Rod McQueen's Blog, page 48

Fathers and sons

Dear Steve Paikin:

I read your blog about you and your son and I agree, you have a serious problem. As a high-profile journalist covering politics and public issues on TVO, how do you deal with your son Zach's plan to seek the Liberal nomination in the federal riding of Hamilton West-Ancaster-Dundas? As you rightly ask, can you continue to be seen as neutral, do you have to stop covering Liberal politics, or are you exaggerating your concern? The last question is the simplest. No, you are not exaggerating. But how do you balance being a father with being a journalist?

Let me tell you how this works in the real world. When I was Washington Bureau Chief for The Financial Post, then Prime Minister Brian Mulroney visited President George H. W. Bush. I wrote an article criticizing Mulroney. At the time, my son Mark was Mulroney's deputy chief of staff. Marjory LeBreton, who was in charge of political appointments for Mulroney, went on the warpath. She castigated Mark and complained to anyone else who would listen about my views. So, if your son becomes a Liberal candidate and you criticize the Liberals in any way, party members will complain to Zach and blame him. Conversely, if you don't criticize the Liberals as much as the other parties, people will presume you are pulling your punches.

You've already run afoul of the problem. Those photos on the weekend showing you, Zach and Justin Trudeau cheering for the Canadian men's hockey team made it look like you'd gone over to the dark side. I understand you were caught up in a situation beyond your control, and the next time a similar possibility presented itself, you skedaddled out of sight, but it won't be the last time you find yourself where you shouldn't be.

Transparency is obviously helpful, but is it enough? On BNN, for example, when someone is commenting on stocks, their holdings are listed onscreen. Viewers are made aware of a potential bias but the notices serve another purpose. The commentator is seen as an expert on those holdings because research has been done and money invested. An onsceen crawl announcing that your son is a Liberal won't help you in the same way.

All journalists have biases. The critical issue is do those biases get in the way of their reporting. In your case, recusing yourself from political commentary would be professional death. Too many topics would be offside. The Agenda would be the worse for such skimpy coverage.

So, by all means, carry on. Tell it like it is. And root for your son. If he does win the seat, there's no reason why you both can't do your respective jobs, but it won't be easy for either of you. And you probably thought the teenaged years were supposed to be the toughest.

Plug me into something

Notice anything about your hydro bill recently? Prices are up, year-over-year, anywhere between 9 per cent and 14 per cent depending on time-of-day usage. The biggest increase, 14 per cent, is for off-peak. So much for doing a load of laundry at 10 p.m. to save money. And it's only going to get worse. Ontario used to have a ready supply of the cheapest power in North America. Soon we're going to be among the jurisdictions at the top end. The cause? Decades of poor management and worse political oversight.

The original goal of Ontario Hydro, back in 1906 when Adam Beck founded the electric power system, was public ownership selling power to consumers at cost. Now we've got the worst of all worlds; it's still public but there's no accountability. Hydro can run up huge debts and users must pay. In 1995 the Mike Harris government set up a commission of inquiry under former federal finance minister Donald Macdonald to see how competition could be introduced to the system. Macdonald had done a much larger Royal Commission in the 1980s that led to free trade but politics trumped him this time. After Macdonald's report, Harris took a few tentative steps toward privatization, then his successor, Ernie Eves, who was premier for about five minutes, cancelled everything.

The government of Dalton McGuinty made matters worse by cancelling low-cost coal-fired plants. It's all well and good to care about our air quality, but Ohio and Michigan still have coal-fired plants. The prevailing winds bring their pollutants across southern Ontario, so there's no improvement. Two new gas-fired plants were cancelled to win a couple of seats in an election at a cost to taxpayers of $1 billion. Prices paid for solar and wind are so far out of whack that I read about one householder who sells his solar power into the grid, gets an annual return of 10 per cent on his investment, and will send his child to college with the proceeds. 

Parker Gallant, a retired TD banker who now blogs for Energy Probe, keeps a close watch on the atrocities that are being committed. Here's a small sampling of his findings. Since they were first introduced, off-peak rates have increased 140 per cent, moving them ever closer to on-peak rates. Taxpayers have ponied up $12 billion to pay down the stranded debt of $7.8 billion – but there's still $3.9 billion to be paid. The number of employees at Hydro One is up 1,700 or 39 per cent since 2005 even though they distribute less power now than they did then. Pricing has become so weird that when you conserve energy your local distribution company can apply to the Ontario Energy Board for a rate increase because they lost revenue. And finally, my favourite boondoggle, according to Gallant we pay to build meteorological stations at wind developments to monitor power they might have produced, but we can't use, and pay for it anyway.

It's clear that no politician of any stripe can control the run-amok engineering culture that produces our electric power. The answer is simple; follow the same procedures as natural gas used for heating our homes. Private companies control the assets, regulators set the rates, and end users know where they stand. 

