Education in the 2016 Ontario Budget

The Ontario government’s new budget is something we could talk about at some length but today we are going to focus on one element of it and keep this post extremely short. The government will now provide grants for students from low to middle income households to attend college and university. The grants should allow students to finish school without massive student loans. This should also increase the total number of people that have the opportunity for a post secondary education. The idea here is a good one; more people with a higher education level is a good thing.  However, the changes required to make this a reality should be larger scale and more transformative.

Currently most students will go through a publicly funded elementary school, run by the government, and then to a publicly funded secondary school also run by the government. If they qualify, they will then pay to go to a privately run, heavily government funded, college or university. With the changes coming in the budget the government wants more people going to post secondary schools, will pay for it, but won’t run the schools. Tuition levels will be set my private institutions but are guaranteed to be paid with public funds. This is already the case but with these changes every school has the incentive to push their tuition even higher as taxpayers will be covering more of the costs. These institutions are run for profit, after all.

If we want all children to have an equal opportunity at post secondary then make it part of the standard educational progress of a student. Make Universities publicly funded and operated as an optional 4 year extension to the current K-12 system. Once students complete their K-12 +4 they would be able to pay private institutions for masters levels and beyond.

It is a rather simple idea with massive implications so please feel free to comment.

2015 in Review and Look Ahead to 2016.

So this year in review is a little late but here it is.

Last year I didn’t make many predictions for 2015. First one was that I had assumed that we would see a small rise in the overnight rate. The BoC shocked everyone this year by dropping rates twice. The BoC is still trying to settle in on a solid policy. They are supposed to monitor and react to inflation but in their statements they have claimed they needed to take out “insurance” against low oil prices. Well we have low oil prices, which is bad for the Canadian dollar and we have a low interest rate, which is bad for the Canadian dollar. This would seem to indicate that the BoC does not care about the strength of the Canadian dollar. Which is fine because it is not supposed to.

Leading up to the rate announcement this month there were murmurs of negative interest rates and another rate cut, Half of all economists surveyed believed another rate cut was coming. Poloz said the BoC has certainly been watching the negative rates in Europe. The BoC kept their rates steady and then in their next statement said that a rate rise was possible because the rapid drop in the Canadian dollar could be leading to higher than expected inflation. As has been mentioned a few times on this site, the BoC needs to greatly increase its communication and clarity. Constantly surprising the market is a terrible way for a central bank to operate.

As for predictions. Inflation is creeping up again.  At 1.6% CPI and 1.9% core we are still in the safe zone. I think with the Canadian dollar so weak there is some political pressure to raise the rates to try to get some strength back in the Loonie but that is not supposed to be the BoC’s job.

I know what you are thinking to yourself right now.  Hey, where did the articles on Free Money go? To be perfectly honest I got bored holding long term stocks so I starting the equivalent of gambling with the money. Taking extremely high risk positions and lost of some the money. At that point the experiment was kind of ruined so I stopped doing it. If something should appear for a new experiment this year the Free Money posts will resume. If you have any suggestions, please send them in.

South of the border the American election is heating up. They don’t really ever take a break down there when it comes to the political hype cycle. Last year I thought Obama should spend his time going after huge problems on a regular basis so that the Republicans wouldn’t have time to generate their false outrage properly in each case. The immigration bill was a good example. I expect to see something big on gun control before November. I also fully expect it to be blocked by Republicans who get lots and lots of money from the gun lobby. Oh, they are going to cure cancer. In general.

As for the election. The circus that is the Republican party continues. Donald Trump seems be leading the polls which is interesting. Even if he wins the nomination I don’t think he has a real chance  of winning a general election. Unfortunately that leaves Ted Cruz as the “reasonable” candidate. Last election he was considered one of the crazies.  Also, he is pretty much just a liar.  

So that means that Bush makes the most sense if you want someone less crazy than the rest of them. I am not sure what they are going to do. Americans love freedom and democracy and hate monarchies. How could they possibly justify electing three people from the same household as president? It’s funny to talk about how crazy everything is in US politics right now but it is actually more sad than anything.

On the Democratic side we have Clinton and Sanders. Clinton who is being investigated for using a personal email server while Secretary of State. A act that demonstrates a lack of good judgment because it wasn’t a gaffe at a speaking engagement or a poor decision made in the heat of the moment. It was ongoing and obviously wrong over a long period of time.

Sanders  looks like a hardcore socialist because the rest of American politics has swung so far right. He believes healthcare could be cheaper with a single payer system and that people could all get the coverage they need. He believes education should not bankrupt you and that 1% should not own 99% of the wealth.  COMMIE!

