$9 Billion for what?

It was announced today that the Canadian Government is purchasing 65 new fighter jets, the F-35.  So far the only criticism of the purchase is that they did not tender the contract wasn't tendered in a competitive fashion and so should not go forward.  There has been no explanation of the intended use of the jets other than to say that they are needed to replace the aging F-18s that Canada currently has.  The last time that the jets were deployed was to protect the Olympics.

I can understand that we need to have some capability to defend ourselves and not rely on other nations military establishments to do it for us.  I understand that sovereignty is decided by ability to defend ourselves but what are these planes meant to defend us from?  Ice breakers for the north make sense, they allow us the ability to access the Arctic year-round.  What do planes defend us from?  Other planes?  In that case they don't provide much security.  A fleet of 65 planes is worth than useless compared to the nearly 2500 that the USA is planning on purchasing.

By the time maintenance costs are taken into account some experts expect the total cost to top $16 Billion.  Is there no better way that money could be spent?  Even keeping it in defense spending there must be better uses.  Why not actually spend it on defence rather than the obviously offensive applications of jet planes.  I don't buy 'the best defence is a good offence' mantra.  We could have a highly trained and effective defense force that could be deployed in Canada and around the world quickly but these F-35s are not going to be taking anyone anywhere.  The defense force could be used to defend against natural disasters at home, simply because there are not military conflicts for them to face here, and be deployed around the world to aid our allies in a defensive capacity.  I am not advocating that they be poorly equipped; I am advocating that they be well equipped for a specific purpose.

We have a Department of National Defence not International Offensives.  Equip our Armed Forces to effectively defend Canada and our allies around the world.

Happy Birthday, Bob Dylan!!

It's the Monday before May 24 and that means it's May Long or more officially Victoria Day, the day we celebrate that we are a member of the British Commonwealth and that we have a foreign Head of State.  The day was originally made to celebrate Queen Victoria's birthday, since it actually is her birthday, and is now the official birthday of whichever monarch is currently reigning happy and glorious over us.  More importantly, this date reminds us that we are a British Colony with a British history that we can all be proud of (unless you live in Quebec in which case it is National Patriots Day and celebrates the struggle of French patriots to gain political liberty and a democratic system of government).   To me this holiday is archaic.  Canada isn't, and arguably never was, a purely British country but we still have this holiday to recognize the United Kingdom of Ireland and Great Britain.  Why don't we expand this a little and talk about all of our holidays?  These days when the working poor get paid time and a half to make sure everyone can still get a burger and fries on his or her day off.

In a country as diverse as Canada it seems a little ridiculous to me that we can legislate national and provincial days of celebration, especially since about half of these days are purely Christian holidays.  I'm not against holidays, I'm against a government saying "this is your holiday, celebrate X event" the same as I (and most others) am against a government saying "this is your religion".  Why would an atheist want time off at Easter other than just to have the time off?  Why would a Muslim woman want to have Christmas off?  Does a Jew celebrate Good Friday?

My proposal is this: give everyone 12 general holidays for a year.  It is up to the employee to inform his or her employer in a reasonable time when they are taking their holidays.  Not everyone has the same holiday.  I might want to celebrate Louis Riel Day but I live in Alberta so tough, maybe my neighbour wants to celebrate the Birth of the Báb; everyone should be allowed their own holidays.  We don't legislate what religion everyone celebrates now let's open it up and let everyone celebrate whichever holiday they want on whichever day they want.

On that note, Happy Birthday, Bob Dylan.

We're Helping Average Canadians

The government recently released some changes to mortgages in Canada. The changes are to help the average Canadian and to prevent a housing bubble. For a government that believes in the free market it is interesting how they are willing to interfere in the market before there is truly any problem. I don't disagree with market interference but their method does seem a little strange.

To qualify for a mortgage now the borrower must be able to afford a five year fixed term mortgage which comes with a higher interest rate than the previously required three year term. The average effects of this assuming, an average mortgage of $337 000.00, is an increase in the monthly payments of about $200 dollars but to qualify for the loan at this higher rate translates into a requirement of an extra $10 000 yearly income. Hmm... that's easy. Just be rich and then you can buy a house. If you're not rich, well then, don't. Rent. If you can find a place to rent from but the government made that a little harder too.

