Category Archives: in the news

Minimum Wage Changes in Canada

I have come out of retirement to talk minimum wage. Specifically, I want to talk about the Bank of Canada report that everyone is reading and talking about. Just kidding, no one is reading it.  Get settled in because this is going to be a long one.

Here is a link to the report.

With just that link I have done more to give you the details of the report than the major news agencies. Based on most of the stories I believe they read the summary, reworded it for their “article”, wrote a headline that said the minimum wage increase would lead to the loss of 60,000 jobs, tweeted it out and called it a day.

Did you read anything about it today?  Did you read the comments? What percentage of the people read the report? What percentage read beyond the summary?  What about the cover page?

From the cover page:

“Bank of Canada staff analytical notes are short articles that focus on topical issues relevant to the current economic and financial context, produced independently from the Bank’s Governing Council. This work may support or challenge prevailing policy orthodoxy. Therefore, the views expressed in this note are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank.”

Okay fine this is probably just a standard disclaimer but still the BoC was not confident enough in this report to put out a “report” about the topic so they made it an “analyst note”. Also, this analyst note does not appear on their main list of publications when you go to the Bank of Canada website.

This is a very minor point and could be considered nitpicking but now we look at the methods they used to reach the infamous 60,000.

The headline is based on this bullet point from the summary:

Weaker labour demand leads to reduced employment and lower hours worked, although the net impact on labour income is positive. Employment losses amount to about 60,000 workers (hours worked decline by 0.3 per cent), a number that lies in the lower part of the range obtained from a simple accounting exercise (30,000 to 140,000).

This is based on some regression analysis which they elaborate on later in the paper.  Now there is controversy in the world of data about “p-values” but for the purposes of this post I will assume that we can accept the values given in the paper as correct.

Crash course. Regressions are a mathematical tool to determine how much of a change can be attributed to specific factors. Example, how much of the rise in house prices can be attributed to either rising wages, foreign investment or new housing build rate. A simpler example would be how much of a workers wage can be determined by their years of education. The basic rule is if a number is “significant at a 0.05 level” then is likely acceptable as a result.  0.01 level is better and 0.10 level is probably pushing your luck.

Why is this important?  Well we want to look at the results tables from this report. First they run their regression for the effect of minimum wage increase on levels of employment.

Why three different results?  Well first they run it based on what are called SEPH wages which exclude the self-employed and agricultural workers and also exclude salaried workers, Fortin (2010). Then they use SEPH data (no self-employed or agricultural workers) but include salaried workers. Then finally they use LFS data that includes all workers. Ideally you would want to have the triple asterisks beside anything with a meaningful result; double would fine, single is pretty much out and no asterisks is a meaningless number.

What do the numbers mean?  For every 1% increase in minimum wage what percentage does employment rate change.  Negative means jobs lost, positive means jobs gained.  It doesn’t matter what the number if it is not significant at the proper level.

Next step is to try to get some robustness in their number by controlling for sex and education. In this case they tried running it in two separate ways once with all of the age groups separated and then again when all the employment data combined.

See those numbers below “Age 15+”? They have no asterisks. That means when controlling for sex and education and combining all wage data there is no change in the employment rate. That is, 0 jobs lost.

The second bullet point I would like to focus on is something that people against minimum wage can certainly latch onto.

The direct pass-through from a simple reduced-form approach suggests that minimum wages could modestly boost consumer price index (CPI) inflation in 2017, ranging from 0.0 to 0.1 percentage point (pp) and by about 0.1 pp on average in 2018, ranging from 0.0 pp to 0.2 pp. The impact for CPI inflation in 2019 is also likely to be modest, ranging from 0.0 to 0.1 pp.

This is for your friends that say, “higher minimum wage just means higher prices for everyone and it just balances out!” If the National Post was writing the headline on this bullet it would be, “Inflation to Surge 0.3% through 2019 after Minimum Wage Hike”. In reality, the results of the paper are inconclusive on this topic as all the ranges provided include a 0.

So you’ve made it through the regressions, next up, the simulations! Oh the BoC simulations.  The mysterious ToTEM III model was just announced in October 2017 and was used in this paper. Now I have not looked closely at ToTEM III but its predecessors have been used for the monetary policy reports in the past. These are the models they use to make the same prediction every few months, that inflation will return to the 2%, and are wrong almost every time.

The main take away from this is that the simulation says that the added consumption from all these higher paid employees (because they do conclude that labour income will increase) will be offset by a rise in interest rates. The bullet points states:

Consumption would be reduced slightly as the higher inflation would elicit a slight interest rate increase, which would more than offset the higher labour income.

Since their predictions about inflation rates based on this model are consistently incorrect you may take this statement as you wish.

The main takeaway from reading through this article is that the results are not conclusive and it appears that the authors feel the same. Look at the passive language of the final summary bullet:

Potential output should remain unchanged in the short run. Longer-term effects are possible through automation, productivity changes or changes in labour force participation. The sign of these longer-term effects is, however, ambiguous.

This paper will be the basis of 1,000 Facebook posts about hating minimum wage. No one will have read it. I am all for debating the topic but nothing in this paper can be used as conclusive evidence for either side of the topic. It makes for great click-generating headlines but the real conclusions of this paper are, however, ambiguous.

2016 in Review and 2017 Predictions

Another year comes to a close. It is time to review last year’s predictions and make new ones for 2017. As an annual tradition this post is written at the last minute in haste so please forgive any errors.

The biggest predictions talked about the US.  I thought that if Trump went up against Sanders he could win but that Clinton would beat him. I even put money down on Clinton winning last month which was obviously a yuge mistake. I stand by my statement that the Democrats should have run Kerry.