It would be interesting to see him in an election against Trump. As soon as Trump got the Republican nomination he could easily change his tactics to appear more moderate. This would sway some people away from what they see as the crazy old socialist Sanders. In a Trump vs. Sanders election, Trump could win. My vote for the Democrats would actually be John Kerry but that is not going to happen.

Canadian politics will be much less exciting this year as the Liberals are still in photo op mode. The Conservatives left Canada with a bigger budget deficit than had been previously reported which is a surprise only to the Conservative party who, in a demonstration of their total lack of self awareness, have criticized the Liberals for their deficit.

The Liberals are going to have to decide some pretty major things in the first year.  TPP, bombing ISIS, new fighter jets, Syrian refugees.

The inquiry into the missing and murdered aboriginal women will likely start and, if it wants to have any credibility at all, will instantly expand to include aboriginal men. (They are far more likely to be victims of unsolved murder). Once it is all over (not this year) we can expect the conclusions to state that poverty was a major contributor to this problem.

The F-35 will be allowed into the bidding on the contract for new jets. The issue will not be resolved this year but I think the decision to let the F-35 into the running will be made.

Alberta stimulus. People in Alberta are going through a hard time because of slumping oil prices. They are the victims of a totally incompetent government that thought that instead of saving money during the boom they would hand out stimulus cash. Stimulus during a boom! Brilliant bit of governing there. Perhaps the Liberals can use some of their planned infrastructure spending as stimulus. A new set of spending will not go over well in the rest of Canada.

Pipelines. There will be much talk of pipelines. Many protests. Then some more talking.

As for this site. You should still see about a post per month. Requests are always welcome. There were no new videos in 2015 so maybe that can be a goal for 2016. Thanks for reading for another year.

Current State of the Canadian Dollar

Last week the US Federal Reserve increased their target overnight lending rate by 0.25%.  This is the first upward move by the Fed since the big financial crisis.  What does this mean for the Canadian dollar?

First, when the interest rate in a country increases relative to other countries then purchasing financial products in that country becomes more attractive.  When more people want to buy things in your country, there is a bigger demand for your currency.  This will drive up the exchange rate in whatever country increased their rate.  The Loonie has already taken a beating with low oil prices and the (correct) speculation that the Fed would make this move at the end of 2015.  With rumours of a further increase in rates by the Fed in 2016, things are not looking good for a Canadian dollar recovery.

Second, oil is priced in US Dollars. All other things being equal, when the US dollar is stronger the price of a barrel of oil is lower.  This is why the Canadian dollar is so sensitive to American currency fluctuations compared to other countries around the world.  We get hit with the interest rate effect but our dollar is also strongly tied to the price of oil in the markets.  On top of that, the US ban on oil exports has ended and the members of OPEC seem to have parted ways.  This means that the price of oil is unlikely to rebound significantly in 2016.

Under those to two effects we are seeing some 11 year lows for the Canadian dollar and we can expect that to be the norm in 2016.  The Bank of Canada has mentioned that negative interest rates would be something they would consider if they believe it will help.  If we moved to negative rates while the US was increasing theirs we would see another drop down below 70 cents USD.

The best case scenario for Canada is that the US economy is actually at the beginning of a strong recovery. Since they buy 75% of our exports, they will be buying more of everything that we make.   That can help our economy and keep our dollar from sliding further.

 

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.

Process:

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.

 Neutral 

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

 Neutral 

$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.

Neutral 

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.

Sluggish Growth and Interest Rates

Canadian growth numbers were released this week and our GDP shrank by 0.1%  in April.  It also shrank in three months before April.  An official recession is when an economy contracts for two quarters in a row. This is bad news for the current government because it means that if we were to go into a recession it would be right about the time there is supposed to be an election call.  The Conservatives can delay calling an election to see if they can get some positive numbers but then the NDP and Liberal will certainly call them out on it. For a government that keeps talking about how strong they have made the economy, it would be a disaster.   This also means that the Bank of Canada could consider dropping its overnight rate again before the year end.

There has been at least one economist interviewed by the National Post saying he believed the BoC would drop from the current target overnight rate of 0.75% to 0.25%.  When we are looking at such low rates we must keep the BoC operating band in mind.  If the BoC wants the overnight rate to be 0.75%, as it does at the moment, then it pays 0.5% on deposits and charges 1% interest on any overnight loans.  This means that no bank would borrow from anywhere else at more than 1% and would not lend to any other bank at less than 0.5% interest.  This creates the desired overnight rate of 0.75% with an operating band of 50 basis points.

