Saturday, April 25, 2009

CAW Wisely Agrees to a $19 Wage Cut at Chrysler--Another I TOLD YOU SO

Should a trade union accept a painful $19 per hour wage cut when we are in the middle of the worst recession in 75 years, when all of the Big Three auto-makers are teetering on the edge of bankruptcy? Of course it should! As I said last November , unionized workers in Detroit make make 15% more than non-unionized workers in the sunbelt, while Canadian workers make 15% more than workers in Detroit, thanks to Canadian medicare system that makes such a wage dividend possible. That's a total wage gap of 30% more than the closest financially healthy major auto maker (Toyota or Honda). Unsustainable in these circumstances, and probably unsustainable in the long run under any circumstances.

Wednesday, April 15, 2009

Who has the best environmental policy?

Alan Durning's recent posting in the Sightline Daily neatly summarizes the NDP's position in the environmental community as a result of its attack upon Campbell's carbon tax. For years, the NDP has received--and by and large deserved--high profile endorsements from David Suzuki, activists like Tzeporah Berman and academics like Marc Jaccard. One doubts Suzuki or Berman will even vote for the NDP on May 12, and there is little doubt that Jaccard won't.

As Durning points out, to describe the carbon tax as a gasoline tax makes about as much sense as calling the GST and excise taxes gasoline taxes. It is a comprehensive tax paid by everyone, and about 2/3 of B.C. families will get ALL of their money back in income tax reductions.

Furthermore, the BC Liberals recognize, and I agree, that carbon taxes and cap and trade are complementary strategies, not mutually exclusive ones.

But is it fair to run down the NDP on this issue alone? Surely, there are other aspects of climate change policy besides those relating to pricing and taxation. And there are other aspects of environmental policy besides climate change (as the NDP's strange bedfellow on this issue, Stephen Harper, likes to point out.) It is true that there is something very cynical about Campbell's focus on the carbon tax. He aimed to take a bow in environmental circles and in the eastern media, and to use carbon taxes to do his favourite thing---namely reduce progressive income taxes on affluent Vancouver voters. Other regulatory policies aimed at curbing emissions have not been as spectacular as his carbon tax. The continuing subsidies to gas and oil production, the twinning of the Port Mann and parts of the Cariboo Highway suggest that the Liberals seen more automobile traffic as a good thing.

But Campbell has also perhaps learned from the mistake of the sudden 20% income tax cut---i.e., that it is better to phase things in gradually and allow time for adjustment. That is what the carbon tax does. I have argued elsewhere in this blog that a floor price for fuel might be better, but that is still closer in spirit to the Liberals at this point than it is to the NDP.

It is all a little sad. There are many people in the NDP who have devoted decades of their lives to the environmental movement, (and to First Nations issues as well, that matter). The NDP could have responded to the Liberals' volte face by using its deeper roots in the First Nations community and the environmental movement to come up with better policies. Instead, it is hoping to win more votes by going after the middle class gas-consumer and taxpayer.

It may work, but probably not. Had Campbell continued his tightfisted ways, his opposition to treaties and his indifference to the environment, there would be a United Front of interest groups against him, which in the context of a sputtering economy would likely have spelled his electoral demise. Instead, he has split the Opposition beautifully.

Tuesday, April 14, 2009

BC-STV lite would have been an easier sell---especially in rural and northern B.C.

A more modest version of BC-STV would have simply divided the province into electoral districts of 3 different magnitudes: 3 member districts in metropolitan areas, 2 member districts in the southern interior, and single member (AV) districts in the north. This would yield improved voter choice, with recognizable and manageable constituency sizes. Yes, there would be only a modest improvement in over-all proportionality under my preferred scheme. But I would argue that a modest increase in proportionality is really all that is desireable, and all that is necessary, in order to shake up the Legislature and make it more representative of the population.

It is really difficult to say whether BC-STV will improve representation for the "typical" rural voter (whoever he or she is). On the one hand, the argument has been made that, since rural and northern ridings will have fewer MLAS, they will constitute a larger proportion of the caucuses of the two major parties than will their southern and urban counterparts. This could spell more, not less influence. Furthermore, the Citizens' Assembly did their homework and looked at the evidence from Ireland, Malta and the Australian Senate: sure enough, representation in multi-member STV constituencies does tend to be evenly distributed geographically. On the other hand, it is difficult to guarantee the town council of McKenzie or 100 Mile House that they will be as sought after or as listened to in a geographically much larger riding. And then there is the simple math: the number of representatives per capita will be approximately the same under both systems.

I would have preferred to split the difference-- keep the northern ridings much the same size as they are now, but with a majoritarian preferential ballot (also known as Alternative Vote). That would improve voter choice and have the intended moderating effect upon candidates as they compete for second and third preferences. A degree of genuine proportional representation in the province would still come from the multi-member ridings in more densely populated areas, raising the bar somewhat for the creation of majority government, but not opening the door to perpetual minorites or too many Green-Party balance of power scenarios.