One suggestion was that Obama should go after huge sweeping laws to try and change things like gun control to expose the Republicans as obstructionists. I now realize it would not have mattered because calling out Republicans as hypocrites, liars or anything else simply has no effect.

In Canadian politics the prediction was that the Liberals would need to make some decisions on fighter jets, TPP, ISIS bombing and Syrian refugees. One prediction was that the bid for fighter jets would be opened up but that the F35 would be eligible for the tender.  Instead the Liberals are looking into getting some Super Hornets until they can decide when or how to start the decision process. They should ask Chretien how his helicopters worked out. If Trudeau calls the F35 the Cadillac of jets we are in real trouble.

We allowed Syrian refugees but did not send troops or air power to Syria.

The TPP might be dead in the water with Trump being elected but we did get a trade deal signed with the Euro zone which was a good thing. Trump said he would pull out of the TPP but he is not against completely ignoring what he says when it comes to taking action. He will likely walk back the strength of his anti-TPP rhetoric.

Brexit happened. I didn’t really think that was a possibility but it did happen. Now the UK has to make their article 50 declaration and start the process of leaving the Euro zone. Decades of laws need to be re-written. New trade policy established. It is not going to be pretty.  Many expected there to be some big implosion as soon as the vote happened and then when there were no major market changes took it as a sign that the Brexit was not going to cause any problems. The problems that will be caused by Brexit are much longer term and the cracks will start to show in 2017. The UK will very quickly need to establish the free movement of goods and money to the continent or businesses will start to look to move their supply chains and offices into Europe. Uncertainty is never good for business. Along with the Article 50 declarations they need a very clear roadmap for the transition; without it there will be some serious issues.  Capital will flow out of the country and the pound will start to lose strength.

The inquiry into Missing and Murdered Indigenous Women and Girls has a preliminary report due on November 1st 2017 with a final report due on November 1st, 2018.  It has begun as predicted but we will need to wait for the conclusion to confirm the second part of that prediction that a major cause of this issue is poverty. The inquiry did not expand to include all missing and murdered aboriginal people as was suggested. The budget has been set at $53.8 million. My prediction is that they use up more than three quarters of that budget before the end of the year.

The prediction on pipelines was quite short.  “Pipelines. There will be much talk of pipelines. Many protests. Then some more talking.” Well we have had massive protests, one pipeline approved here in Canada but nothing really resolved. Trump will approve the Keystone XL in 2017.

Let’s do some more 2017 predictions.

First, Trump and US politics.  It is a madhouse down there right now. Trump is said to be unpredictable but really he is very consistent. “Do what is best for Trump and Trump’s family and friends” should be his motto.

There have already been several instances of this but members foreign governments will be encouraged to use/invest in/endorse Trump-owned assets. Hotels, golf courses, etc.

Pull out of any climate talks and claim that the science is not clear on the human effects on the planet.

Continue to take credit for business decisions he had nothing to do with like Ford keeping jobs in the US or Japanese high tech investment.

Announce he is not building a wall and possibly claim he never said that in the first place and instead say he will add to the border patrol budget.

Increase spending across the board without any protest from Republicans about deficits or debt ceilings.

Have to defend himself in court while being president. Republicans will be silent about impeachment.

Threaten China with military action without actually understanding what he is doing.  Example: “If China puts their carriers where we don’t want them then we can sink them.” Then the next day claim he loves China and that people are twisting his words.

2017 is going to be a shitshow in the US.

One positive thing to come out of the election is that Twitter and Facebook are going to start cracking down on fake news. Now like many things the far right wing have taken a term, in this case “fake news”, that applies to their news sources like InfoWars and Breitbart and applied it to ABC, NBC, NYT and real news sites but at least we can get the real junk off people’s Facebook news feeds.

In Canada our dollar is going to have a rough year.  With more interest rate increases in the US and the BoC holding their current level we should see our dollar start to drop even more. The bigger issues is that if bonds continue to move then we could see increases on mortgage rates even without any move by the BoC. With Poloz at the helm the BoC mandate has never been crystal clear. It could be that they welcome a lower Canadian dollar in order to stimulate exports.

The Canadian housing market has been predicted to crash for years now. Every year Toronto and Vancouver continue to have massive price increases.  This could certainly slow down in 2017 with extra taxes in Vancouver but it could be that the problem isn’t all that evil Chinese money flowing in but a lack of housing supply. Canada will begin tracking foreign ownership data this year so we should see some interesting results. Also, it will take a few months for people to find ways around the tax laws like foreigners paying citizens to buy the houses in their names.

As for, it will continue to live on in its 7th year. The low bar of a post a month will continue. Every year I think about all the extra things I am going to add but then I stick with the 1 post a month.

It is said that saying you are going to do something gives a similar satisfaction to actually doing it as long as people are listening. This year I will simply say that my goal is create more and hope it leads to a better website experience for you.

Thanks for reading in 2016, see you next year.

US Election. Money Where My Mouth Is

We have yet to look at the US election here at Webernet and we are not going to do it in any great detail for this post. Also, we have not done any Free Money posts this year so I figured it would be a good idea to combine the two ideas.

First idea was to place a standard bet on Clinton to win. Oh, officially endorses Hillary Clinton.  Bold, I know. Unfortunately most bookies believe that Clinton will win so the odds are only 1.2 for her to win.  That is, only $20 profit on a $100 bet. Not good enough for readers of

Next came a look through other options like by-state bets, total electoral votes etc.  None of the options were both possible and well paying.  The ideal situation would have been the ability to parlay state by state results but no one is offering that option.

