Paperclips to the Gunfight

By Graham Lane
Winnipeg Sun, July 28, 2017

This past week saw Manitoba’s debt downgraded for the second time under the PC Government, from “AA” Very strong capacity (when they took over) to – “A“ Strong capacity but somewhat susceptible to adverse economic conditions and changes in circumstances.

Predictably the Pallister Government blamed the NDP. While it is true that the NDP left the Province in a financial mess – a billion dollar budget deficit, massive debts and a disastrous Hydro expansion – it is also true that the NDP were voted out because Manitobans rejected its former tax, spend and risk policies.

Oddly, the PC Government budget projections see them running four years of annual deficits totalling $2.95 billion — 26% higher than the last 4 years of the NDP’s tenure. How is it that in a province where citizens value every nickel and have a reputation for frugality, taxpayers find themselves captives of not one but now two spendthrift governments? Where is this new fiscally responsible PC party – the party that was to set us on the right track for tax cuts and balanced budgets?

The deficit ballooned to more than $800 million during the last year of Selinger’s reign, an election year, up from only $422 million the year before. Only in their government’s 4th year, do the PCs expect to get below $700 million. Even for the last year of the party’s current term they do not project getting anywhere close to having a balanced budget. And, this ‘sorry’ projection includes the PCs stiffing Hydro ratepayers with explosive rate hikes inflicted by government and Hydro blunders.

Manitoba voters did not vote for this. We voted for a change. We voted for reduced government spending and proper stewardship over Hydro, not for the maintenance of the status quo.

The PCs won in a massive landslide – the largest in the Province’s history. In case they didn’t notice, that was a mandate for change. Other than mandated cuts of bloated management and staff at the Crown corporations and efforts being tried in the Health Department, it is impossible to find any major real change since the PCs were elected 18 months ago.

Nothing of substance is happening in Education, Child and Family Services, Agriculture, Infrastructure spending – etc. etc. We have seen some minor political statements (scrapping of maximum class room sizes in some grades), but nothing transformative of any consequence has happened in any department or Crown corporation that could not have happened under an NDP Government.

Without substantial and immediate action, there will be further credit downgrades. With each downgrade, the cost of borrowing rises. Combined with rising interest rates, we could see Manitoba’s debt cost escalating out of control. At a time when the province is desperate for fiscal prudence, the ruling government is terrified of an unsophisticated WFP and CBC media and an opposition in disarray – for fear of criticism of any cuts.

The NDP warn the PC government against any cuts to government spending. Even minor cost savings are represented as if the world is falling apart. This, even though Manitoba has a notoriously high-spending, low-performing public sector across the board.

Who is going to stand up for the people of Manitoba? How much further into debt must the province fall before a politician is brave enough to do something about it?

 Graham Lane leads Manitoba Forward (manitobaforward.ca).

Feds should revamp First Nations tax exemptions

By: Graham Lane
Published on July 20, 2017 by the Winnipeg Sun

First Nations and Indigenous issues draw $20 billion a year from our federal and provincial governments. It’s likely increases will be coming. On the tax side of the ledger, tax breaks afforded to First Nations annually exceed $1 billion.

Federal and provincial governments do not collect taxes on products and services delivered to reserves (and sub-offices of reserve offices) for Registered Indians. If, for example, a First Nations person lives in Winnipeg and buys a car and has it delivered to a reserve, no federal or provincial taxes are paid. Surprisingly, governments have not examined the fiscal impacts of this policy. In fact, governments make it very difficult to get data on this issue.

In a recently published Frontier Centre report (“The Value of Tax Exemptions on First Nations Reserves”), researcher Lee Harding estimates that First Nations tax exemptions are worth about $1.3 billion per year. Harding notes that in 2014-15 tax exemptions for First Nations for PST, HST and GST were worth roughly $237 million. Add to that waived personal income tax of $251 million, fuel tax breaks of $97 million, and tobacco tax exemptions worth an incredible $686 million.

The $1.3 billion in annual lost tax revenue to government represents an average benefit of about $2,000 for each of Canada’s 637,660 Registered Indians. These tax exemptions, which are not available to other Canadians, were not included in any of the 600 plus treaties but are provided through the Indian Act. The Act should be revised, as it is some provincial governments are already trying to clamp down on the tax breaks.

