise to Ontarians that according to a recent Nanos Research poll, the cost of hydro was the most important issue for 20.5 per cent of voters, eclipsing the usual suspects such as health care (15.1 per cent), jobs and the economy (9.6 per cent) and high taxes (7.3 per cent). And it will also come as no surprise that recent polls suggest that the popularity of Ontario’s Liberal Government is taking a beating because of the issue.

Undoubtedly, the government is frustrated by the electorate’s focus on the cost side of the hydro file and its relative lack of interest in what the Liberals see as a series of environmentally friendly energy policies (the closure of the coal plants, the Green Energy program, increased “clean power” imports from Quebec, etc.) that have dramatically reduced smog days and made Ontario a leader in North America in fighting climate change.

But if the Liberals are puzzled by the public’s refusal to give them much credit for their green energy initiatives, they only have to look as far their crassly political cancellations of the Oakville and Mississauga gas plants to understand why the public isn’t cutting them much slack on the hydro file. Politics is nothing if not a blood sport and if you want political credit for making tough decisions on a file, then it is probably best not to engage in a billion dollar’s worth  of political opportunism (the cost of re-locating the two gas plants) on that very same file. After all, that’s a billion dollars added to the hydro bills of the very voters that were already paying for the elimination of cheap, coal-generated power!

That said, it appears that Kathleen Wynne has gotten the message  (high hydro bills are “my mistake”) and has promised to announce new rate reduction measures over and above the already announced 8% HST rebate. Continue reading

Justin Trudeau’s big infrastructure mistake

port-mann-bridge-construction

It is a mistake to have private asset managers invest in projects funded by a new infrastructure bank expecting a return of 7-9% when the government can borrow long-term at 2%.

November 14 was a big day for the Trudeau government’s infrastructure plans.

In the afternoon, Prime Minister Trudeau attended a “summit” for foreign investors focussing on investment in areas like infrastructure, technology, natural resources, and renewable energy.

The summit was hosted by Blackrock Capital Investment Corporation, the world’s largest asset management company with $5.1 trillion dollars under management. All told, BlackRock brought two dozen of its clients to Toronto from around the world to meet with Trudeau. Blackrock clients include many of the world’s largest pension funds, sovereign wealth funds and other institutional investors.

Cabinet ministers attending the event included Finance Minister Bill Morneau, Minister of International Trade Chrystia Freeland, Minister of Natural Resources Jim Carr, Minister of Innovation Navdeep Bains, Minister of Infrastructure Amarjeet Sohi, Minister of Canadian Heritage Melanie Joly, and Minister of Health Jane Philpott.

Earlier in the day, the Liberals met with Canadian institutional investors such as the CPP Investment Board, the Caisse de dépôt , Ontario Teachers’ Pension Plan, OMERS, and Brookfield. Continue reading

Is a flat rate option for hydro coming to Ontario?

 

Ontario Morning News Round-up and Legislative  Agenda for Nov. 29.

Ontario News Round-Up for November 29.

  • On Monday, Ontario Energy Minister Glen Thibeault raised the possibility that consumers could opt out of time-of-use pricing for flat rates or other billing plans. Details will come in the government’s updated long-term energy plan being developed now with input from the industry and consumers. It will be released next spring, with any measures taking until after the 2018 election to be implemented.
  • Ontario will become the first province to launch pilot projects for self-driving cars. There will be two groups involved in the trials. BlackBerry’s QNX software development subsidiary and the University of Waterloo will work with Ford Motor Co’s Lincoln cars, while Erwin Hymer Group will test one of Daimler AG’s Mercedes-Benz vans, according to an Ontario government statement.
  • In a report tabled at Queen’s Park Monday, the Financial Accountability Officer projected a budget deficit of $5.2 billion this year and $2.6 billion in 2017-18. That’s in contrast to the government’s fall economic statement that forecast a $4.3 billion shortfall in 2016-17 and a balanced budget in 2017-18. The budget watchdog operates independently of the government and reports directly to the legislature.
  • According to the Toronto Star, officials in PC leader Patrick Brown’s office misled former Star reporter Richard Brennan over whether former MPP Garfield Dunlop was offered a job to resign his seat in order to allow Brown to contest a by-election and enter the legislature.

Ontario Op-Eds and Editorials

  • Martin Regg Cohn, citing Air Miles’ practice of wiping out points if they haven’t been used in five years, says that Ontario should ban the practice as they did the expiration date for gift cards.
  • In an editorial, the Star says that the City of Toronto’s anti-poverty plan needs to be fully funded to deal with the City’s growing poverty problem.