Instead, we will work under two assumptions.  One, Clinton will win the election. Two, Clinton winning the election will be good for the US dollar. This means we need to buy some USD.  Now simply going to a bank and asking for some USD is not the best way to make this bet.  Instead we will use Canadian dollars to buy some USD and then use those USD to open a leveraged position in an foreign exchange (FX) trading market.

There were some leftover funds in an FX account used in past Free Money posts and another $200 USD has been added to that total. Because of the way the FX platform works with holding fees we invested $55 and then $190 about 15 mins apart.  The FX pair selected? USA/Canada of course.  Average purchase price, $1.3379. Here is the screenshot of the “portfolio”.

As you see in that image the leverage rate is 400X.  Now we’re talking. 

The take profit level has been set to 1.35. Total investment: $245 USD.  What makes this method more interesting than a standard sports bookie bet?  Risk. The stop loss settings have been limited for the US election so the stop loss has been set to 1.3347.  If the USD drops $0.0032 before it increases $0.0121 against the Loonie then this bet is a total loss. If, instead, it rises $0.0121 first then the total payout will be $877.63 USD.

We deserve at least that much for having to live through this dumpster fire of an election season.



Fox News Falls Into Its Own Trap

A quick note at the end of October here.  I will try to have something more about the US elections before that actual event.

A lot of people get confused when they see the working poor or people below the poverty line in the US voting Republican.  It is often said that these people are voting against their own interests. This thought should be expressed more precisely because they are actually voting against their own economic self interest.  Someone that is poor and likely to have their benefits cut under a Republican government might put more priority on their candidate being against abortion, gun control, gay marriage or any other polarizing social issue.  It should also be said that when you are watching outlets like Fox News you begin to believe that lower taxes for the rich and for corporations is the way to grow the economy even though it has never proven to be true.

Fox News. The echo chamber of the Republican party. Many people find this channel hard to watch because of both implicit and explicit bias it has for all things Republican. This channel has been supporting Trump since his nomination. Yes, Megyn Kelly and Trump got into some arguments and no Chris Wallace didn’t hand him the debate on a silver platter but Fox certainly supports him.  How do they do it?  By simply hating Hillary Clinton so much.  They make every attempt to tear her down.  It is not clear if they have yet realized their mistake.

Trump TV.  There have been a number of stories about Trump starting his own TV channel, Network, streaming service after the election whether he wins or loses.  It is likely, even after the latest email “scandal” from the FBI, that Clinton will win.  After this happens Trump will be bitter but still craving attention.  He will launch some form of media service that caters to his angry set of followers. It is not hard to guess which network stands to lose the most viewers when Trump TV hits the air. Fox News. For years Fox has been convincing people to focus on social issues and politics and to ignore the personal financial repercussions. Now it finds itself in a situation where it has spent so much time focusing on destroying Hillary Clinton and propping up Trump that it didn’t realize it was actually working against its own self interest.

Census 2016 – Not the Government Trying to Oppress You

After filling out my 2016 census online I remembered how much traffic an old post had gotten during the 2011 census.  All of the traffic came from a similar set of search terms. Some examples from this year:


So you can see there is a theme.  I had to update my original post talking about the penalty for not filling out the forms because the government changed the link.  Also, they make the penalty rather hard to find so I thought it would be a good public service.  Feel free to read through the comment section there to really get a good idea as to the mindset of the people reading and posting comments.   For the record the penalty (that has never been applied) for not filling out the 2016 census reads like this:

“guilty of an offence and liable on summary conviction to a fine not exceeding five hundred dollars or to imprisonment for a term not exceeding three months or to both.”

There are many things that a government does that are questionable.  If they were spying on your location and listening to your phone calls all the time then there are major concerns.  This is not the same thing.  This is trying to use your infrastructure dollars more efficiently.  Roads, sewers, doctors, fire services, etc. are all influenced by the census data.  The government is already inefficient enough, there is no need to hinder this part of their work.

If it makes the doubters feel better, this data is extremely hard to get a look at.  There is a question on the census that allows easier access to historians 92 years from now for a reason. This is not just some database that you can google and grab personal data out of.  Even researchers have to submit an application that contains a literature review and research goal to StatsCan just to get access to the single terminal that might exist on a university campus.  There are rules about what you are allowed to have with you when you look at the data and what you can take away with you.  On top of that the data is all reworked as to be completely anonymous. If there are too few people in some subset of data then it is coded.  For example, if they were using income brackets that were $20,000 – $40,000  and $40,000 – $60,000 and kept going up like that they wouldn’t use something like $10,000,000 – $10,020,000 because that subset would have too few people in it and you might be able to combine the information and then figure out who the person was (Then you would know if they spoke French or not!). StatsCan would just set some cutoff and top code it by saying $500,000+ to ensure there was enough people in the subset to make it impossible to identify any individual.

Short post today because I am just getting back into it after the website hack which was supremely aggravating.

If you have not already, go do your census.

The Liberal Middle Class Tax Cut

The National Post today cited a study about the new Liberal “tax cuts for the middle class”.  This study apparently concluded that people with a high income will see a greater benefit from the tax cuts than the people in the targeted income bracket. I have not read the study but I believe I can re-create the incredible insights discerned after what I am sure was hundreds of hours of research and primary source investigation.

Here are the federal tax brackets in 2015:

  • 15% on the first $44,701 of taxable income, +
  • 22% on the next $44,700 of taxable income (on the portion of taxable income over $44,701 up to $89,401),+
  • 26% on the next $49,185 of taxable income (on the portion of taxable income over $89,401 up to $138,586), +
  • 29% of taxable income over $138,586.

If you have a job making $44,701 you pay 15% on your salary. If  you then get a raise to $54,701 you don’t get “bumped to a higher tax bracket” as people like to say.  You pay 15% on the $44,701 and then 22% on the last $10,000.