Prince Edward Island reported $1.1-million worth of provincial tobacco tax exemptions, despite having only 765 Registered Indians — a $1,500 benefit for every First Nation person. New Brunswick reported First Nation persons being exempt from $1,200 of provincial tobacco taxes each, the total representing 8% of the province’s tobacco tax revenues.

Provinces with large aboriginal populations (Manitoba and Saskatchewan, specifically) are trying to close the tobacco tax loophole. Saskatchewan limits each Registered Indian to one tax-free carton of cigarettes per week, down from what was three cartons per week. While the limitation rankles many First Nations people, tobacco exemptions have climbed to 23% of the province’s entire tobacco tax revenues.

The ongoing exemption of tobacco taxes has perverse outcomes. Aboriginals smoke more than other Canadians, perhaps because it costs them about half as much. And, Aboriginals are buying tobacco products for non-aboriginals — a thriving black market in tobacco exists on many reserves.

Smoking is not healthy, many tax-free smokers end up burdening the health-care system. To help pay for health-care, perhaps all smokers — not just non-aboriginal smokers — should pay tobacco taxes.

A question of principle needs to be asked. Why should First Nations people be exempt from paying taxes when they benefit hugely from Canada’s expensive and increasingly comprehensive social system? The Indian Act — not the treaties — gives First Nations massive tax exemptions.

As the unfairness of this become understood by more Canadians, federal and provincial governments will likely face increasing pressure to reduce if not eliminate the tax breaks. So far, the federal government has shown no interest in changing, let alone removing, First Nations tax advantages. It should, and soon.

— Graham Lane chairs Manitoba Forward

Provincial gov ignores responsibility for Hydro’s distress

Note: The provincial government continues to ignore its responsibility for Hydro’s distress and could lessen its take from the boondoggle and cover much of the capital loss.

We invite you to read this article by Nick Martin published in the Winnipeg Free Press:


Manitoba Hydro projects $92 million in profit, coalition wants rate hike spiked
‘We think the imminent catastrophe Hydro is alleging is overstated’: lawyer

The same high water that cut Churchill’s rail line may also have contributed to Manitoba Hydro’s bottom line — so much so, a consumers coalition argues Hydro doesn’t need its proposed rate increase.

Not with a projected net income of $92 million.

The Public Utilities Board will sit today and Wednesday to hear a 7.9 per cent interim rate application from Hydro, which would take effect Aug. 1. (Hydro wants a similar 7.9 per cent increase each of the next five years, but that marathon hearing won’t start until at least December.)

“We think the imminent catastrophe Hydro is alleging is overstated,” lawyer Byron Williams, representing the Consumers Association of Canada and Winnipeg Harvest, said in an interview on Monday.

Deep within the appendices of lengthy documents Hydro will table today is a net income forecast requested by the PUB, which shows the impact of no interim increase, Williams said.

Hydro’s own figures show it is forecasting a net income of $92 million for the current fiscal year — even without the 7.9 per cent rate hike.

Williams said the Crown corporation is benefiting this year from high water levels, particularly on the Nelson River, allowing it increased power generation.

“Hydro’s had a really good water year, as people in Churchill have found out to their cost,” he said.

The projection also reflects Hydro’s having followed the orders of Premier Brian Pallister to cut 15 per cent of managers, and its own decision to reduce its workforce by 15 per cent, or 900 jobs.

Williams said the cost of severance and buyouts, and the reduced payroll, are part of the $92 million.

“All the expenses are in,” he said.

Hydro didn’t argue Monday the $92-million figure is accurate, but corporate communications director Scott Powell said Manitobans can’t gamble on weather.

“It wouldn’t be prudent to plan for higher-than-average flows. We must base our financial forecasts on average flows. Otherwise, we are essentially putting our financial health fully in the hands of Mother Nature,” Powell said.

“Significantly above-average water flows and record storage, resulting in much higher generation, are allowing us to sell substantially more energy on the short-term opportunity market, thereby mitigating the impact of lower pricing and, in fact, providing almost all of that total of $92 million. If we were to have started the year with normal reservoir levels and then experienced even average flows, our net income estimate would be essentially break-even at best, without any rate increases,” Powell said.