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Search up-to-date Canada Fact Check databases for the full text, approval status, committee hearings and other details of all Ontario bills from the current session here!___________________________________________________________________________________

Projected Ontario Legislative Business for Tuesday, Nov. 29

Main Chamber Business

9:00 a.m. – Third Reading of Bill 28, An Act to amend the Children’s Law Reform Act, the Vital Statistics Act and various other Acts respecting parentage and related registrations. Watch Live!

10:45 a.m. – Question Period. Watch Live!

3:30 p.m. – Second Reading of Bill 70, An Act to implement Budget measures and to enact and amend various statutes. Watch Live!

Ontario Legislature Committee meetings

9:00 p.m. – The Standing Committee on Government Agencies will meet to consider intended appointments.

4:00 p. m. – The Standing Committee on Regulations and Private Bills will meet to consider Bill 47, An Act to amend the Consumer Protection Act, 2002 with respect to rewards points. A full list of presenters is here.

Ontario NDP Bill on Domestic Violence Gets Support of Minister, Unions

Ontario Morning News Round-up and Legislative  Agenda for Nov. 28.

Ontario News Round-Up

  • NDP MPP Peggy Sattler seems to have the support of Ontario Labour Minister Dennis Flynn for her Bill 26. The bill was reffered to the Ontario legislature’s Standing Committee on the Legislative Assembly after receiving approval at Second Reading on October 20.   Bill 26 would amend both the Employment Standards Act and the Occupational Health and Safety Act to include up to 10 days of paid leave and accommodation for victims of domestic and sexual violence.

Meanwhile, the Ontario Federation of Labour is directing the 54 unions under its umbrella to negotiate paid leave for survivors of domestic and sexual violence in all collective agreements

  • The Ontario Government has announced that Howard Sapers, Canada’s correctional investigator, will be taking on the job of reforming Ontario’s troubled corrections system. On Jan. 2, Mr. Sapers will start as an independent adviser to the provincial government tasked with leading an external review of segregation policies.
  • The debate continues over the best way to implement toll roads in Toronto. Most experts agree that that a dynamic pricing model puts a fairer price on the road, which is more in demand at certain times of day than others. However, Toronto Mayor John Tory seems to favour a flat, $2 toll.

Ontario Op-Eds and Editorials

  • Martin Regg Cohn takes a shot at Provincial Conservatives for opposing road tolls when their former leader (John Tory), has come out for them.
  • Christina Blizzard says that there is a warning to the provincial Liberals in the fact that 127 new private schools have opened since 2015 — many of them faith-based.
  • David Reevely echoes Cohn in criticizing Patrick Brown’s Conservatives for their opposition to road tolls.

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Search up-to-date Canada Fact Check databases for the full text, approval status, committee hearings and other details of all Ontario bills from the current session here!___________________________________________________________________________________

Projected Ontario Legislative Business for Friday, Nov. 28

Main Chamber Business

10:45 a.m. – Question Period. Watch Live!

1:30 p.m. – Second Reading of Bill 70, An Act to implement Budget measures and to enact and amend various statutes. Watch Live!

Ontario Legislature Committee meetings

2:00 p.m. – The Standing Committee on General Government will meet to discuss Bill 45, An Act to amend certain Acts with respect to provincial elections.

2:00 p. m. – The Standing Committee on Social Policy will meet to consider Bill 7, An Act to amend or repeal various Acts with respect to housing and planning. A full list of presenters is here. Watch Live!

Ontario Morning News Round-Up and Legislative Agenda for November 25

Ontario Morning News Round-up for November 25

  • On the same day Toronto Mayor John Tory called for $2 tolls for the Don Valley Parkway and Gardiner Expressway and a new tax on hotel rooms, a City  staff report called for the implementation of a far broader range of revenue generators.
  • The Ontario Government has announced its next step in its ongoing efforts to reduce the gender wage gap – it’s creating a new working group  to advise it on the issue. The new group will provide guidance on how government can address specific issues and initiatives identified in the Gender Wage Gap Final Report, including:
    • Shared parental leaves;
    • A gender workplace analysis tool;
    • A social awareness strategy to help understand the effects of gender bias, the gender wage gap and the importance of closing the gap; and
    • Reviewing pay equity legislation.
  • The Ontario Federation of Labour is directing the 54 unions under its umbrella to negotiate paid leave for survivors of domestic and sexual violence in all collective agreements. The OFL was at Queen’s Park Thursday to talk with Labour Minister Kevin Flynn about enshrining such leave. NDP MPP Peggy Sattler currently has a private members’ bill at committee. Her Bill 26 would amend both the Employment Standards Act and the Occupational Health and Safety Act to include up to 10 days of paid leave and accommodation for victims of domestic and sexual violence.