So now let’s look at another example using the tax rate change.

Before the Tax Rate Change:

Person 1: Salary of $50,000. They pay 15% on $44,701 and then 22% on $5,299 for a total of $7870.93 paid in Taxes.

Person 2: Salary of $95,000. They pay 15% on $44,701,  22% on the next $44,700 and then 26% on the remaining $5,599 for a total of $17,994.89 in taxes.

After the Tax Rate Change 

We will use the same income ranges to make comparisons easier.  They will shift a bit in the new plan but the effect will be the same.

Person 1: Salary of $50,000. They pay 15% on $44,701 and then 20.5% on $5,299 for a total of $7791.45 paid in Taxes.

Person 2: Salary of $95,000. They pay 15% on $44,701,  20.5% on the next $44,700 and then 26% on the remaining $5,599 for a total of $17,324.39 in taxes.

So Person 1 has saved $79.49 a year while Person 2 has saved $670.50.

Anyone above $89,401 will get this $670 benefit. So they will be ahead unless they are above $200,000 where the new 33% bracket is being created.

So, if you make above $89,401 but below $200,000 (what the Liberals call middle class) then you will be getting a greater benefit than someone making less than you just like anyone in the $44,700 to $89,401 bracket will benefit more than anyone that that makes even a single dollar less than them.

The Liberals have not changed their plan. This was always what they said they would do under the name “middle class tax cuts”.  Interesting fact, median income in Canada in 2013 was $32,020.

Feel free to cite this study.

Canadian Federal Election 2015 – Who to vote for.

Tomorrow is election day here in Canada!  This would not be much of current events site if the election passed and no endorsements had been given out.  Today we decide which party is the least bad choice to run Canada for the next four years.


I am now going to review the work of the Conservatives over the last 10 years or so focusing on their time with a majority. I will then read through the platforms of the two other major parties and write my thoughts as they come. Finally, I will post this with no real editing as there is very little time left today and this is already going to be a long process.  Please forgive the inevitable errors in the below text.

Incumbent: Conservative Party of Canada  cpoc-logo

Here is their platform.

The thing about being the incumbent, especially when you have been in power for 10 years, is that any promises of spending or big projects ring hollow.  If there has been no movement toward a program in the last 10 years why should we believe that anything will change if you are re-elected.

It is also important to understand that the incumbent will be the easiest to criticize because they have time in power to judge rather than just a set of goals and plans.

The Good

Cutting the GST by 2% – This one was a monster. In 2006 the Conservatives knocked 2% off the GST(now harmonized to HST in many provinces). Every point of GST adds an estimated $7-9 billion to the government coffers.  GST was a regressive tax, meaning it had a larger effect on lower income earners.

It was the Mulroney Conservatives that introduced the GST during a recession.  Inflation went to 7%, unemployment to 12% and the conservative party was almost entirely destroyed – they held on to 2 seats. Liberals ran on a platform that included killing the GST but after winning the election, kept it in place.

Tax Free Savings Accounts – People often overlook how big a deal the TFSA was when introduced. Originally $5,000 a year, now $10,000.  Allows an easy savings alternative to Canadians without all the tax headaches of RRSPs.  Money invested with your TFSA gains interest tax free and you can take it out during retirement tax free.  A properly conservative concept implemented perfectly.

Financial Crisis – The other parties have talked a lot about our deficits but the Conservatives did exactly what you were supposed to do in tough economic times as a government.  They were spending. There are dozens of countries that followed the “tighten your belt” mantra with terrible outcomes.  Governments are not households. This was exactly the right move and Canada did well during the aftermath of the 2008 crash as a result.

Overall Tax LevelsFrom the Parliamentary Budget Office who everyone accuses Harper of hating:

In total, cumulative changes have reduced federal tax revenue by $30 billion, or 12 per cent. These changes have been progressive, overall. Low- and middle-income earners have benefited more, in relative terms, than higher income earners.”

 The Bad

Balanced budget obsession –  The conservatives hung their hat on a commitment to  balance the budget. They did everything they had to including asset sales to bring in a balanced budget on time. Again, governments are not households.  They can run deficits for longer periods of time without as much worry. With borrowing rates at historic lows their obsession over a balanced budget seems more like good politics than good governance.

Insisting we are not in a recession when we are. Everyone except Joe Oliver knows that we had two quarters of what the economists like to call negative growth. Non-economists sometimes call this shrinking.

Icebreakers – In 2005 the conservatives promised that if they were elected they would purchase 3 heavy icebreakers so that Canada military and science teams could operate effectively in the Arctic.  In 2007 that dropped to 6-8 patrol boats and 1 ice breaker.  To date we have 0 new icebreakers. Currently our largest icebreaker is about 60 years old.

Mapping the sea floor in the arctic is important because those maps are used in international resource agreements.  If there are resources in the arctic we need those maps to stake a claim.  Even if you are against Arctic resource extraction you would have to agree that it is better for Canada to have those rights rather than Russia.

Painting everything in black and white – The conservative party thinks people are apathetic (they are right) and dumb (they are wrong) so they like to present their ideas in a black and white terms. When suggestions are made that nuance exists in an argument, they are dismissed.

“can either stand with us or with the child pornographers.” – Vic Toews, Public Safety Minister talking about a bill that would require telecom companies to give up identifying information on clients if asked by the police.

Tough on Crime – Mandatory minimum sentences are a terrible idea.  In 2004 the Conservatives ran an ad that said Paul Martin was not tough enough on crime and so he supported child pornagraphers.

G20 Summit – A billion dollars.  Fake lakes, gazebos, illegal arrests, police brutality.