Powell said Hydro’s finances are volatile and dependent on weather, water supply and export prices. The Crown corporation has been fortunate thus far in 2017, but there’s no guarantee that will continue.

But Hydro’s challengers maintain such fears have nothing to do with an interim increase.

Williams said whether the benefit of high water levels for electricity production is sustainable is not at issue in the two-day hearing.

“In terms of sustainability, we’ll be fighting that out in December, January, February,” he said.

Hydro president and chief executive officer Kelvin Shepherd told the Free Press in May Hydro really needs 14 per cent a year, but recognized that wasn’t going to make it past the PUB.

Shepherd said the 7.9 per cent could cost the average homeowner an additional $6.88 a month, but also acknowledged northern Manitobans could consume four times as much power in winter.

Meanwhile, the Manitoba Industrial Power Users Group will argue today that Hydro’s long-term forecasts are unduly pessimistic, and debt on the Bipole III and Keeyask generating megaprojects has nothing to do with an interim rate increase two weeks from now.

The users believe Hydro’s financial situation has not changed — rather, a new board has a different attitude towards paying down debt quickly and is taking “unconventional” approaches to Crown corporations, which again are not relevant to an interim increase.

nick.martin@freepress.mb.ca

Note from Graham Lane

A note from Manitoba Forward’s Graham Lane on the recent exchange between Garland Laliberte and Andrea McLandress:

Garland Laliberte, Vice-President of Bipole Coalition and retired Dean of Engineering University of Manitoba, responded with the column “Hydro still reeling from NDP’s decisions” to an op-ed article by Andrea McLandress of the Mining Association of Manitoba Forward (both published in the Winnipeg Free Press). Her article was entitled, “Saving Hydro at Economy’s Expense.” In his response, Dr. Laliberte ‎correctly agrees that much blame is due to Manitoba’s past NDP government for the ongoing Hydro debacle, while providing some much needed and crucial information. Manitoba Forward would add the present government to the blame list. Premier Brian Pallister’s government’s failure to halt the project and subject it to an open and comprehensive review before continuing to spend perhaps $10 million per day on a project forecast to drive up rates is something beyond all reason and necessity. It is also worth pointing out Pallister’s intention to collect hundreds of millions of dollars expected to be withdrawn from Hydro directly from the levies on Hydro related to the debacle which will, of course, ultimately be paid for by ratepayers.


Here is Garland Laliberte’s column:

There are points to agree with in the article by Andrea McLandress (Saving Hydro at economy’s expense, July 10). But there is also a lot to question.

It is noteworthy that McLandress is the executive director of the Mining Association of Manitoba, an organization representing the interests of Manitoba’s mining industry, a heavy user of Hydro’s energy.

First, the points of agreement. She is correct when she states, “It is not easy to disentangle the business, finance and politics of Manitoba Hydro.” Former premier Greg Selinger understood this complexity would make it easy to fool the public when he forced the utility to spend way beyond its means in a market that had evaporated even before the build started.

McLandress also appropriately acknowledges that our relatively low and stable power prices have given a major competitive advantage to Manitoba industry, offsetting lower taxes and depreciation regimes for capital offered in other jurisdictions.

She also makes a valid point when she states, “There appears to have been no consideration or consultation about the impact a 7.9 per cent increase would have on Hydro’s major customers and how that impact would affect Hydro’s bottom line.” Hydro simply left the matter of price elasticity to a future application for a rate increase.

But McLandress is wrong when she states that the necessity for the Bipole III transmission line should not be disputed. Few Manitobans know that Hydro never tabled credible evidence of the need for the line. The gold standard for such evidence is a probability-based analysis of the financial, social and economic consequences with and without the line. If such an assessment was conducted, Hydro never made it available for scrutiny. In reality, Selinger prohibited any analysis at all on the strength of his untested word, and Hydro’s, that the line was needed for reliability.