Ontario Op-Eds and Editorials

  • Martin Regg Cohn believes that the constant accusations of corruption and criminality related to Liberal operatives’ activities in the Sudbury by-election that elected Energy Minister Glenn Thibeault, cheapen Ontario politics.
  • Bob Rae supports Toronto mayor John Tory’s proposals for toll roads but says low and moderate income Ontarians must be protected. The Star’s lead editorial also supports the mayor’s proposal while Thomas Walkom warns that while Tory’s proposal should be supported, the history of transportation planning in Toronto is such, that things may still go awry.
  • Bob Hepburn outlines the Wynne Liberals’ three-pronged strategy for re-election in 2018.

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Search up-to-date Canada Fact Check databases for the full text, approval status, committee hearings and other details of all Ontario bills from the current session here!___________________________________________________________________________________

Projected Ontario Legislative Business for Friday, Nov. 25

Main Chamber Business

There is no House business scheduled for today.

Ontario Legislature Committee meetings

There are no Legislative committee meetings scheduled for today.

 

 

Federal News Highlights and Parliamentary Business for November 25

Federal Morning News Round-up

  • The Liberals have introduced new legislation that repeals changes the Harper government made to Canada’s Election laws. Amongst the changes being made under Bill C-33 are: the reinstatement of  voter information cards as identification; allowing vouching; and creating a national register of electors to pre-register youth aged 14 to 17.
  • According to anti-poverty group Campaign 2000, Canada’s child poverty rate has jumped from 15.8 per cent in 1989 when parliament passed a resolution to abolish child poverty, to 18.3 per cent today. According to its annual report, for those under age 6, the rate is almost 20 per cent nationally and closer to 45 per cent for young children in Nunavut.
  • Canada’s premiers intend to push the Trudeau government hard on increasing health care transfers when the Premiers meet the Prime Minister in two weeks ostensibly to talk about climate change.
  • The Liberals are admitting that more could be done to plug holes in the new CPP enhancement – but that does not include amending the bill that includes the omissions. Responding to pressure from New Democrats in the committee studying Bill C-26, regarding omissions that hurt Canadians who temporarily drop out of the workforce to raise their children or to cope with an illness, the government admitted there was a problem but promised only to consult with the provinces when federal and provincial Finance Ministers meet in December.

Op-Eds and Editorials

  • Gerry Caplan makes the case that despite ratifying the United Nations Convention against Torture in 1987, Canada is guilty of many of the practices banned in the convention. Caplan says that “Torture – physical, psychological or both – has been inflicted by our prisons and our security and intelligence services on many Canadians – a disproportionate number of them indigenous or people with a Middle Eastern background – as well as on foreign citizens”. Caplan gives as an example, Adam Capay, the young indigenous man kept in solitary for more than 1,500 days in an Ontario correctional facility.
  • Thomas Homer Dixon says Donald Trump is “a bizarre hybrid of an idiot savant and a Mafia don” and that these personality traits are likely to result in constant “bedlam”. You think?
  • John Ivison takes a swipe at the Trudeau Liberals’ “cash for access” fundraising tactics.

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Search up-to-date Canada Fact Check databases for the full text, approval status, committee hearings and other details of all Federal bills and regulations from the current session here!

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Projected House Business for Friday, Nov. 25:

Main Chamber Business

The House is meeting between 10:00 – 7:00 p.m. today.

  • 10:30 – Government Business – Second reading debate on Bill C-18 An Act to amend the Rouge National Urban Park Act, the Parks Canada Agency Act and the Canada National Parks Act.  Watch Here!
  • 2:15 – Question Period. Watch Here!
  • 3:15 p.m.  – Government Business – Second reading debate on Bill C-30 – Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act. Watch Here!
  • 5:45 p.m. Private member’s Business. Bill C-274 – Mr. Caron (Rimouski-Neigette—Témiscouata—Les Basques) — An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation). Watch Here!

Projected  House Committee Business for Friday, Nov. 25

  • There are no Committee meetings scheduled for today.