Killing the Long Form Census – A terrible idea.  At the time Tony Clement (Industry Minister) stated this action was backed by StatsCan.  The head of StatsCan resigned in protest.

C51 – Broadly worded, poorly thought out, dangerous legislation.

Not answering questions in question period – This is more a problem with our entire political system but it is the conservatives that take advantage of the fact that there is nothing that actually forces you to answer questions in the House of Commons. You can just simply say whatever you want.   

Only watch that video if you want to get angry about how useless the question period actually is. All that heckling,yelling and stomping makes them all look like a bunch of idiot children.

Mike Duffy – “My friends knew about the bribe,  my senior advisors knew about the bribe, they all talked about me knowing about the bribe but I had no idea.” – Stephen Harper (not a real quotation)

Omnibus Bills – How do you get through legislation that no one wants?  Attach it to a budget!  That way if the opposition parties vote it down it was THEM that called the election, not you.  Shitty governance and smart but shitty politics.

Climate – Canada needs to do more here.  The conservatives didn’t have to come right out and say that climate change is real because I know they love their oil patches but they could have at least not been totally against the thought of looking into it.


F35 Program – Love them or hate them Canada needs new fighters if we want to play at the international level.  Here is the post in support of the program during the 2011 election but since the process has been shrouded in secrecy and lies it goes into the neutral pile.

Canadian Wheat Board AbolitionJury is still out on this one. Read my 2012 post about it. 

Trans Pacific Partnership – We do not have the full text of this deal yet.  This is a massive international trade agreement.  It goes ahead with or without Canada so it is important that we had a seat at the table.  The secrecy around this whole process is very concerning.

Income Splitting – This does nothing for me but if you are a married couple and one partner makes a lot more than the other then I guess you will like this.

 The Challengers 

It is much more difficult to do this list on the challengers. I will use their platforms as the basis for the lists but anything they have said is fair game. Platforms are tough because lots of the ideas are nice to think about but they are often paid for by “closing loopholes” or some other vague notion of revenue generation.  If there is a change of governing expect a 1.5 month delay between the when they take power and the announcement of Oh the other guys left it way worse than we thought it was. And that is the queue to start reneging on election promises.

Since there are always things like more jobs! Kickstart the economy! Better Healthcare! in all of the platforms we will try to stick with ideas that are unique to a party.


Challenger #1: New Democratic Party (NDP) ndp_logo

Here is their platform.

Riding a wave of Anti-Bloc Quebecois sentiment during the last election the NDP managed to become the official opposition. This surprised everyone, even the NDP.  This time they believe they can win. Let’s take a look at their platform.

The Good 

Youth Unemployment – “Create 40,000 jobs and co-op placements and internships for youth.”  Youth unemployment is north of 10% so this is a good idea.  Although if a government could just create 40,000 jobs out of nowhere I assume they would have tried by now.  Also, why not just create more jobs all around? This squeaks into the good pile.

5 extra weeks of parental Leave – New parents get 9 months right now, what’s another 5 weeks?

Small Business Tax – Cutting from 11% to 9%.  Very un-NDP of them.  A good idea.

Repealing Bill C-51 – Good idea. Something needs to be created to replace it but this is not good legislation.

Simplify access to government export services – This is rather vague but it is a good idea.

Reinvesting in the Canadian Space Agency – Great idea.

Introduce Green Bonds – Surprised I had not heard of this until now.  This is a good idea.  It sounds like private venture capital going into green projects.

Phasing out interest on all federal student loans – A good idea but it could be argued that with lower (no) interest rates people would qualify for more funds on their loans which universities will realize and raise their tuition rates.  Why not introduce education bonds?  People can buy bonds at low interest rates that fund student loans. No federal government needed.

Bill C-475 – Although I think it is corporate suicide these days to try to cover up a data breach this law would make it illegal as well.

Office of the Parliamentary Science Officer – A new position to “to ensure that parliamentarians have the best possible access to science-based analysis.”  Sounds good.

The Bad 

Restoring Home Mail Delivery –  Bad idea.  Many communities have been using super boxes for years.  If they do bring it back maybe they can reduce the number of delivery days so you get all your crappy fliers on just Tuesday and Fridays.

Returning the retirement age from 67 to 65 – People are living much longer, a two year increase makes sense.

TPP – NDP is against the TPP in its current form.  Although they have not read it.  Canada has to be a part of it. This is straight up pandering to their union supporters.  There is no doubt the NDP would be fiercely protectionist in any trade deal.  Protectionism rarely works.

Directing the CRTC to crack down on excessive cell phone roaming charges –  this is a really good campaign idea in 2007.

Bank Fees – “Cracking down on excessive ATM fees and ensuring Canadians can access a low-interest credit card.”  Hard to be against this. Wording is strange here though.  “a low-interest credit card”?  Just one? Like a government credit card company?  why not “access to low-interest credit cards”?  Having read further it appears they will make sure there are “no frills” credit cards with prime +5% interest rates available.  Not sure what the market for these looks like. People that have good enough credit for a prime+5% credit card would probably just use a line of credit.  Also why 5%?  Why not 4 or 6?

Further in the details they have a graph that shows household debt and how horrible it is. So they want to give people low interest credit cards to help with excessive debt?  This just got bumped to bad idea.

TFSA Rollback – They will reverse the increase from $5k to $10k a year on the TFSA.  Yes, it likely benefits the rich the most but it is still the best way for any Canadian to save for retirement.

Using the US as a measure for corporate tax rates – Most of the big corporations have billions of dollars in offshore companies in Ireland or other low tax jurisdictions because the taxes are so high in the US.  Saying we will raise taxes because we would  still be below the US is nonsensical argument.