And while McLandress accuses Hydro’s chair and vice-chair of using doomsday scenarios in their current round of meetings with business groups and chambers, she is guilty of the same offence when she speculates about a possible blackout and places the economic impact of such an occurrence at “north of $20 billion,” leaving “hundreds of thousands of Manitobans without power for months.”

Hydro already had a failure of its two existing bipoles in September 1996, now 21 years ago and the only unplanned outage in the more-than-40-year history of the lines. The cost to rehabilitate was only $11 million, including the cost of makeup power imported from the United States during the outage.

The down time for the two bipoles was less than two weeks. Both results were well short of the cost and the down time cited by McLandress.

She states that Hydro is forecast to remain profitable over the next decade even without the proposed 7.9 per cent rate increases. This is simply not factual. With the rate increases of 3.95 per cent (still twice inflation) contemplated until now, Hydro’s current application calculates that its cash flow would remain negative until 2023 and its cumulative net income would be essentially zero for three years beyond that.

The article states that, to this point, “downgrades (in Manitoba’s credit rating) have not been due to Hydro’s debt.” This statement is at odds with a Sept. 21, 2016, Government of Manitoba news release which quoted Finance Minister Cameron Friesen in reference to “the July 2016 decision by S&P Global Rating to downgrade Manitoba’s credit rating (from AA to AA-) and (which) cited Manitoba Hydro as no longer being considered self-supporting, thereby placing the province at risk for further credit rating downgrades.”

McLandress does a good job of arguing for her employer’s best interests. But to buttress those arguments with a mixture of fact and fiction is not in the best interests of anyone. The Hydro board is simply doing the best that it can in dealing with a mess left by the NDP.

That mess is a fact and the only option now is to deal with it. Until such a time as Hydro is able to find new markets for electricity produced by its overbuilt system, we should expect to be faced with rate increases of the magnitude being considered. Thank Selinger for poisoning the well before he left.

The board’s task now is to push Hydro to find those new markets (electric vehicles, conversion of electricity to other forms of transportable energy, export facilitated by an interprovincial grid, to name a few). Hydro’s challenge is to become much nimbler in responding to technological and market opportunities.

And yes, a continuation on the path already started but a long way from being finished — making Hydro a leaner organization.

Garland Laliberte is a director and vice-president of the Bipole III Coalition, an organization of citizens who believe a route for the Bipole III transmission line on the east side of Lake Winnipeg is superior to the west side because of greater economic, social and technical benefits.

Press Release about Efficiency Manitoba Pure Propaganda

Below is the Progressive Conservative’s June 22nd press release titled, “Efficiency Manitoba = Lower Power Bills for Manitobans“:

We want you to have the facts on how your PC government is going to save Manitoban families money when it comes to their power bills.

Along the way, we would like to clear up a few misconceptions out there on Efficiency Manitoba:
Fact: Establishing Efficiency Manitoba = lower power bills for Manitobans. It will finance new energy efficiency programs and incentives to help you and other Manitobans reduce their electricity costs and save money. Saving ratepayers money is what this is all about.

Fact: The establishment of a new stand-alone agency (Efficiency Manitoba) to promote energy efficiency and conservation has been a recommendation of the independent, arm’s length Public Utilities Board since 2014. It’s the smart thing to do.

Fact: The establishment of Efficiency Manitoba was part of our 2016 Campaign Platform that all of our candidates campaigned on, and that Manitobans voted overwhelmingly for with the largest majority in 100 years. We said we would do it.

Fact: A new, independent agency outside of Manitoba Hydro is better suited to meet energy-savings targets with a reduced overhead cost by 50% compared to Manitoba Hydro’s Power Smart program. Cost-effective government saves you money.

Fact: Our government is utilizing expert advice from one of Canada’s pre-eminent energy experts, Mr. Philippe Dunsky, with the priority being to save Manitobans money on their utility bills. NDP ideology costs you money; PC policy saves you money.

Efficiency Manitoba will offer households and businesses expanded energy savings programs to help cope with higher Manitoba Hydro rates coming as a result of NDP mismanagement of Manitoba Hydro. They burdened Manitobans with massive debt for the Keeyask dam and Bipole III transmission line. Your PC government is fighting to keep our Crown Jewel – Manitoba Hydro – financially sustainable. And save you money as we do so.

