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 Lawrence Solomon: Arctic ice sets records in April, could augur global coolingThe Arctic ice set 30 records in April, one for each day. According to satellite data received by the Japan Aerospace Exploration Agency, the Arctic was more ice bound each day of April than it had been any other corresponding day in April since its sensors began tracking the extent of Arctic Ice in mid 2002. Click here to see this tracking on the Japan Aerospace website, run jointly with the International Arctic Research Center. While Arctic ice has always varied greatly, expanding and contracting during the course of a year and also from year to year and decade to decade, the expansion of the Arctic ice this decade is significant in one respect: It acts to disprove the models that had predicted that the Arctic ice in this century would not recover as it had in previous centuries. The expansion of the Arctic ice also acts to support a growing number of reports that Earth could be in for a period of global cooling. In one recent example, on April 14 New Scientist in an article entitled "Quiet Sun Puts Europe on Ice" warned its readers as follows: "BRACE yourself for more winters like the last one, northern Europe. Freezing conditions could become more likely: winter temperatures may even plummet to depths last seen at the end of the 17th century, a time known as the Little Ice Age. That's the message from a new study that identifies a compelling link between solar activity and winter temperatures in northern Europe." New Scientist, a widely respected magazine that until recently had blamed human activity for the global warming, is now advising its readers that climate scientists may have had their blinders on in ignoring a dominant role for the Sun. New research, the article explains, "is helping to overcome a long-standing reticence among climate scientists to tackle the influence of solar cycles on the climate and weather." The new study that New Scientist refers to, which appears in Environmental Research Letters, a journal of the Institute of Physics, is entitled "Are cold winters in Europe associated with low solar activity?" LawrenceSolomon@nextcity.com Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute and author of The Deniers: The world-renowned scientists who stood up against global warming hysteria, political persecution, and fraud.
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 Peter Foster: Subprime government
At the height of the Wall Street crisis, Greece's Prime Minister warned against free market 'greed.' It's hard to blame Greece's collapse on capitalism
By Peter Foster
M
uch to the frustration of U.S. regulators and legislators, and despite rumours of criminal charges, the grandstanding over Goldman Sachs this week was upstaged by the cacophony coming from Greece. The EU debacle definitely couldn't be blamed on "unfettered capitalism," a mythical creature that is part unicorn, part scapegoat. In fact, the Greek situation provided a useful reminder that there is nothing as dangerous as subprime government.
Greek debt was this week downgraded to junk, while the cost of borrowing for Portugal and Spain was also raised. But European markets rebounded later in the week on the belief that a bailout package could be put together by Monday by the IMF, the European Central Bank and other eurozone countries. The problem with bailouts, however, is that they prevent possible contagion now at the threat of systemic plague later.
Despite the rising Greek chorus, the U.S. regulatory establishment fought fiercely to keep the emphasis on Goldman, culminating with the hardly surprising news that New York prosecutors were looking at the case. Most revealing were the thoughts, published in the Post on Thursday, of former New York governor, Wall Street "sheriff" and prostitute wrangler Eliot Spitzer.
Mr. Spitzer regurgitated the hackneyed assessment that Wall Street firms often engage in nothing better than "gambling" and thus called for an assessment of their "social utility." But the difference between gambling and financial regulation is that with draconian regulation, although there may be short-term winners who are relieved of the consequences of their "bad bets," in the long run everybody usually loses.
Mr. Spitzer fulminated about the "asymmetry" of having "socialized risk" and "privatized gain." One couldn't agree more. But he didn't suggest that governments should stop socializing risk. Instead, he wants the very shortcomings of government-socialized risk to be an excuse for more government.
The Spitzer wing of the liberal regulatory brigade like to think of themselves as secular "gods" charged with the weight of correcting humanity, but if they are like gods, it is the Greek variety, an utterly amoral and vindictive bunch who specialize in wreaking havoc. Mr. Spitzer is hardly alone in his pretensions, or his hypocrisy. At the height of the Wall Street crisis in October 2008, then Greek Prime Minister Costas Karamanlis had the gall to say that "free economic activity must not submit to greed or a lack of restraint." His successor, George Papandreou, earlier this year berated "loan sharks ... whose only god is greed." During a subsequent meeting with President Obama, Mr. Papandreou found a fearless fellow castigator of wicked "speculators."
The problem is that it's pretty tough to blame Greece and the dominoes lined up behind it on capitalism, although one stab was made earlier this year when it was revealed that Goldman Sachs had advised Greece on off-balance-sheet shenanigans. However, the notion that Goldman corrupted Greek politicians strains credulity to the limit.