Immediately moving to restore the long-form census – No brainer.

General Spending – Hard to separate out the billion and billion of dollars that they have listed in this document.  There is no way they could implement all of this and still go after their promised balanced budget.  More healthcare, more military, more schools, cheaper school,  more infrastructure, more money for women’s right, more funds for aboriginals, more foreign aid. Something will have to give. With all this new spending here are the projections for debt to GDP ratio under an NDP.

ndp fiscal plan


$15 a day child care – Child care is expensive.  It is a massive burden on families that want to continue to have both parents work full-time. This is a good idea but it is expensive.  It would probably go into the good category as idea on its own but people without kids subsidize people that do so it gets a neutral.

$15 Federal Minimum Wage – A good idea but it gets bumped to neutral because of their dishonest representation of it.  They are fully allowing people to think it will be an across the board $15 minimum wage but it only applies to federal workers.   Real minimum wages are implemented by the provinces.

2,500 new police officers – They specifically mention the RCMP.  The RCMP is already having problems getting quality candidates.  They have thousands of open slots they are trying to fill, adding 2,500 more won’t help anything.  I like the sentiment though so Neutral.

Review the F35They claim that they will review the process but I think that once they get into it they will realize this is the only option.  It would be a mistake start a whole new procurement process.

Challenger #2: Liberal PartyLibLogo

Here is their Platform

After losing power and then failing to maintain its position even as the official opposition the Liberal party thinks they have a shot at a majority with their new leader.

 The Good 

Tax Cuts – People making between $44,700 and $89,401 a year will get a 1.5% tax cut.

Jobs for young people – Sure.  Same as the NDP. Whatever trick they do to create these jobs they should definitely try the same trick for non-young people.

Removing all GST on new capital investments in affordable rental housing – Had not heard of this one until now.  This is a sensible approach. Incentivize the market, don’t direct it.

Immediately restore the mandatory long-form census – No brainer.

Infrastructure Spending – The announcement of a massive increase in infrastructure spending by the Liberals and an acknowledgement of their planned deficits was a turning point in the election.  It was the first major differentiator between the NDP and Liberals.   Good idea.

Infrastructure Bank – Along the same theme as the previous point obviously.  This is a good idea.  Maybe my city can fix some extra potholes with some low cost loans.

Flexible parental benefits – Allow parents to take parental leave in smaller chunks rather than all at once.  Good idea.

Eliminate the First past the post system – Great idea. My post on it here.  This one will be tricky but worth doing.  It is also in the best interest of the Liberals and NDP as it would eliminate the split vote problem they have when battling a united political right.

Reform the House Had not heard of this one until now.  It is a great idea.

  •  A question period directly for the Prime Minister and accountability to actually answer questions.
  • Free votes in the Liberal caucus outside of election promises and confidence votes. This one could be abused when they warp was is and is not an election promise.
  •    No more omnibus bills.

Chief Science Officer – Like the NDP, this is a good idea.

Marijuana – Legalize it, regulate it, tax it.  Money to be made on taxes. Money to be saved on law enforcement and jails.  This should have been done years ago.

 The Bad 

Tax IncreasePeople making over $200,000 will pay an extra 4%. The effective marginal tax rate on someone making $200,000 is currently 47.97%.  With this increase it will be 51.97%.  So for every dollar this person makes over $200,00 they keep 48 cents.  Not sure that works to “bring back fairness

Returning the retirement age from 67 to 65 – Like the NDP. People are living much longer, a two year increase makes sense.

General Spending – Similar to the NDP.  More education, more jobs, less poverty, more money for mental health, transit, etc, etc.  Just more money all around.  Not well costed although the weed tax could be a new revenue source.

Tax Benefit for Teachers for School Supplies – Terrible idea.  You are subsidizing individual purchases of school supplies where massive volume discounts could be taken advantage of.  This is essentially giving a free pass to inefficient school boards that don’t buy enough school supplies. If you want more supplies in schools, give the money to the schools.

This is also the perfect program for fraud.  Teachers are the group that claim that they need to have their sick days paid out because otherwise all the teachers would fake being sick to get the days off.  There is no doubt in my mind that teachers would use this tax credit inappropriately.  AND it’s a refundable credit. Do I need a new category for extra bad idea?

Save home mail delivery – Same as the NDP. I don’t want to pay millions of dollars for government workers to deliver flyers and junk mail daily. Bad idea.

F-35 – My post from 2011 on F35s here. The Liberals must have short memories.  When they came to power after Mulroney they kept an election promise to cancel the purchase of new helicopters to replace our aging fleet of Sea Kings.  The cancellation cost $500 million dollars in 1993.  Equivalent to about $740 million now.  They said they would get a better deal somewhere else with an bid process.  Sound familiar?  We still don’t have replacement helicopters.  Canceling these jets would be a mistake.  This one alone is almost a show stopper for me because the Liberals should know better.

One more thing. This case is a bit different because we have not yet committed to buy any F-35s, we simply agreed to pay for some of the development.  This means that we should not see any massive cancellation fees. The strange part  is that the new “open bid” process will not include the F35 as a possible candidate. It makes no sense.


Income Splitting – Liberals will repeal this. Again, this does nothing for me but if you are a married couple and one partner makes a lot more than the other then you will not like this change. The difference from the NDP here is that they will not end this program for seniors.

Increase the maximum Canada Student Grant – This is for low income families.  an extra $3k a year in grants, not loans.  This is a good idea but does not solve the larger issue of the cost of education so it gets neutral.

Carbon Market – This is a dangerous one.  Yes it is good that we put a price on carbon. The main problem arises if we are the only ones that do it.  Then all of our industries are paying extra and we lose our competitiveness internationally.  Neutral.  If we go to the Paris climate talks with a good plan and everyone else agrees then we can safely move this to a good idea.