If the BoC were to lower its rate by 0.5% (or twice by 0.25%) that would mean it pays 0% on all deposits. That is a pretty drastic step because if you find yourself in need of more stimulus after the 0% lower bound you must move to more quantitative easing or you could follow what the European Central Bank did last year and move into negative interest rates.  Essentially the BoC would penalize any deposits the banks held with them overnight.

So expect another quarter point rate drop before the end of the year unless Stephen Harper gets his wish and we see a nice turn around in the next few months.

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):

$42,806.

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.

tuition_interest

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.

tuition_nointerest

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.

Update/Correction:

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

 

Open Letter to Rogers with My Review of Their Ignite 250u Package.

All Updates will appear at the bottom as they happen.

Hello Rogers,

It has been awhile since I have been a Rogers internet customer.  I remember the terrible customer service on all levels and the inability of any single Rogers employee to resolve an issue on their own. I saw your new internet packages and thought I would switch back from Bell to get the 250u Ignite deal.

After this new experience with your install process I can say that you have taken the period of me being a Bell customer and used that time to truly perfect the art of terrible customer service.

Wednesday March 18th

Technician 1 arrives, plugs the modem into the wall, attaches the coax cable and I ask if this unit has the AC wifi and he says “this one does it all”.  So I specifically ask if it is the top model and he then says no and that this one was just as good.  He then runs out the door before the modem is even booted up.  Modem is the N model.

I run a speed test.  90 down 10 up.  Not the correct speed. So I call into technical support to see what is wrong.

Technician says my connection works fine. He claims the reason that the speed is slow is because the work order on my install has not been completed.  He says he needs to transfer me.  I questions why it would run at half speed in that case. He transfers me to customer service.

I speak with customer service.  She tells me that the work order is complete and after checking a few things and obviously not knowing how to fix the issue says that I need to wait 30 mins after plugging a modem into the wall for it to get to full speed.  I questions why it would need 30 mins to increase the speed and she says to wait 30 minutes and then to call back if it’s not up to speed.  An obvious punt but I am not going to argue because she obviously can’t fix the issue.

I wait the 30 mins, just in case she wasn’t punting me and call into Technical support again.  This technician tells me that there are various types of cat5e cables and that I need to swap out the cable. I correct him by saying that there is only one cat5e and maybe he is confusing cat5e and cat5 but that my cable is in fact cat5e, as required. This obviously goes nowhere and I realize I sound like a jerk even arguing this point and I swap the cable.  No change in the results.  Meanwhile he is insisting that my speed is supposed to be 250/10 and I said that the package is 250/20.  We go back and forth a few times but I know it is going nowhere so I give up.

Time:  73 minutes (not including time technician was at my place since he left so quickly)

 

Thursday March 19th

A tech is scheduled to come to my place again today to look at the lines.  He arrives with his test gear and a laptop and this is good because the first tech had neither of those things.

He tests with his laptop and his special line tester.  Cable looks good. Signal looks good.  Still at 90/10.

Swaps out the modem. Still 90/10

He calls his support line.  They confirm I am on the right package and that there is nothing wrong on their end.

Technician tells me there is nothing wrong with the lines and nothing wrong in the computer and there is nothing else to be done.  He calls his supervisor who tells him to plug the modem power into the wall instead of my power bar.  Same result

He tells me that whenever Rogers releases a new service it is glitchy and that if I just wait awhile then the speed should eventually come up.  Couple of weeks should do it. I mention that the 250 service has been around for months and it is just the Ignite name that is new. He leaves.

I call into technical support.  I tell him everything that has been done to troubleshoot.  They run through all the steps again.  He repeatedly claims I should only have 250/10 and I tell him the package is 250/20 but that it doesn’t matter because I am getting 90/10.  After a while he determines that yes he is going to escalate the issue.  He claims I should get a call in 24-48 hours from a technician.  That is where I am now.

Time: 17 mins + 30-40mins for technician visit. 

As you can see, this would appear to be a perfectly coordinated effort to screw with me and yet I know it isn’t   You have it set up so that each employee can only do one thing and in some cases, they don’t even know how to do it.  I am not going to threaten to cancel because I want the 250 speed and no one else offers it.  I really did expect the bad customer service because I know that you can never call Rogers just once. Anytime you call Rogers for anything you must call at least twice because your agents will screw something up the first time.  I fully expect to have to call back in after the connection speed is fixed to fix my bill.

The best part of this is that you are charging me for this service.  Install and activation fee? Yes please!  I am considering sending you a cheque for $1000 to come to my place and kick me in the balls but we’ll have to conclude this transaction first.

In summary, I expected bad service.  The bad service coupled with the agents that cannot or simply refuse to attempt to resolve the issue was a surprise. You have truly shown the world how being the only game is town allows you to not give a shit about your customer service.  Impressive.