Having 3-member seats in Greater Vancouver and Victoria and 2-member seats in the southern interior would have two further advantages. First, the resultant constituencies would more clearly correspond to the boundaries of actually recognized communities than either the existing First-Past-the Post system or BC-STV: the Richmond riding would contain all of Richmond; the Surrey riding would contain most of Surrey; North, South and West Vancouver constituencies would facilitate the discussion of most local neighbourhood interests; while the double ridings of Kamloops and Cariboo would correspond to most residents' perceptions of where those communities are. Second, constituencies of magnitude 1-3 would present most voters with choices between a manageable number of candidates and facilitate the formation and expression of well-considered preferences.

That being said, "STV-lite" is not on the ballot. All things considered, I am still willing to follow the recommendation of the Citizens' Assembly and support BC-STV on May 12. I hope that all of my readers will do likewise.

Friday, April 10, 2009

Lest We Forget: the 2003 Bush Tax Cuts and the Folly of Economic Conservatism

One of the worst examples of conservative economic policy-making in recent years was the 2003 Bush tax cuts. W and his supporters in Cabinet, Congress and the business community were reaching for that winning Reagan formula of feeding the fat cats to generate prosperity while foolishly asserting that the cuts would "pay for themselves". They were also using the recession as a pretext for trying to ideologically engineer permanent changes to the tax structure--at the same time that a very expensive war in Iraq was just getting underway. The case of the Bush tax cuts is instructive now as we watch governments deal with the 2008-2009 economic crisis, a crisis largely triggered by Bush's financial deregulation and no doubt made worse by his fiscal policies.

Not surprisingly, a prestigious group of 450 leading economists signed a statement urging Bush not to enact the cuts. The list had ten American Nobel Prize winners on it, including the two greatest living economists since John Maynard Keynes, Paul Samuelson and Kenneth Arrow.

The statement was printed as a full-page ad in The New York Times and released to the public through the Economic Policy Institute. According to the statement, the 450 plus economists who signed the statement believe that the 2003 Bush tax cuts will increase inequality and the budget deficit, decreasing the ability of the U.S. government to fund essential services, while failing to produce economic growth.

The statement reads as follows:

"Economic growth, though positive, has not been sufficient to generate jobs and prevent unemployment from rising. In fact, there are now more than two million fewer private sector jobs than at the start of the current recession. Overcapacity, corporate scandals, and uncertainty have and will continue to weigh down the economy."

"The tax cut plan proposed by President Bush is not the answer to these problems. Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near-term. The permanent dividend tax cut, in particular, is not credible as a short-term stimulus. As tax reform, the dividend tax cut is misdirected in that it targets individuals rather than corporations, is overly complex, and could be, but is not, part of a revenue-neutral tax reform effort."

"Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income."

"To be effective, a stimulus plan should rely on immediate but temporary spending and tax measures to expand demand, and it should also rely on immediate but temporary incentives for investment. Such a stimulus plan would spur growth and jobs in the short term without exacerbating the long-term budget outlook. "

Over 450 economists signed the statement, including the following ten Nobel Prize Laureates:

George Akerlof, University of California – Berkeley
Kenneth J. Arrow, Stanford University
Lawrence R. Klein University of Pennsylvania
Daniel L. McFadden University of California – Berkeley
Franco Modigliani Massachusetts Institute of Technology
Douglass C. North Washington University
Paul A. Samuelson Massachusetts Institute of Technology
William F. Sharpe Stanford University
Robert M. Solow Massachusetts Institute of Technology
Joseph Stiglitz Columbia University

Friday, April 03, 2009

Lobbying in B.C. : What are the Next Steps in Accountability and Transparency?

{The following responds in part to a major historical pattern of BC politics: the tendency of measures to improve transparency and accountability to come from newly elected governments, and not from re-elected ones. It is based on a section of a chapter I wrote for the forthcoming book, BC Government and Politics (Emond Montgomery 2009). In that chapter I also look at another historical pattern, the tendency of re-elected governments to reward client groups by expanding or contracting the scope for collective bargaining in the Labour Code}.

Gerry Kristianson’s 1996 article on lobbying and private interests in BC politics began by observing that the small number of visible lobbyists in Victoria as compared to Washington state or other American jurisdictions was a misleading indicator of the level of pressure group activity: “the half-dozen or so people who are to be found around the legislative buildings on a daily basis while the house is in session are only the advance guard of a host of individuals and groups who attempt to influence provincial government decisions on behalf of an endless variety of private interests.” (Kristianson 201). Kristianson’s point, echoed by more recent academic literature (e.g. Montpetit 307), was that the parliamentary state organizes a lot of interest group activity out of public forums such as US-style legislative committees or other apertures afforded by the separation of powers and into the offices of public servants and cabinet ministers, “away from the glare of public attention and media scrutiny” (Kristianson 202). To some extent, parliamentary government replaces lobbying with governance; to some extent lobbying is merely cloaked by the realities of party discipline and cabinet solidarity.