C-51 – Supported Harper on bill C-51 but now says that he will repeal the worst parts of it. We shall see.

 Conclusion and Endorsement: 

In Canada we don’t vote for a Leader, we vote for a local party member but really we are voting for a party.  However, the elections races always focus so heavily on the leaders it is hard to put it out of our mind.  Am I choosing between Harper, Mulcair and Trudeau or Conservative, NDP and Liberal?  This year I have to believe I am voting for a party because none of the leaders appeal to me.

The Conservative party has lost it’s  way.  They are not even clear what their objectives are anymore. People want fiscal conservatism not social cynicism.  They lie, cheat and steal but worse they wreck Canada’s image abroad.  Historic lows on foreign aid, sabotaging climate talks and cold relations with our closest allies.

They also made a massive political error not following the Liberals’ move to the left during this election. The Liberals were so far left all the Conservatives had to do was move to the middle and they could have held on.  Conservatives are out.

To steal a line from the Joker, I think if the NDP got a majority they wouldn’t know what to do with it. Their platform is not solid.  Their tendency toward protectionism is economic suicide. I just don’t see how they can spend everything they have planned.  Also, I don’t trust them to keep costs low in the long run.  I think they will buckle under union pressure; both public sector and manufacturing leading to increased fixed costs and hurt our international competitiveness.  NDP is out.

So this has been a long day of reading and comparing. I now find myself rocking back and forth in my chair repeating to myself that I vote for parties, not leaders.  I think Justin Trudeau was the right person to add a little energy to a stagnant party but I don’t think he was the right choice to lead a ruling party.

When I watch the debates I can’t stand his breathless speaking style.  They have coached him so much that he can barely speak. His canned responses come so rapid fire that he can barely finish one before he moves to the next.

I cannot picture him sitting across a table from Vladimir Putin.

Here is a clip of him telling Peter Kent he is a piece of shit in the House of Commons.

Here is a clip of him throwing himself down a set of stairs, as a gag.

Both of these clips were when he had his terrible mustache which he no longer has. So there’s that.  I am the last person to say that a person need be historically perfect to run for office but that first clip is IN the house of commons. Not exactly a crazy night out with university buddies.

My hope is that the team he had around him will force him to grow into a proper leader with a distinct personality.  My fear is that he will regress to leftist populism and run this country into the ground like Wynne in Ontario.

So based on the promises of House of Commons reform, infrastructure spending, legalizing weed, and eliminating the first-past the post system it is with a heavy heart that I give the official Webernet endorsement to the Liberal Party.

Bank of Canada Interest Rate Decision – September 2015 Edition.

Bank of Canada kept their target overnight rate at 0.5% this week.  Judging by the forex market reactions, this came as a surprise to some.   We have looked at the uncertain behavior of Poloz as governor in the past and now we are seeing the consequences.   When he surprised the market with a rate drop earlier this year he changed the way people thought about the BoC.  Our central bank was always very clear about its intentions and so the rate announcement days were always more of a formality to announce what everyone knew was coming.  Now, because of this surprise it is going to take years for people to once again trust or think they understand what the BoC is doing.

 On the BoC website they list four major responsibilities:

  • Monetary policy: The Bank influences the supply of money circulating in the economy, using its monetary policy framework to keep inflation low and stable.
  • Financial system: The Bank promotes safe, sound and efficient financial systems, within Canada and internationally, and conducts transactions in financial markets in support of these objectives.
  • Currency: The Bank designs, issues and distributes Canada’s bank notes.
  • Funds Management: The Bank is the “fiscal agent” for the Government of Canada, managing its public debt programs and foreign exchange reserves.

For years this meant that any actions they took regarding interest rates were almost purely to control inflation. They had many public statements that the Canadian dollar was free to float and that they would not participate in currency manipulation.

Now we are in a new situation.   The reasons for lowering interest rates do not appear to be quite as clear.  Poloz spoke many times about taking out “insurance” against a slow economy and that lower interest rates were required to combat low oil prices.  These are not direct inflation issues.  Is there an argument to be made that inflation would become a problem as a result of these situations if nothing had been done?

The drop in oil prices was caused not only by a high and regular supply but also by a massive drop in demand.  With less people wanting to buy the oil we produce, there is less demand for Canadian dollars to buy that oil.  This devalues our currency.  This is why when oil prices drop drivers in Canada do not see large drops in prices at the pump; barrels of crude are priced in US dollars.  Lowering the target overnight interest rate also devalues our currency.  So we get two forces acting to push our dollar down.

We have seen over the last year that our dollar lost about 30% of its values versus the USD.  This would mean that any goods that we import become more expensive while anything we export becomes cheaper for outsiders to buy.  Have you noticed that most of the things you buy online are not that great a deal anymore?  That is our weak dollar at work.  However, these increased prices for online goods are likely not included in the basket of goods that are used to calculate inflation.   Any imported food however would be more expensive and would be included in CPI, although not core, inflation. So perhaps that was the plan.  Increase the prices of consumer goods through currency devaluation to push inflation a bit higher since it was slightly below target.

More likely, the rate cuts were targeted at companies that make most of their income in USD or foreign currency.  Any company that makes money internationally but has Canadian employees got a 30% discount on their labour costs this year.  (Did you feel that pay cut?  They were pretty quiet about it.) This is good for the economy as it keeps people employed.

It is safe to say that the actions of the BoC fall more in line with the original Bank of Canada act who’s preamble reads:

WHEREAS it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada;

Using the BoC powers to promote the economic and financial welfare of Canada is fine but until Poloz and the rest of the board start making their intentions clear we will continue to see uncertainty on the exchange markets. This is good for forex traders but should be rather embarrassing for a central bank.

