Friday, December 30, 2005

Test your global cultural awareness

OK, a question for all those who think themselves well up on popular culture around the world.
Which Canadian sporting event made it into the top three for global television audience this year, trailing only the Superbowl and the UEFA Champions Leage football final?
The answer is the Montreal Grand Prix, one of two North American stops on the F1 circuit. About 53 million people tuned into the race, according to Iniative, a media tracking company that follows such things.
I watch F1, although I'm not sure why. Most races involve four minutes of excitement among 90 minutes of routine, and they are often on at weird times. But the sheer scale of the whole thing and the vast technological effort put into such a limited end are compelling.
But what struck me about the item is how few Canadians would guess at the global reach of the Montreal event, and the potential promotional value.

Thursday, December 29, 2005

Leak or not, Liberals bungled corporate tax policy

VICTORIA - I don’t know if Ralph Goodale should resign now that the RCMP are investigating whether pre-election leaks from his ministry helped insiders get richer at the expense of the rest of us.
But I do know that the whole income trust saga is a case study of tax policy bungling, and the triumph of politics over sound planning.
Stripped down to its essence, this is pretty straightforward stuff.
Some smart tax lawyers and corporate types found a loophole in Canada’s income tax laws, and drove through it in ever increasing numbers.
The ploy was simple enough. A corporation is taxed on its profits, including the money sent out to shareholders as dividends. But companies found they could create income trusts and funnel their profits through the trusts to shareholders without paying taxes on the money.
They paid less tax, the payouts to investors were bigger and the value of the businesses increased. Happy days.
Except for people who pay income tax. The rush to take advantage of the trust loophole meant that the federal government was losing about $300 million a year in tax revenue. The money has to come from somewhere.
The federal finance ministry started to worry, belatedly, about the losses. Some economists also questioned whether the shift hurt corporations’ ability to innovate and invest to create growth, since the priority would be on keeping up payments to the trust.
None of this should have caught the government off guard. Australia and the U.S. went through similar experiences almost two decades ago, and decided to close the tax loopholes.
But Ottawa dithered. By the time the federal government started talking about changing the rules, Canadian income trusts were worth $120 billion. They had become popular investments, and a reduction in their tax benefits would cut their value. Canadians would see their RRSPs and mutual fund holdings lose ground.
Corporations, the investment community and seniors’ groups were all over the government. And with an election imminent, the Liberals backed down. On Nov. 23 Goodale announced that income trusts would keep their tax status, and that the tax on regular corporate dividends would be cut to try and reduce the rush to trusts.
The news was sure to have a big effect on investment markets. So the finance ministry made the announcement in the evening. That way everyone supposedly had the same chance to consider the implications before markets opened the next day.
Except that trading patterns that afternoon, hours before the information was public, strongly suggest some people knew what was coming. Trading volumes soared, and some buyers started snapping up shares in companies that would benefit from the announcement. BCE Inc., the communications conglomerate, was a big winner as a result of the dividend tax cut. Its shares jumped 3.3 per cent in the final two hours of trading before the announcement. The Yellow Pages Income Fund rose by 3.4 per cent. Other stocks showed similar extraordinary trading.
The people who bought made quick gains. After Goodale’s announcement that evening their holdings were worth even more.
But the people who sold to them lost out. If they had hung on to those shares for one more day, they would have got much more for them.
It could be that the buyers just made a good guess. Rumors of similar action were flying around in the pre-election frenzy.
But the analysts who have looked closely at the trading patterns say it’s much more likely that some investors had advance knowledge, which they used to their advantage - and to the detriment of those who weren’t in on the plan.
That’s what the RCMP is investigating. It’s a serious issue. If information leaked, then people were cheated and Canada’s reputation as a safe place to invest will have been harmed.
But just as serious is the government’s stumbling response to the whole issue of income trusts, ending with the last-minute pre-election corporate tax cut.
Canadians deserve a more considered, intelligent tax policy.
Footnote: Goodale says he asked his staff if there was a leak and they said no; Paul Martin is standing by his finance minister. But newspaper headlines on the RCMP investigation were not the kind of kick-off the Liberals wanted for the second half of this long campaign.

Tuesday, December 27, 2005

Rights case finds government abandoned special needs students

VICTORIA - It hardly seems revolutionary to declare that students with learning disabilities have the right to an education.
That’s the essence of a BC Human Rights Tribunal ruling that found the government discriminated against children with disabilities. When cash-strapped school districts needed to cut spending, they made kids like Jeffry Moore take the hit.
Moore’s family launched the human rights’ complaint after he was abandoned by the public school system. Jeffry is bright, but severely dyslexic. By the end of Grade 3 he still couldn’t read. The North Vancouver school district had referred him to its centre for special needs students for intensive help, but then closed it in 1994 to save about $290,000 a year.
Find a private school if you want your child to learn, the Moores were told.
So they did. Jeffrey’s father was a bus driver, and his mother a secretary. Private school bills were crushing. But they didn’t see a choice.
The Moores did see a chance to turn things around for other children, and launched their human rights complaint.
Their victory was complete. They get compensation for a decade of private school costs.
And the tribunal ordered the government to mend its ways. The education ministry has a year to ensure that funding for students with severe learning disabilities reflects the number of children who need help, and to set up a system to make sure that school districts are delivering the services.
It’s the kind of ruling - by a court or tribunal - that raises worries about non-elected people setting public policy. The theory is that politicians are elected to make those decisions. They should have the right to deny education to kids with disabilities, or aboriginal children, or whoever else they choose. the argument goes.
But a reading of the ruling shows the tribunal stayed within the laws the politicians created. The school act says “it is the goal of a democratic society to ensure that all of its members receive an education that enables them to become personally fulfilled and publicly useful, thereby increasing the strength and contributions to the health and stability of that society.”
And the Human Rights Code prevents discrimination. Denying a child an education because of a disability is against the law.
The government can still set education funding levels and spending priorities. School districts can justify a lack of services if providing them would cause extreme hardship, the tribunal noted.
But it’s illegal to deny services to people with disabilities as an easy way of saving money.
British Columbians should welcome the ruling on practical grounds.
Jeffry got the help he needed in a private school. He has just graduated from BCIT and is apprenticing as a plumber. He’s achieving what the school act promised - personal fulfillment and a chance to make society stronger.
Contrast that with the outlook if he had continued to struggle, without adequate help, in the public school system, and dropped out or simply graduated without basic literacy skills.
This isn’t a partisan issue. Jeffry’s case started way back when the Harcourt government was in power, and more than decade later students with special needs are still often the first to suffer when school districts face money troubles. In 2001 school districts had identified 47,000 with special needs. Then the Liberals ended targeted funding for those students. Now school districts say there are only 40,000 students with special needs. Either there has been a miraculous drop in students with learning problems, or thousands of children have been abandoned as a low spending priority.
Vince Ready’s fact-finding report on the teachers’ strike confirmed that support for special needs students is inadequate.
Education Minister Shirley Bond isn’t commenting on the tribunal decision. The government has 60 days to launch an appeal.
But the principle seems simple. The government promises children a chance at an education. It’s a commitment that’s worth keeping, for all students.
Footnote: The government faces more problems over the issue. A Vancouver law firm is planning a class-action lawsuit on behalf of dyslexic students and their families, arguing the failure to identify the disability and help students resulted in serious long-term damage to their lives.