– – – – – END – – – – –

This piece of propaganda tries to justify a new crown corporation, not the agency referred to in bullets 2 and 4 above. Section 3(1) of The Efficiency Manitoba Act clearly sets up Efficiency Manitoba as a crown corporation, not as an agency.
3(1) Efficiency Manitoba Inc. is hereby established as a corporation without share capital, consisting of the directors appointed under this Act.

Philippe Dunsky, more properly Dunsky Energy Consulting, is a Quebec-based firm founded in 2004. According to the Dunsky web site: Our focus is on the demand side of the equation: improving energy efficiency and demand response, accelerating the deployment of renewable energy and storage technologies, and transforming mobility through electrification, alternative fuels and new transportation solutions.

Why we would ignore local firms with world-wide experience in electrical energy and transmission projects is a mystery. Creating Efficiency Manitoba is intended to distract us from the very real problems at Hydro but does not address Hydro’s core illness. We can’t fix hydro with a separate, costly, shiny new crown corporation.

Reducing demand makes sense when supply is limited and costs are driven up. We do not have a supply side problem, we have a debt problem. The focus should be on slashing Manitoba Hydro debt as deeply and quickly as possible. Projects need to be mothballed and the management of Hydro chopped and replaced.

Manitoba Hydro has become a monstrous mess of bad planning and debt so large that the provincial credit rating is at risk. Creating a second crown corporation to offset the high energy prices demanded by the Manitoba Hydro crown corporation is a strange way to control energy costs. Worse, Manitoba Hydro and Efficiency Manitoba both report to the same government Minister.

Improving the energy efficiency of existing buildings and manufacturing and processing facilities is costly and the costs will be born by the consumer or taxpayer. We will be left with a glut of power we cannot sell and high rates caused by reckless debt incurred to generate that extra power. Our competitive edge in attracting industry has been diminished without proper justification.

Premier Pallister promised to kill Bipole III and mothball dam projects but has done neither. We are told that curtailing construction would be too costly but we have nothing to support that. We are in bankruptcy court and long past hiding numbers to protect Hydro. We deserve a clear look at what promises have been made and to whom. The axe must come out. Manitobans feel they are being kept in the dark while facing enormous electrical bill increases and that is not acceptable.

John Feldsted
Winnipeg, Manitoba

VIDEO: Fletcher Won’t Flinch: Good Policy is Good Politics

Did you miss our event in Winnipeg? Now you can watch our town hall with MLA Steven Fletcher on YouTube in full.

This presentation was cited in media reports as the reason that Steven Fletcher was removed from the PC Manitoba Caucus. It is an interesting discussion on public policy.

Thank you to everyone who participated, contributed, and made this town hall a success.

Trudeau risks women’s safety for votes

By Graham Lane
Published by the Winnipeg Sun on July 13, 2017

Justin Trudeau claims his government has the best interests of women as a central pillar of their reign. Yet, sadly, a recent federal policy change on spousal immigration calls into question the validity of Trudeau’s claim. The new policy suggests he is more interested in getting votes through identity politics than protecting women.

Overseas marriages — requiring one of the couple needing a visa to stay in Canada with their spouse — provide difficult situations for western democracies. With arranged marriages the norm in India, a Canadian marrying an East Indian can raise questions as to the validity of the marriage bond. In many cases the couple has spent little, if any, time together before marrying.

In the U.S., the U.K., Australia and New Zealand, immigrant spouses are granted conditional visas, becoming unconditional only after two years. Why? The time requirement better ensures marriages are legitimate. Even more importantly, it protects women who find themselves in abusive marriages. If a woman suffers abuse within the two-year period, her husband has his visa revoked and sent back to India. While the two-year test rule deals with out-right marriage fraud, more frequently it is used to protect women who sponsored their husband only to be abused.

In 2011, the Canadian government finally adopted two-year conditional visas for immigrant spouses, the international standard. While Canada’s adoption of the two-year test only brought us into line with other developed countries seeking to protect women, the change was met with outrage, largely by older men of East Indian backgrounds.

