Reevely: Subtracting when they should have added makes NDP's financial forecasts wrongly rosy - Canadanewsmedia
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Reevely: Subtracting when they should have added makes NDP's financial forecasts wrongly rosy



Ontario New Democrat Leader Andrea Horwath speaks at a rally in Paris, Ont., on Tuesday, May 15, 2018.


The Ontario New Democrats’ budget plan understates the deficits they’d run by $1.4 billion a year because it counts a $700-million expense as government revenue.

This isn’t buried in footnotes. It isn’t the obscure error the Liberals crowed about earlier this week in declarations that were about 85 per cent bull. 

This is in bold type on page 97 of the NDP platform, in the very final calculation. The hard stuff is done by then. Lines and lines of pricing out the party’s plans for what it would do if leader Andrea Horwath becomes premier after the June 7 election are soaring to their triumphant finish. And then the math zigs when it’s supposed to zag.

This year, an NDP government would take in $153.6 billion and spend $157.6 billion. The difference is $4 billion of red ink — a lot of money, but less than the Liberals would need. Then the New Democrats allow for a “reserve” of $700 million, a margin of error in case unexpected things come up.

But instead of adding the reserve to their deficit and coming up with a total of $4.7 billion, they subtract it to get $3.3 billion.

The NDP platform does the same thing every year for the five years it looks ahead. By the end of a full term, the party platform says a New Democrat government would be running a deficit of $2 billion when it should be $3.4 billion.

(We can only see this because the party went to such trouble to produce a costed platform and share it early. That’s worth something. The Progressive Conservatives have no such document so nobody knows what their budgets would look like. Possibly not even they do.)

A section of the Ontario NDP platform counts money set aside for unexpected expenses as a revenue source.

Ontario governments have to include reserves in their budgets, under a 2004 law the Liberals passed to show how good they were going to be with the treasury.

“The fiscal plan must include a reserve to provide for unexpected adverse changes in revenues and expenses, in whole or in part,” the Fiscal Transparency and Accountability Act says.

The law doesn’t say how big the reserve has to be. There’s no formula. As finance minister, the Liberals’ Charles Sousa has plugged anything from $600 million to $1.1 billion as reserves into his budgets, depending on both genuine prudence and on political calculations about what bottom-line figures the Liberals wanted to show off.

The thing is, the reserve has to be booked as an expense. If you get to the end of the year and you haven’t spent it, you get to treat it as found money. Spend it, talk about all the money you saved because you’re such great managers, or a bit of both. But when you’re making up your budget, the reserve is money you’re ready to spend if you have to.

The cash might flow out. It would never flow in.

An excerpt from the 2018 Ontario budget, prepared by the Liberals, shows their $700-million reserve making the province’s bottom line look worse.

Sousa’s pre-election budget included $700-million reserves for each upcoming year, just like the New Democrats’ platform, but the Liberals did what they’re supposed to do with it: their plan says they’ll spend $6 billion more than they bring in, and then they added $700 million of reserve to the deficit for a total of $6.7 billion.

The New Democrats use the same number but they do the opposite.

“The key difference is the Liberals assume they’ll spend the reserve and we assume we won’t,” explains NDP campaign spokesperson Andrew Schwab. “Which is why we make the assumption we’ll use it to pay down the deficit.

“The Liberals have assumed that they will spend their $700-million reserve on unspecified in-year expenses annually, above and beyond what they’ve budgeted.

“Given we’re facing an operational deficit, it’s our intention not to spend the reserve, and instead use it to pay down the deficit … something the government often does in practice, anyway.”

Ten out of 10 for effort.

That’s an OK argument for not including a reserve in your calculations (as the Progressive Conservatives did when making up their defunct “People’s Guarantee” platform under ex-leader Patrick Brown). That’ll be a problem when you form a government and run into the law that says you have to have a reserve, but it’s a position a party could defend.

It is not an argument for including a reserve but treating it as income rather than spending. If you could do that, you could stick a $1-billion reserve into your plan and cut your deficit by $1 billion. Or $4 billion. Or $20 billion.

“It is a mistake,” says Kevin Page, the former federal parliamentary budget officer turned scholar at the University of Ottawa, after being shown the numbers by email. “Looks like a spreadsheet type of error. If they wanted to eliminate the reserve, they should have left it at zero — not subtract $700 million per year.”

Page’s Institude of Fiscal Studies and Democracy looked at the New Democrats’ platform for the party and agreed that the estimates for its big-money programs and taxes were reasonable, a seal of approval the party has boasted about.