Omar Khadr’s Release on Bail

If Omar Khadr had not been captured by American forces in Afghanistan in 2002 as a 15 year old there is little doubt in my mind he would have ended up as an adult member of Al-Qaeda, ISIL or some other radical Islamic group.  But he was captured and so for the next decade of his life he was detained without charges, tortured and denied a proper day in court.   Now that he is back in Canada and we are trying to give him some semblance of a fair trial we have the government fighting it at every step.  I really expect nothing less from a government that seems to like to speak about complex topics as being black and white.   Don’t like the government seeing everything you do online?  You must the a child pornographer.  Are you an industry leading technology CEO that doesn’t like bill C-51? You are unpatriotic and should reconsider your business model.   You want a Canadian citizen to have a fair trial after years of legal, psychological and physical abuse?  You are a bleeding heart liberal that supports murdering terrorists. Any suggestion to an MP that there might be more complexity to a topic is laughed off with a well rehearsed smirk,  Whatever offended you is of course not what I meant.  It is beyond imagining that anyone could have interpreted it that way. Then on to the next topic.

Omar Khadr was considered a young offender under Canadian law when he is accused of the crimes in question. The tribunal in Gitmo was ruled unconstitutional by the US Supreme court and so the US government then re-wrote their already insanely re-written rules to include new laws that Khadr would be guilty of. After the fact. Child soldier, witness statements that claimed the person that threw the grenade was killed in the fight that were later changed to say the person was just wounded, torture, illegal courts, retroactive law. Any one of these is enough for an appeal and probably an acquittal under Canadian law and yet we have the government fighting relentlessly to keep this man in jail. This is after leaving him to be tortured in Gitmo and using CSIS to extract information from him after he had been subjected to sleep deprivation techniques.

There are three scenarios where this type of reaction can make sense.

  1. The government wants to stick to its tough on crime/terror image so they maintain their talking points and position no matter what the facts say.  It is a political play rather than a value judgment. Disgusting, but understandable.
  2. They are not smart people and genuinely see every issue in black and white.  In their minds this truly is the right thing to do or say.
  3. They have access to information that we do not that makes this issue clear cut in their minds. They choose not to share this information with the public. Or the courts.

Omar Khadr was a bad person.  We do not know if he is still a bad person.  Even though the current government would like you to believe otherwise, the Canadian justice system is about rehabilitation, not punishment. Especially for young offenders. It is right that he be given a chance to prove himself a productive citizen.

The Cost of University Tuition in Ontario 2015

03/25/2015 Update: Corrected calculations appear at the end.

Today we look at how much it costs to go to university in Ontario. This topic is frequently in the news and student organizations are always trying to bring attention to the topic. Typically we hear about how much it has gone up since some period in the past or how it ranks compared to other provinces. Today we try to answer a seemingly straightforward question. How much is tuition in Ontario? We are not talking about housing, food, books or booze budgets; we are simply looking at fees paid to the school. This is a numbers post.  There will be no exploration of the value of school or fairness of tuition levels.

I will use one of my old stomping grounds as a starting point, the University of Western Ontario. Undergraduate tuition + fees for a science degree totals $7,296.93 a year for a Canadian citizen.

Of this, $5,975 is actually tuition. The rest is for student organizations, building endowment, etc.

Over four years this means the total amount paid is: $29,188. $23,900 is actually tuition.

Undergraduates in Ontario get a yearly refund from the government equal to 30% of their tuition. This does not include the fees. This refund is therefore $1,792 a year or $7,170 over 4 years.

With this 30% grant the total paid, including fees, over 4 years is $22,018 or $5,504 a year.

Now we can deal with the tax credits which are where there are some options. When you are going to school you can deduct $65 a month for books and $400 a month for living expenses for a maximum of 8 months a year. That is $3,720 a year or $14,880 over 4 years. You can also deduct your tuition, excluding fees.

This means that a university graduate can store up $38,780 in tax deductions over their four years.

Assume the student decides to pay their student loan off over 7 years at 5%. The interest on the loan is also tax deductible. We’ll only take first 5 years of interest deductions in to account here so the real world benefit would actually be a bit higher.

You pay a total of $4,026 in interest on the initial loan. So our total deduction over the 5 years following graduation is (education deductions + interest deductions):


You can use all of these credits while you are in school or you can carry them over until you graduate. The smart student holds them all until they graduate and they are making more money and therefore have a higher marginal tax rate. The benefits to holding these credits depend on how much you make in the 5 years after you graduate. The average university graduate starting wage in Canada is around $50k. Assume the graduate uses equal parts of their deductions each year. They could probably benefit more if they waited until the later years when they were making the most but we will keep it easy. Let’s look a few different scenarios.


Now if you were to save up before hand and pay the tuition as it came up you would no longer have the student loan. This means no interest to pay or deduct.


We have done some quick calculations that show what a person ends up paying to a school for their education.  So now if you want to have a conversation about the fairness of tuition levels you have some numbers to work it.


As pointed out in the comments the minimum tax rate is used to calculate refunds rather than the marginal rate.  The provincial book and educations amounts are also slightly different at $156 and $520.

This gives us $43,650 total provincial deductions at 5.05% refund and $36,898 total federal deductions at 15% for a total of $7,739 in refunds if you take no loans.

Interest is $4,123 for $22,018 at 5% for 7 years. So with loans we have $47,676 total provincial deductions at 5.05% refund and $40,924 total federal deductions at 15% for a total of $8,566 in refunds.

So total per year is:

$3569 without loans

$4394 with loans