Friday, June 20, 2008

Sifting through the Shift

The Liberals have unveiled the details of their proposed carbon tax. To Dion's credit it appears he has noted the lesson from Kim Campbell, John Tory and others that elections are not the time to discuss major shifts in public policy. He has the summer to educate Canadians on his Green Shift program.

It will take time to review the policy outside of the standard headlines. There is one aspect of the revenue neutral claim that needs further examination. The carbon tax will start at $10/megaton and over 4 years rise to $40/megaton. The Liberals are boasting that as the price of carbon increases the more Canadian families save through tax cuts.

Last summer in Ontario, Hydro launched a number of inititives to decrease electricity consumption. They were successful. As a result the Hydro is experiencing a revenue shortfall and has applied for a rate increase.

The purpose of the carbon tax is to reduce carbon emittions. What happens when the cost of carbon is maxed out and pollution continues to decrease? The overall revenue of the carbon fund will begin to fall. Will families have to give back their tax cuts or will the government continue to increase the cost of carbon in order to keep the tax cuts in place? Either way if this plan is successful Canadians will once again be in a position where reducing energy consumption will have a negative effect on their disposable income.

Say a little Prayer

In February, Dalton McGuinty made it a priority for his government to fix the injustice of prayers in the legislature. The Lord's Prayer did not reflect the cultural diversity of the province. He was going to be a leader in fixing this injustice even if it was unpopular. Objections from his mother would not phase him from doing the right thing. He completely ignored the fact that this was an issue very few people cared about. The Hansard doesn't even record which prayers are being recited. More than 20,000 people responded to requests public consultation. 87% requested the Government keep the Lord's Prayer.

Last week the government unanimously adopted a compromised solution. The Lord's Prayer would be recited followed by a second prayer or moment of silence at the discretion of the Speaker. To start with there will be eight prayers. Any future additions would be decided by the Speaker. The current Speaker has already said that he will refer such decisions to an all party committee. This is not a surprise considering he referred the question of coffee in parliament to be decided by committee.

The solution strikes an excellent balance. It upholds keeping traditions that built this country while recognizing the diversity of the Province. Hopefully, when Parliament returns in September they can apply this principle to other government issues. Hopefully, they will also choose to focus on matters of importance to the average citizen.

Friday, June 13, 2008

National Anthem

I grew up as a big hockey and baseball fan. Playing hockey and baseball was a way to relate to my favourite players. Skill, effort, team work and a bit of luck would be the difference between winning and losing. From a fans perspective the same rules applied to professional sport. The best players would make it to the pros. If a player wasn't pulling his weight he would be benched, sent to the minors or cut outright. Real fans would support their team no matter how bad they played.

The world of sports has changed so much. If fans don't show up, it means they are unhappy with team play or management. Fans need to know about salary caps, escrow account, ancillary revenue streams, drug testing policies, tax regulations etc. If I take public transit instead of paying for parking will my team still sign my favourite player? What if I buy a hot dog and beer instead? This past season I learned how our legal system carries out prison sentences when a Leaf was given permission to serve his DUI conviction in the off season. Decisions made on paper are just as important as play on the ice.

Last week Hockey Night in Canada announced they would not be renewing the rights to play the HNIC them song, spoiling a tradition since 1968. They are still facing a $2.5 million lawsuit for ring tone sales. They were paying $500 each time they played the song to a tune of $60,000 per year. Despite the public outrage it looked like the song might be lost forever. The Premier of Alberta took up the protest and even offered to complain to Don Cherry. The Liberal Heritage Critic suggested that the federal government had an obligation to save the song, although he never brought this view to the House of Commons. CBC responded by announcing their will be a fan voted contest with $100,000 going to the winner. Just what we need HNIC Idol to nail the coffin on a great tradition.

All is not lost. CTV has bought the rights to the song for $2.5 million. As the owner of TSN, RDS and the rights holders to coverage of the 2010 Vancouver Olympics, the hockey "anthem" will remain a part of our heritage. The realities of the business world continue to erode the pure enjoyment of professional sports. At least there are some things we can always count on.

Friday, June 6, 2008

GM to cut production of 6 cylindar trucks

This week, GM announced the closing of (4) truck & SUV plants. The truck plant in Oshawa will be the Canadian victim of these cuts. The move comes in response to a drop in demand for gas guzzling vehicles. With the decline in the manufacturing sector there is plenty of finger pointed directed towards, the Union (CUPE), GM and the government.

The federal government is being blamed for not having a strategy to save the auto industry. The Liberals are blaming statements made by Finance Minister Jim Flaherty that Ontario was a poor place to invest. They now claim that GM took the ministers advice. GM is a multi-billion dollar company. They are capable of doing their own cost/benefit analysis to determine the most cost effective way to meet their production needs. They would not make such decisions on political statements. Flaherty has indicated that money set aside in the budget for greening the auto industry could be used to entice a more fuel efficient car produced in it's place.

In an effort to save the auto industry the Province provided financing for GM. The plan did not work as effectively as had been hoped. The government will now need to attempt to recoup the funds.

GM is being blamed for bargaining in bad faith. They just signed a contract with the union without any mention of the pending closures. Considering CUPE made concessions to try to help GM be more competitive they have a right to be upset on this point. The price of oil has been on the rise. People are being more concerned about the environment and carbon emissions. The US economy is tanking. It does not take a PhD economist to predict that the overall trend is moving towards more fuel efficient vehicles. GM slowness to react to such market changes are why they are performing so poorly in the first place.

Unions create an environment where businesses cannot respond quickly to changing market conditions. Perhaps the reluctance of the big 3 to meet marketplace demands resulted from their inability to work with the unions for the greater good of the company.

There has not been much focus on the environment impact of this move. Less gas guzzlers means less carbon emissions. This could be taken as good news for the environment.

GM has been slow to respond to the trend away from large vehicles. Instead of being leaders they chose to be passive and have left the market of the future wide open for the foreign manufacturers. Adjusting to market forces requires retooling and in some cases job loss. If they had taken a larger share of the fuel efficient job market sooner, they may not have been popular with the workers but the longer term job losses would have been minimized. This may be the first painful but necessary step to achieving a strong financial future.

Another solution not being considered is what to do with the workers. Perhaps they can be retrained to work for another automaker or take their expertise to other areas of the economy. Relying on one company to be a lifelong employer is not realistic. Perhaps this is a point that needs to be considered before making the decision to join the ever changing auto industry.