My groupies

In the bird world, there are wonderful descriptions of groups and flocks. Just to cite three examples: a murmuration of starlings, an exaltation of larks, and my personal favourite, a charm of hummingbirds.

Why not apply the same possibilities to human gatherings? So you'd get a tribulation of politicians, a banality of sportscasters, a trepidation of lawyers, a pugnaciousness of hockey players, an exhaustion of Olympics and a reach of bloggers.

The secret’s out

Whatever happened to budget secrecy? Here we are on the day Finance Minister Jim Flaherty brings down his budget and we already know that he will announce an end to the immigrant investor plan, legislation for better consumer prices in Canada versus the U.S., as well as more money for skills instruction, infrastructure projects and the auto sector. And, oh yes, there will be an overall deficit, supposedly the last for the Harper government. 

And I read all this in my morning paper, as supplied by officials in the know and the minister himself. Time was when a journalist who knew this much would be investigated by the RCMP looking for a leak. Doug Small, then of  Global News, was threatened with jail in 1989 because he seemed to have advance information. 

About the only tradition Flaherty honoured was outfitting himself with new shoes. In fact, no one knows where this so-called tradition came from, and not all finance ministers have followed it. A researcher in the Parliamentary Library has looked into this matter of fancy footwear and discovered that the first finance minister to wear new shoes was Donald Fleming in 1960 but only in one of his five budget presentations on behalf of the Diefenbaker government. Other finance ministers who did not wear new shoes include Walter Gordon, Don Mazankowski, and John Manley. According to the website, the footwear of Edgar Benson, John Turner, Allan MacEachen, and Donald Macdonald is not known.

Those who have worn new shoes include Mitchell Sharp, Jean Chretien, John Crosbie (if you count used mukluks), Michael Wilson, Marc Lalonde, Paul Martin Jr. (but only for the first of his seven budgets and they were new work boots), Ralph Goodale, and the aforementioned Flaherty who's about half and half for his ten budgets.

It also used to be said that the cabinet post of finance was a graveyard for a politician. Flaherty laughs past that cemetery. Today's offering will be his tenth budget, an all-time record. New shoes, apparently no longer matter so much. When it comes to information, new shoes have been replaced another budget tradition. Let's call it old hat. 

Funny money

We're all trying to get used to the new polymer currency, battling with bills that stick together, and worrying about them melting in a parked car if summer ever comes. For my part, I'll accept the Bank of Canada's claims that the bills last 2-1/2 times longer than the old cotton-paper series. Over time, we'll learn if they really are difficult to counterfeit. And yes, we've joined some 30 other countries using polymer. I'm fine with all that.

What bothers me is that we're stuck with portraits of people that can only be described as duds on each of the five new bills. None of the individuals has gravitas; they all look effete. If the four former prime ministers had used these drawings on their respective campaign material, none of them would have been elected.

Robert Borden on the $100 is the best of a bad lot. But even he looks like he's holding his breath waiting for his coalition Union government to collapse during the First World War. On the $50, Mackenzie King looks a bit stunned, like's he just heard at a seance that he's due to die in the next few days. 

As for the Queen on the $20, this has to be the only image of Her Highness than neither makes her look lively nor like she's reigning. Instead she seems to have been caught halted in the hallway just before entering a roomful of her subjects, allowing herself a last moment of emptiness, before she fills up again with grace and gentility.

Sir John A. Macdonald's head is too small on the $10 bill and his eyes are glassy. I wish I could say that it was from taking the grog for which he was famous but instead he just looks like he's about to bump into something. Sir Wilfrid Laurier on the $5 bill is the worst. His head isn't even on straight and he seems to be peering up into the far corner. Is that a spider he sees, or does he just wish the sitting were over? He looks askance, nothing at all like the man who said the twentieth century belonged to Canada.

Anyone who agrees with me about this gallery of not-so-greats can send me their bills of any or all denominations. As part of my protest, I'll undertake to spend them quickly without even giving the renderings about which I complain so much as a glance.

Where’s St. George when you need him?

What is it about TV personalities that makes print journalists go all weak at the knees? The profile in Saturday's Globe and Mail about Arlene Dickinson, a panelist on CBC-TV's Dragons' Den, is positively fawning. Yet it's written by Jackie McNish, one of the paper's hardest-hitting investigative journalists. Dickinson is so deft at what she does that she cries while telling McNish about helping an entrepreneur. The article ends focussed on Dickinson's napkin, still moist from the tracks of her tears about someone else's travails. 

Gad. Nowhere in the profile does it say that precious few of the "deals" that supposedly get done on the show ever come to fruition. Nor does McNish even appear to question Dickinson's purported talent for recognizing and financing good ideas. As described, her business background includes only how she worked her way up in a Calgary marketing company that she eventually bought. Other than the man whose tale provoked her tears there isn't a single proof point about how she supplied venture capital to anyone who succeeded, or failed for that matter. Dickinson claims to have invested $2 million in various deals but none of them is revealed to the reader.