A Congressional subcommittee on finance tried to suggest on Thursday that Greece's situation may have been caused by credit default swaps, CDSs, the form of insurance that drove AIG into the arms of Washington. The committee was disabused by Anthony Sanders, a finance professor, who told them that no analysis of complex instruments was required. "The Greek crisis," he said, "is the result of massive government spending and debt issuance to fund the spending." He added that the swaps had in fact alerted the world to Greece's "credit death spiral" (thus providing a much more reliable guide than ratings agencies).
Both the U.S. subprime crisis and the current sovereign debt turmoil are essentially children of the delusive belief in comprehensive "economic security." The subprime crisis was rooted not in Wall Street "greed" but in government money manipulation and "altruistic" housing policy, plus explicit or implicit guarantees of bailouts, which inevitably promoted reckless behaviour. Similarly, the Greek crisis was based in the folly of believing that adopting the euro would render Athens responsible.
The cost of a Greek bailout will not only fall on the taxpayers of other countries (including Canada), it will boost the likelihood, size and systemic threat of future bailouts. The Greeks will never elect more sensible governments as long as non-Greeks are forced to bear or share the consequences.
Compared with this, Goldman's alleged client conflicts are the merest side show. The big picture -- in Europe as it was, and is, in the United States -- is that of self-serving regulators bleeding helpless taxpayers to cover up for the fundamental incompetence of their Rube Goldberg systems.
As Milton Friedman pointed out after the fall of the Berlin Wall, the "100% socialism" of the Soviet Union collapsed in the face not of "unfettered capitalism" but of the "50% socialism" that reigned, and reigns, in the West. The latter could never survive unless the 50% capitalist part of the system was there to sustain it and pick up the pieces. And yet it's the capitalist bit that always gets the blame.
Financial Post
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 Lawrence Solomon: Shake that saltThe sodium-is-dangerous theory is itself a danger By Lawrence Solomon A re you worried about congestive heart failure? Liver or kidney failure? Chronic fatigue? Pneumonia? Blood vessel health? Alzheimer's or the loss of other cognitive abilities? Do you experience muscle cramps or have high cholesterol? Perhaps you suffer from Gitelman's syndrome or Type-2 diabetes, low libido or insomnia. Maybe your glucose metabolism isn't what it should be. If any of these medical conditions applies to you, then maybe you should ask yourself if you're getting enough salt in your diet. These and numerous other conditions -- some of them potentially fatal -- could be triggered or exacerbated by a diet low in sodium. We hear a lot from governments about the dangers to our health of consuming sodium. Governments are also subjecting us to an increasing array of sodium-related regulations, much of it geared to protecting those suffering from hypertension, a condition associated with heart attacks. This sodium-is-dangerous theory (it is only a theory because no proof for it has yet materialized) is credible and worth considering. But before the government's regulatory apparatus expands, it and we should consider the far-reaching danger in cutting back on our salt, a danger that -- ironically -- fully applies to those who suffer from hypertension. Only one controlled study has been conducted of hypertensive patients on a low-sodium diet. Its results, involving some 3,000 patients in the 1990s, showed the opposite of what most expected: The more sodium the patients consumed, the less likely they were to suffer from heart attacks. The 25% of male patients who consumed the least sodium experienced more than four times as many heart attacks as the 25% of male patients who consumed the most sodium (women did not show a statistically significant relationship). The study, published in Hypertension, a publication of the American Heart Association, was conducted by a research team from the Department of Epidemiology and Social Medicine at the Albert Einstein College of Medicine in the Bronx and the Cardiovascular Center at Cornell University Medical College in New York. The gold standard in medical research is the randomized clinical trial, which randomly assigns participants to different treatments. To date, such trials have rarely occurred in the study of low-sodium diets, with only one involving patients suffering from heart failure. These high-risk patients were found to be at higher risk still when following a low-sodium regimen, says a 2009 study in the American Journal of Cardiology. In contrast, those who consumed normal levels of sodium were less likely to be rehospitalized, less likely to experience the neurohormonal activation associated with heart failure, less likely to suffer from renal dysfunction and less likely to die. Most studies of sodium and heart disease point to highly complex relationships. In one of the largest studies, involving some 11,000 participants, sodium intake was shown to benefit cardiovascular health. In a follow-up study that disaggregated the data, however, large differences turned up among the 28% who were overweight. Unlike the other 72%, the overweight fared poorly when they increased their salt consumption, experiencing more deaths from coronary heart disease, from cardiovascular disease, and more deaths overall. Other studies show sodium interrelates with the type of diet, with environmental factors, and with our genetic makeup. African Americans are thought to be salt-sensitive. The Kuna Indians, who live in the San