Canada’s revised rules also provided wives from overseas relief from being abused by Canadian husbands. Separated foreign wives leaving arranged marriages escaped abuse and allowed to remain in Canada. But, after the two-year test was introduced (to protect women), dozens of articles appeared in the Indo-Canadian press claiming the government’s new rules were not needed and ‘hurt’ women. The opposite was true, the new rule protected women.

After this positive change was enacted in 2011, hundreds of false and or abusive foreign male spouses had their visas to stay in Canada revoked, returning them to their home country while leaving their wives here and safe. Before the new rules came into force, there were countless stories of cases of marriages where male immigrant spouses walked away from their new Canadian wives after arriving (to stay) in Canada. Either abused or a victim of fraud, distraught new wives often didn’t know their husband before marrying them.

The Trudeau government then responded to fiery male-orientated opposition by repealing the new two-year test, removing conditions to spousal visas. Once again, women were the losers. The cause of their loss: an outcry by males from segments of the Indo-Canadian community.

Trudeau’s government, pandering for votes at the cost of no longer protecting women, should be ashamed. Sadly, doing what is right — the protection now revoked — takes a back seat to playing identity politics for hoped-for Liberal votes.

Immigration officers and consultants express deep disappointment of Trudeau’s reversal. Most work hard to protect women from abusive and fraudulent marriages. An important tool, the two-year test, was taken away, once again it is much harder to protect the vulnerable.

So much for our self-described feminist Prime Minister.

— Graham Lane leads Manitoba Forward (manitobaforward.ca).

Pallister smothers dissent, Fletcher tossed

By: Graham Lane
Published by the Winnipeg Sun, July 6, 2017

Brian Pallister has often talked about the importance of the PC Party operating as a team. He uses examples drawn from his past experiences with sports and political teams.

Teams are composed of individuals. The best leaders recognize that good results come from teams comprised of members having different skills, past experiences and viewpoints. Great team leaders seek to develop the differing strengths of their members, welcoming their talents and differing views.

Not so with Mr. Pallister. His team is analogous to the “Big Man” team — where there is but one leader and that leader calls all the “shots.” The focus of such “teams” is on the leader — not the team. Big Man teams seldom succeed in the long run, they focus on the leader’s wants at the expense of the team. Unfortunately, this is what is now happening with the PC Party of Manitoba — caucus members with ability having to subjugate their own skills and views to those of the Big Man.

Last week, the PC Caucus voted, allegedly unanimously, to expel Steven Fletcher. Mr. Fletcher, an experienced politician at both the federal (cabinet minister) and provincial level, is the most active back-bencher that this province has seen.

While his colleagues are out days and evenings engaging with constituents and interest groups, Mr. Fletcher’s lack of mobility (he is a quadriplegic) makes it very difficult for him to easily attend glad-handing events. Instead, we have a super-active back-bencher, having drafted and submitted nine private members bills and working on another 30. He invites ideas. Recently, his single-handed opposed the creation of a needless new Crown Corporation — Efficiency Manitoba.

All of these bills and his other actions are fully in line with modern conservative values. There is nothing rebellious in the views he expresses. And, he was not caught up in a sex scandal (as he says, to his own regret). He has publicly supported the premier at public and private events.

Yes, Mr, Fletcher is a different kind of team player — one who should be welcomed and fostered not tossed because he doesn’t fully agree with 100% of the Big Man politics of Brian Pallister.

The foundation of our democracy is based on the Socratic Method — that is, the search for what is best through open discussion and debate. Sadly, the only public discussion we see from the PC party is from one man — Mr. Pallister.

By expelling Mr. Fletcher from the PC Caucus, Brian Pallister sent a clear message to other MLAs, potential candidates, and all PC members at large: if you want a cabinet position or board appointment, toe the party line, which in this case is a party of one.

Thoughtful Manitobans are appreciative of having a government trying to right many of the wrongs left by the NDP — but in any organization, ideas do matter — and discussion and debate are critical. Sadly, Mr. Pallister is again proving his insecurities are to be feared — debate is to be stymied, only one PC voice matters.

PC party members should ask themselves three questions: did you make the right choice in allowing Mr. Pallister to lead the party? Is he the best we could have as premier? Should discussions proceed towards replacing him before the next election?