“We did not examine or have discussion about a reserve when we examined cost estimates,” Page says, and the institute didn’t sign off on the final deficit figures.

So best, the NDP platform books $700 million a year in unspecified savings and hides them in a line that’s supposed to show how careful they are. That would mean they’re smart but dishonest, and frankly it doesn’t make any sense.

More likely, the NDP’s budgetmakers mixed up their numbers, right before wrapping everything up with a bow, and made a mistake so basic nobody caught it.

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Twitter users voice opposition of UCP plan




UCP plan

Alberta’s United Conservative Party (UCP) said if elected, schools will operate under rules for gay-straight alliances that were developed before the NDP came to power.

UCP leader Jason Kenney outlined his party’s education platform for the April 16 provincial election at the private Calgary Jewish Academy on Monday.

He said his government would proclaim the former Progressive Conservative government’s Education Act of 2014 to replace the NDP’s amended School Act.

The Education Act included a provision to allow gay-straight alliances — clubs meant to make LGBTQ kids feel safe and welcome — in schools if students wanted them.

“We support those as an opportunity for young people who might be facing harassment or bullying to get that peer support and so we will encourage schools to comply with that legislation,” Kenney said.

Albertans were quick to jump on Twitter to weigh in on the issue, using the hashtag #QueerkidsAB, which was trending across Canada on Monday and into Tuesday morning. Those opposing the UCP’s plan said it would harm LGBTQ students in Alberta.

Kristopher Wells, an associate professor who specializes in sexual minority issues at Edmonton’s MacEwan University, accused Kenney of taking a “back-door route” to undo progress the NDP has made on LGBTQ rights.

“This is an attack on LGBTQ rights in the province,” Wells said.

“It’s a move to undermine gay-straight alliances and has the ability to do real harm to LGBTQ students, who remain amongst one of the most vulnerable groups of students in our schools today.”

The New Democrats said at the time there were some loopholes in the Tory legislation that some schools were using to delay or deny students trying to set up the clubs. That’s why the NDP amended the School Act to take protections for LGBTQ students further.

A flashpoint of the NDP legislation was a prohibition on school officials telling parents if their kids joined the clubs. Last summer, a coalition of faith-based schools, parents and public interest groups lost a bid to have a judge put the law on hold until there is a ruling on its constitutionality.

Commenting on how a UCP government would deal with any pushback from religious schools on gay-straight alliances, Kenney said: “Our approach would be one of co-operation rather than one of confrontation.”

Kenney also said his party would ensure all sex education in the province covered the topic of consent.

Other planks of the United Conservative platform include lifting a cap on charter schools and requiring clear and understandable report cards.

Education funding would be maintained or increased, while at the same time, UCP will seek more efficiency. The NDP’s curriculum review which Kenney has previously threatened to put through “the shredder” if it strayed too far from learning fundamentals — would be put on hold to allow for broader consultations with parents, teachers and experts, Kenney said.

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Ontario’s government to Fund Municipalities




Ontario’s Progressive Conservative government is giving municipalities “transitional funding” next year, even as the province downloads public health and child care costs onto cities.

Premier Doug Ford made the announcement to a packed room of 2,000 mayors, councillors and policy advisors at the Association of Municipalities Ontario (AMO) conference in Ottawa on Monday.

Ford said the funding will give municipalities more time to search for savings, while also helping protect “the future of public services.”

“So you can continue to deliver important services people rely on every day, including public health and child care,” Ford said in a mid-morning speech.

While Ford provided few details on the transitional funding, sources in the Premier’s office said the province is trying to limit the financial hit to municipalities, especially when it comes to public health.

The government will standardize the cost sharing arrangement of local public health units – the province will pay 70 per cent starting in 2020, while municipalities will carry 30 per cent of the burden.

However, government sources said if the public health costs borne by the municipalities were to rise by more than 10 per cent, the province would provide funding to offset the additional amount.

“It provides them more of a cushion for those changes,” the source said.

The costs of creating new child care spaces – currently fully bankrolled by the province – will also be split in 2020, with municipalities taking over 20 per cent, while the province pays the rest.

The government said that cost sharing agreement will eventually grow to a 50/50 split by 2021.

Downloading costs is a top concern for the representatives of 444 municipalities at the AMO conference, with many expressing apprehension about the net effect to their bottom lines.

“We’re a little nervous,” Jerry Smith, a councillor with the Township of Perth East, said.

“We’re not 100 per cent sure of what is going to happen, we’ve had so much downloaded to the municipalities.”

But, Ford stressed that the current fiscal situation of the province, which is carrying a $10.3 billion deficit, is his top priority.