Despite the growing consensus that a registration of lobbyists, similar to the ones required by the federal government and several other provinces, was desirable in order to have a more comprehensive list of groups attempting to influence decision makers, there was also concern expressed that such a registry would still fail to resolve the issues of transparency, equality of access and the implications of partisanship, due to the many links, both informal and formal, that would continue to exist between the private sector and public officials beyond the purview of legislation. Kristianson, himself the dean of ‘government relations’ specialists working in Victoria in the 1980s and 1990s, suggested that true transparency might require something more:

"Instead of asking lobbyists to register and even to disclose their their specific contacts with public officials, it might be better to require public officials to disclose the sources of information upon which they base their decisions. Weekly or monthly disclosure of a log of contacts between decisionmakers and the public would shed a great deal more light on the flow of political influence than does the registration of lobbyists. Reducing the level of secrecy in the BC political system would be an effective way of ensuring greater transparency (214). "

The Lobbyists Registration Act (LRA) of 2001 has confirmed both the realistic hopes of its proponents and the reasonable fears of skeptics. Created early in the Liberal government’s first term in office as part of its “New Era” platform commitment to open and accessible government, the LRA established a registry in the Office of the Information and Privacy Commissioner requiring “registration of anyone who is paid to lobby the government to influence government legislation, regulations, programs, policies, the awarding contracts or the awarding of benefits.”(Plant 2001). The Act covers both “consultant” and “in-house” lobbyists, and section 4 requires not only their registration but the filing of names and business addresses of their clients/employers, as well as particulars to identify relevant legislative proposals, regulations or contracts, as well as the name of any ministry and public office holder lobbied or whom the lobbyist expects to lobby during the relevant period. The Information and Privacy Commissioner is designated as registrar, who maintains the registry and makes it available to the public and online. The LRA does not make the fees received by lobbyists available to the public, however; nor does it count as “lobbying” a wide range of actions by public office holders, or citizens or businesses contacted or consulted by public office holders, or constituents’ communications with their MLAs. It does make the contravention of the Act an offence punishable by a fine of not more than $25,000, but has not yet given the registrar clear enforcement powers, such as the ability to levy administrative penalties or ban persons who fail to comply with the Act from lobbying.

A perusal of the Lobbyists Registry permits a clearer picture to emerge of the size of the industry, the names of the most important lobbyists and their clients/organizations, and the policy issues and ministries that attract the most lobbying activity. At the time of writing, there were over 450 active lobbyists currently registered under the Act (210 senior officers of organizations,135 consultant lobbyists, and 109 In-House lobbyists), engaged in over 3300 “current lobbying activities”. Fully 243 of those activities were with MLAs, followed by 211 with the Office of the Premier. Other agencies attracting large numbers of lobbying activities include Finance (176), Environment (131), Attorney-General (116), and Energy, Mines and Development (109). Currently, the most active business lobbyists evidenced by the Registry include consultant lobbyists Michael Bailey, John Moonen, Gary Ley, Bruce Young, Kimanda Jarzebiak, Andy Orr, Andrew Wilkinson and Christopher Smith, and Senior Officers Jock Finlayson and Ed Wong of the Business Council of British Columbia. Many more are in-house lobbyists working either as public affairs specialists or lawyers for particular firms and organizations, including organizations that engage in public interest advocacy on behalf of broader social causes. Of course, this information does not indicate which contacts are most influential, but does help to point us in the right direction (one suspects that, ceteris paribus, a meeting with the Premier’s Office carries greater potential for influence than with most backbench or opposition MLAs, and that a close advisor to Gordon Campbell such as Wilkinson or spokespersons for the larger business community like Wong and Finlayson are more likely to gain an influential audience than other lobbyists.)

The Opposition New Democratic Party (NDP), although supporting the LRA as a continuation of their own policy commitment to transparency and accountability, nonetheless raised concerns at the LRA’s inception that, while trade unions and public interest NGOs would have to register in order to gain access to government officials, those whom the government asked for advice (disproportionately from the business community in the case of the Liberals—via such bodies as the Progress Board of BC , and the Premier’s Council on Science and Technology) were exempted, thereby leaving important channels of influence uncovered and creating inequities between interest groups. These criticisms may have been overstated in the sense that the vast majority of business interests that make specific claims upon the state have had to register or hire registered lobbyists to speak on their behalf, and the vast majority of entries in the register refer to specific business interests.