 

Saturday March 21st

Rogers attempted to help through twitter yesterday.

rogers_twitter

The image is poorly shopped to fit all the messages.  I only cut out my my phone number.

So yes you were so concerned about my tweet that you wanted to know the problem.  Although you didn’t read the tweet because it has all the details (this post).

I did get a call while I was in a meeting at work yesterday.  Perhaps it was a Rogers rep?  No message was left and no one called back.

It is now Saturday at 9 am. Current status:

rogersspeed_mar20

I expect that anyone that can fix this issue is probably off for the weekend.

Sunday March 22nd

I received a tweet from RogersHelps yesterday telling me that someone had left me a voice mail on Friday. To check I actually dialed into my voice mail box which I had not done in a year or two.  Normally any voice mails I gets are sent to me as text with an audio clip attached.  When I remembered my password and logged into my mail box there was a message from the “Office of the President” (OP) there.  So the reason I didn’t get the voice mail was because my Rogers  voice mail service didn’t work properly which I found pretty funny.   I called them back and spoke with someone there.  They agreed that, so far, I had not received good service.  They informed me that they would look into the issue and call me back but that a technician would need to be sent out.

They claimed that this time they were going to send a senior technician.  I told them that the second technician that had arrived claimed to be a senior technician.  The rep was surprised by this.

The rep from the OP then said that I should be getting the speeds that I pay for at 250/10.  I mentioned to her that everyone there keeps saying that it is 250/10 so it must be in their system somewhere written like that but the service is actually 250/20 on their website.  I suggested that either the website was incorrect or their internal systems were.  She said she agreed that one was wrong and that she would look into it.  Rogers.com website, for the record:

rogersspeeds

This morning I got a call at 9 am that sounded at first like a telemarketer because the line was silent for 5-10 seconds before the robot voice came on.  It informed me that Rogers appreciates my patience and that they are still looking into my issue.  Rogers robocall! First time I have had one of those.

 

Monday March 23rd

I got another robocall from Rogers today.  In its half automated half bored human voice it told me that my issues have all been resolved.  It also gave me Rogers’ full mailing address in case I wanted to contact them. Maybe it didn’t trust that my internet or phone would be working.   At home I tested what the robot told me.

rogersspeed_mar23

Turns out the robot lied to me.  Nothing has changed.  The hilarious part is that I don’t even have to make things up to make Rogers look bad.  I just need to keep documenting the normal customer service.

I have not yet received a callback from the Office of the President.

Tuesday March 24th

I heard nothing from Rogers today.  I called back into the Office of the President at around 4:05 pm.  They close at 4 pm.  I left a voice mail.

I suppose I could have called back into your tech support but I didn’t feel like spending another hour on the phone power cycling my modem.

My speed is still 90/10.

Wednesday March 25th

I called into the OP today and they said they did not have a technician appointment for me yet but they were looking into it and that they would call me back.  Rogers is going to send an in-house technician rather than a contractor and hopefully they can find some answers.  All possible remote tests have been performed and no problems have been found.  I should hear back from the OP tomorrow with my appointment date.

I have also been told that my first month of service is going to be free.

Thursday March 26th

Today I have some average news and some good news.

The average news is today Rogers called me 6 times and threw a lot of excuses at me. Got my hands on some audio recordings.  Since I am lazy, here you go!

I cut out silences and names.

So now the good news.  Speed test when I got home was similar but I then ran another test at about 10:30 pm and…

rogers_speedWow, they really fixed the hell out of the download speed!  Upload is still a bit low but I am fine with that for now. I called and left a voice mail for the OP to cancel the technician.

To be clear, everyone I dealt with was polite and I can’t really fault them.  In most of the cases if they didn’t know something it was because they were never trained on/told it.  I do wish they would refrain from making things up when something doesn’t work out.

Final Review 

When that speed test finally hit 250 and then jumped up past it I was pretty happy.  I have tested some downloads out on the Steam network and the transfer speeds I am getting are unreal. Yes, it was kind of a pain to get the service up and running but I had a connection the whole time; it wasn’t like I was without internet. I recommend you get this service if you like to download things stupid fast.

 

TL;DR Of Whole Post

Rogers Ignite 250u is crazy fucking fast.  Get it.

Update:  I ended having so many problems with Rogers customer service that I tried to switch to the slower Bell service but their customer service was brutal. Their internet connections are fine but their customer service is beyond bad.  I have settled on a smaller company that leases lines from Rogers.  In a way Rogers is still getting my money but at least they get less of it.

The Future, now. Since 2010.