“We can’t continue throwing money at the problem as our predecessors did into top-down, big government schemes,” Ford said.

“That is neither compassionate or sustainable.”

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Elections Canada warns climate change discussion could be partisan




OTTAWA — A pre-election chill has descended over some environment charities after Elections Canada warned them that discussing the dangers of climate change during the upcoming federal campaign could be deemed partisan activity.

An Elections Canada official warned groups in a training session earlier this summer that because Maxime Bernier, the leader of the People’s Party of Canada, has expressed doubts about the legitimacy of climate change, any group that promotes it as real or an emergency could be considered partisan, said Tim Gray, executive director of the advocacy group Environmental Defence.

People’s Party of Canada Leader Maxime Bernier speaks during a candidate nomination event for the upcoming federal by-election in the riding of Outremont in Montreal, Sunday, Jan. 27, 2019.

Any partisan activity — including advertising, surveys, or any kind of campaign costing at least $500 — would require a charity to register as a third party for the election, an onerous requirement that could jeopardize a group’s charitable tax status, Gray said.

It is “discouraging” that Environmental Defence and other charities may have to zip their lips about climate change being real during the campaign period “because one party has chosen to deny the existence of this basic fact,” he added.

“Obviously climate change is real,” said Gray. “Almost every credible institution on the planet is telling us to get our act together and do something about it.”

One party has chosen to deny the existence of this basic fact

Last fall, the United Nations climate change panel, made up of hundreds of scientists from around the world, said if the world doesn’t act faster to cut global emissions the planet will face irreversible and catastrophic consequences.

Five of the six political parties expected to have any chance of winning a seat in the upcoming campaign agree that climate change is real and caused by humans. Bernier, however, is the one outlier: he believes that if climate change is real, it is a natural cycle of the earth and not an emergency.

“The main reason for climate change, it is not human activity,” Bernier said Sunday in Gatineau, Que., where his party was holding its first convention.

“There is no climate change urgency in this country.” he said in a speech in June speech. He also disagrees that carbon dioxide, which experts say is responsible for three-quarters of greenhouse emissions globally, is bad.

“CO2 is not ‘pollution,”‘ he tweeted. “It’s what comes out of your mouth when you breathe and what nourishes plants.”

Because of that, Elections Canada is warning that any third party that promotes information about carbon dioxide as a pollutant or climate change as an emergency could be considered to be indirectly advocating against Bernier and his party. Activities can be considered partisan by Elections Canada even if they don’t mention a candidate or party by name, the agency’s rules say.

An Elections Canada spokesman confirmed “such a recommendation would be something we would give.”

Gray says the impact is stifling the conversation about climate change at a critical time.

“At this point, unless I can get greater clarification, after the writ is dropped we would stop doing anything online that talks about climate change, which is our entire mandate,” he said. “You feel you’re being drawn into this space where you’re being characterized as being a partisan entity for putting up Facebook ads that say climate change is real, which seems ridiculous to me.”

Environment groups in Canada are still on edge after spending much of the last five years fighting against the Canada Revenue Agency accusations and worry that if Elections Canada accuses them of being partisan, it will attract another round of audits for partisan activity. Gray said the two may have different definitions of partisan, but the fear is still having a chilling effect.

“We need to ensure that we’re not saying things that are going to be considered to be illegal by Elections Canada.”

Climate change is a scientific fact

It doesn’t mean Gray is forbidden from giving interviews about climate change during the campaign, he said. Rather, it would affect any kind of activity the group undertakes that costs more than $500, such as a Facebook ad campaign.

In 2012, the former Conservative government unveiled a $13-million audit program to seek out charities the Conservatives alleged were abusing their tax status with partisan activities. The probes went after two dozen environment, human rights, anti-poverty and religious groups — none of them considered partisan — for going beyond a rule that limited their spending to no more than 10 per cent of their funding on political advocacy work.

The program was launched as the Conservatives called many environment groups “radical” and a “threat” to Canada.

The Liberals promised to end what they called a “witch hunt” against any civil society groups that opposed the government’s policies. It took more than three years, but eventually legislation was changed last year to lift the 10 per cent limitation. The non-partisan rule, however, remains.

Catherine Abreu, executive director of the Climate Action Network Canada, called the Elections Canada warning “shocking.”

“Climate change is a scientific fact,” she said. “It’s not an opinion.”

The situation is “contributing to ongoing confusion” about what environment charities can and cannot do, and will give fuel to pro-oil groups that want to silence their opponents, Abreu added.

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