It costs more now for investors and developers to buy property with the intent of renting rather than living in. This way only the rich can buy houses to live in and the super rich can buy the rental properties. It's an ingenious way to keep the rich rich and the poor subsidizing them. Good idea, Mr. Flaherty.

If we are worried about people not being able to pay the mortgage why don't we attack other types of debt that might be making it hard to afford a mortgage. Check out credit card rates. With an average of 19.5% and little to no requirement to receive a credit card the government could have gone a long way to reducing consumer debt by restricting credit card rates, especially as interest rates are at historic lows, and creating some solid requirements for getting a credit card. This would have had the undesirable effect of people not spending money, though.

If someone doesn't have their credit card they might not purchase that new toaster they couldn't afford and if someone doesn't purchase that toaster than the company won't make money and if the company doesn't make money then someone loses a job and has no money to buy stuff and uses a credit card instead. It's a vicious cycle. This doesn't happen if someone doesn't buy a house. They still spend money, either on rent or on stuff. Hopefully both without saving, that way they don't ever do something silly and invest in a house, everyone knows only the rich should do that.

Taxes and Death

There's two things that are certain in a person's life: Death and Taxes. Having not experienced the former for myself I will talk about the latter. Taxes are paid by everyone on nearly everything, it's just the way it is and the way it's got to be. In Alberta we happen to pay the lowest overall tax rate; it's part of our province's shortsighted addiction to resource revenue. Why have a stable source of revenue when we can rely on the business cycle?

Alberta forgoes between $10 and 20 Billion by having such a ridiculously low tax rate. This rate is defended as helping out the little guy. The 2009 budget claims that this benefits those with lower incomes. Unfortunately this isn't true. A recent study by the Parkland Institute shows that only two provinces have a higher tax rate for the lowest income bracket and all of them have a higher rate for the highest tax bracket. Who is it that we're helping here?

Alberta's tax system is not competitive, it's not even playing the same game. If it was the best system in Canada, wouldn't all the businesses and skilled workers that they are trying to attract to the province be here by now? Alberta could remain attractive and institute a progressive tax rate; it doesn't have to be ridiculous start off at about five percent for the lowest income bracket and end at fifteen percent for the highest tax bracket. Nobody is really hurt by this and it would earn Alberta at least another $10 Billion.

Moving away from income tax for a moment let's look at sales tax. Alberta does not have a provincial sales tax, the only province not to. This is all to be more competitive but it still doesn't attract all the new skilled workers that we want in this province. Let's charge a sales tax and let's make it progressive as well. For example, one needs to buy a car. They have a choice between a small cheaper car like a Honda Civic or for three times the cost a Cadillac Escalade. let's charge five percent for the cheaper purchase and fifteen percent for the more expensive purchase. Obviously, only those that are able to afford the bigger purchase will even think about buying expensive objects like yachts (maybe not in Alberta), sports cars, huge houses and we know they can afford the extra tax.

With a graduated sales tax and a progressive income tax Alberta would be able to have a hefty tax base to work with and they could afford to do all the basics that need to be done: health care, education (grade school and post secondary), infrastructure and maintenance. Even hitting a recession the government could afford to weather it with almost no problems at all because they aren't relying on the booms and the busts of the business cycle.

Part of being able to afford doing the basics is knowing what can be afforded and when. The extras that people want and things that are good to have: museums, art galleries, funds for all sorts of extras. These things would need to be funded on a basis of when the money is available. Mostly the money would be available through the royalty rates that the government collects primarily on the oil industry. With an effective and fair royalty structure Alberta would be able to collect a bunch of extra cash and use this for the extras that people want. They could even save a bunch and then when times are lean they could pull out the savings and spend their way through the recession and maybe no one would even notice that it happened.

This would take foresight and intestinal fortitude. Most people hate hearing the word taxes but they gonna happen whether you like it or not. Let's at least make it fair and tax the people who can afford to be taxed and who actually create some revenue from their taxes. Let's stop relying on oil and gas revenue and then cutting back on all the crazy spending we institute when the economy goes bust every ten years. Let's institute a plan that will benefit the most people most of the time. Let's raise taxes.