Nevertheless, the claims that there are inequities of influence between interest groups, and a lack of enforcement and investigatory powers on the part of the registrar, have proven to be warranted. At least two subsequent incidents clearly illustrate this. Ken Dobell was the deputy minister to the premier from his election in May 2001 until he resigned in June 2005, when he began a consultancy business through his company Dobell Advisory Services Inc. As part of that business he accepted, later in 2005, a contract as special advisor to the Premier in various areas and he also accepted, in April 2006, a contract as advisor to the City of Vancouver and the City Manager respecting development of a cultural district and social housing. Each job paid Mr. Dobell about $250 an hour. Since the LRA requires a consultant lobbyist to file a return within 10 days after entering into an undertaking to lobby on behalf of a client, and Dobell did not do so until October 28, he was clearly in contravention of the Act.

Dobell explained that he had not considered himself to be a lobbyist but rather a “content consultant” engaged in the “substantive work of policy and process analysis” (Loukidelis 2007, 2), but chose to register anyways in the interest of transparency and in order to quell controversy surrounding the question of compliance with the LRA. He also indicated that his communications with provincial government officials were much more in the nature of public policy discussions or debate than lobbying, and maintained that there was an important distinction between his services to government, which he said were in the public interest, and consulting services to private interests. The following spring, Dobell pleaded guilty in a Vancouver provincial court to the charge of failing to register as a lobbyist under the LRA and was granted an absolute discharge. His successor as deputy minister, Jessica McDonald, wrote the premier a memorandum clearing Dobell of conflict of interest.[1] The Information and Privacy Commissioner and Registrar of Lobbyists, David Loukidelis reviewed the question of Dobell’s registration and found that he while he was indeed a lobbyist within the meaning of the Act, “there was no intention by the City or Mr. Dobell to hide the consulting contracts” and that there needed to be a greater commitment to “simple and unstigmatized disclosure” and candid acknowledgment that the current system is not geared or funded to undertake active––much less extensive––compliance and enforcement measures”(Loukidelis 2007, 4).

An even greater embarrassment to the government and the Lobbyists Registry came in October, 2008 when Patrick Kinsella, former principal secretary to Social Credit premier Bill Bennett and longtime Liberal campaign advisor, refused to cooperate with the Privacy Commissioner’s investigation that he improperly lobbied the government. The investigation was triggered after Sean Holman, the legislative reporter for the Vancouver newspaper 24 Hours, obtained copies of records obtained under Washington state’s Freedom of Information legislation, which included a May 2006 contract between the Washington State government and Kinsella’s firm, The Progressive Group, in which the firm committed to "facilitate opportunities for Washington State to develop important relationships" with "key individuals within target business, political and Olympic circles" -- including cabinet ministers and senior bureaucrats. (In a 2004 interview, Kinsella had stated, "I don't consider myself a lobbyist. I hold myself up as a communications consultant. I don't do any lobbying. They don't need me to pick up a phone and talk to the government or any members of the provincial government. I make it very clear to my clients that I don't do that.")

In September 2008 Kinsella’s lawyer Paul Cassidy published a review of the LRA which found that the Registrar of Lobbyists had “no legislative or other power to accept complaints, or to conduct any investigation or reporting on the activities of individuals alleged to have contravened the Act” and that , accordingly, any investigations by the Registrar concerning the alleged lobbying activities of our client have no legal basis”. Loukidelis once again wrote to the attorney –general, pointing out that previous investigations taken unde the LRA had only been possible with the cooperation of those being investigated—i.e. that the BC system was essentially an honour system. The Kinsella case showed that the LRA needed amendments, similar to those found in the Alberta Lobbyists Act, the federal Lobbying Act, and Quebec’s Lobbying Transparency and Ethics Act, that gave the responsible officer powers to investigate non-compliance, including the power to compel production of records and testimony. The Commissioner added that in the meantime, he would no longer investigate complaints against lobbyists because of the de facto veto that lobbyists under investigation have (Loukidelis 2008, 4-5). The Opposition NDP responded by stating that in the future it would therefore ask the RCMP to conduct such investigations, starting with the “Kinsella affair”.

Largely as a result of the complaints concerning Dobell and Kinsella, both of BC’s major parties have signalled that the LRA will be expanded and improved in line with the leading legislation elsewhere in Canada. But besides providing an impetus to legislative reform, these cases also illustrate that the lines between “lobbying”, “communications” and “governance” can be very fine. The growing institutionalization of interest group influence and legalization (in the sense of growing proceduralism and use of legal norms) of the political and policy environment is continuing to alter the way that the state interacts with society and the context in which policy decisions are made.

[1] McDonald, Jessica. Memorandum to the premier of British Columbia, April 27, 2007. “I remain satisfied that Mr. Dobell fulfilled his obligations with respect to managing potential conflict of interest, and that the discussion he and I had and the procedure we agreed to effectively safeguarded the Province’s interest.”