And so it always goes for the other panelists, too, untouched by the blemish of disbelief that financial journalists bring to most topics. Kevin O'Leary, whose mutual funds perform poorly compared to the broader market, does little but disparage the poor wretches who dare to explain plans for a better mousetrap. Of all the current panelists who've been on the show since it debuted in 2006, only Jim Treliving has actually built two sizeable businesses: Boston Pizza and Mr. Lube.

And yet this kangaroo court draws two million viewers every week. It's always been said that Wheel of Fortune owes its popularity to the fact that the phrase guests are supposed to figure out is so simple that even viewers not blessed with much by way of brains can beat them to the answer. I can only guess that the same logic applies to Dragons' Den. Most viewers know nothing about business so they think the panelists must be as bright as Warren Buffett. After all, they dress well, seem to have endless amounts of money at their disposal for investment, and can tap-dance so fast that they overwhelm all comers.

I understand all that. What mystifies me is why the financial media, usually so quick to be skeptical about others in business, gives Dragons' Den a free pass. Will no one slay the dragons? 

Three’s not even a crowd

I saw a statistic recently that between 1892 and 2012 the stock market rose 9 per cent a year. I thought that was a huge annual increase, far beyond what I'd ever heard before, so I asked a group of friends who have worked on Bay Street for their thoughts. Yes, they said, that sounds about right, but don't forget that's a gross number. You have to subtract fees, take account for inflation and pay taxes. The real number, net, net, net, as they said, is more like 3 per cent annually.

Three per cent! Such a low result came as a surprise to me. And if it's new information to me, someone who has been a business journalist for more than 30 years, I can only assume that few others know that's what passes for performance. I pressed my friends, saying surely I'm missing something, say it isn't so. "No," they said, as if I should have been aware of this fact all along, "that's the reality."

Imagine the empires created and the effort expended so that investors can earn a piddly 3 per cent a year. Corporations begat profits, investment bankers raise capital, mutual fund companies manage billions, ETFs are brought into existence, ad campaigns inundate the great unwashed, the media trumpets the CEO of the year, regulators worry about Ponzi schemes and financial advisors talk about a great little stock that's bound to double next week. And all this in aid of 3 per cent a year.

Three per cent, that's the proportion of Americans being forced to buy insurance under ObamaCare. Critics of the president's plan make 3 per cent sound like a lot of people. Yet, a 3 per cent annual increase in my portfolio hardly seems worth all the effort involved. 

Between this news and the market's tumble in the past two days, it's enough to make a guy want to take his money and stuff it under the mattress. 

My apologies

I'm sorry about how the site looks. Obviously the revamp was not a success. We're working on a fix.

Scots wha hae

Flush with success in the early going of his mission to Israel, Stephen Harper has announced that his next sortie will be to Scotland. "There are five million Canadians of Scottish origin. We hope to snare all of their votes," said a spokesman for the prime minister who asked for anonymity because of his Irish roots.

Liberal leader Justin Trudeau, not wanting to fall behind in the global quest for popularity, said he will travel next week to the Philippines to shore up support through the families of nannys working in Canada.

The prime minister's trip to Scotland will include the requisite visit to touch the Stone of Scone, a half of best bitter at The Brazen Head in The Gorbals in Glasgow, and an underwater search for the Loch Ness Monster.

Included in the delegation will be former Prime Minister Kim Campbell leading a group of dancers in Strip the Willow, the pipes and drums of the 48th Highlanders, actor Jim Carrey whose mother was a Gordon, and a Harry Lauder lookalike who has been performing in Estevan, Saskatchewan, for as long as anyone can remember.

A horror story

I've just been reading a horror story and it's not by Stephen King. The title is "The State of Ontario's Indebtedness: Warning Signs to Act." Published by the Fraser Institute, you can read it here.

Let me summarize it for you. Every year Ontario runs a deficit and that loss does not go away. It gets added to the debt. No surprise there, but no one seems to be paying attention. Certainly Ontario Minister of Finance Charles Sousa seems content with the way things are. But compared to California, which is supposedly a basket case, we're far worse off. Ontario's debt is 64 per cent higher than California – even though that state's economy and population are three times larger than Ontario's. And at the rate we're going, net public debt in Ontario will grow to $400 billion by 2017-18 and will be the equivalent of half our GDP.

To carry all this debt, we have to pay interest. This year, those payments run to about $11 billion. That means about 10 per cent of all revenue received by the province is going to pay the interest on a debt that continues to grow. Could you run your household like this? Not for long. The bank would halt your credit card charges, foreclose on your mortgage and seize your car. 

Something similar will happen in Ontario when the ratings agencies downgrade the province so that borrowing costs even more. Unless this issue becomes a prime topic in the coming election, we're all headed for the poorhouse. Like Greece without the good weather.