Blas Islands off Panama, may be salt-insensitive. When studied in the 1940s, these islanders were found to consume little salt and to have normal blood pressure. Fifty years later, with ready access to salt, these islanders' salt consumption resembled that of North Americans yet they continued to have normal blood pressure. The blood pressure of those Kuna who emigrated to the mainland of Panama and ate as much salt as their island cousins, however, now resembled that of other Panamanians. How diet, genetics and environmental factors conspire with sodium to produce their results remains a mystery. We know, however, that in this mystery sodium plays a commanding role, and yet a precarious one. Our bodies run on electricity, with electrolytes transmitting electrical signals to the central nervous system, muscles, the brain and other organs. The body's chief positive electrolyte is the sodium ion that results when salt (NaCl) dissolves into its sodium (Na+) and chlorine components (Cl-). Sodium also controls the fluids in our body, regulating our blood pressure and the pressure inside and outside our cells to prevent their collapse or explosion. In performing its service to us, sodium must also maintain itself in precise balance within the body, calling up replenishments by making us crave salt or by expelling any surplus through our urine. Put another way, our bodies cannot function efficiently, or at all, if their use of sodium is compromised. Because sodium has such far-reaching effects on nearly all bodily functions, its abuse can -- and does -- trigger any number of medical conditions. When governmental health authorities attempt to regulate sodium, knowing next to nothing about the science, they are endangering our lives as well as well as our lifestyles. The human body regulates sodium. One regulator is enough. Second in a two-part series, click here for part one. Financial PostLawrence Solomon is executive director of Urban Renaissance Institute.LawrenceSolomon@nextcity.com
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 FP Comment blog has movedHello readers, Our FP Comment blogs have moved to a new home, over here: http://opinion.financialpost.com/category/fp-comment/There will be no more updates at this location, so please change your bookmarks to the address above.We hope to see you soon!
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 William Watson: Making meaning of CSR Unfortunately, CSR may be most effective before it's a big deal
By William Watson
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hen BP says it will pay the whole cost of the Gulf of Mexico clean-up, even when its maximum legal liability may be much less, is it making a virtue of necessity? After all, the U.S. government is promising to "stand on its throat" to make it pay. Might as well volunteer for what is going to happen anyway. Or is it trying to salvage whatever glimmer of good publicity it can from the oily sludge? Or, finally, is it exhibiting "corporate social responsibility" and being a good "corporate citizen." (Many people who object to the idea that corporations can be legal persons nevertheless want them to be good citizens.) A new paper by the French economists Jean Tirole of the University of Toulouse and Roland B
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 FP Letters: Opportunity in the green economy
Re: Cap and Fade, Terence Corcoran, FP Magazine, MayIt is clear from Terence Corcoran's article that he doesn't understand the opportunities of the green economy. British Columbia's stance on climate change is clear: The costs of inaction far outweigh the costs of action. Mr. Corcoran cherry-picks a study from the Harvard Kennedy School and uses it to make the case against a carbon tax. He should know that one study does not make a case. Many economists have come out supporting a carbon tax and cap-and-trade regime because they are policies that reduce emissions and stimulate economic growth.However, debates over which policy lever to pull undermine the real discussion that needs to be had. Our economies need a growth source and it is the green economy.The global recession's biggest lesson is that business as usual is no longer viable.
Retooling our financial markets to regain investor trust and safeguard against future meltdowns is essential. Equally vital is that we retool our economies to create new markets, new incomes streams and new jobs.Our province thinks the best way to do this, and simultaneously reduce GHG emissions, is to send a price signal through the economy with a revenue-neutral carbon tax and to continue to pursue a cap-and-trade system under the Western Climate Initiative. Recently Vancouver hosted the biennial GLOBE conference attended by industry leaders and governments from around the world. The GLOBE foundation has predicted that B.C.s green economy contributed roughly $15.3-billion to provincial GDP accounting for about 10.2% of B.C.s total GDP. By 2020, it predicts B.C.s green economy could grow to between $20.1-billion and $27.4-billion in 2020, representing between 10.8% and 14.1% of total provincial GDP.The naysayers and the sceptics miss a basic point around climate change: This is an unparalleled economic opportunity. The truths of the new economy are writ large around the world. And those truths aren't being written in the business orthodoxy of in the red or in the black. They are being written in green.John Yap, Minister of State for Climate Action, British ColumbiaGrubel-nomicsRe: Canada's high-cost public service, Herbert Grubel, May 4I read Herbert Grubel's article on the public service with interest as he was my professor 40 years ago at Simon Fraser University. Now a retired economics professor myself and former president of the Canadian Military Colleges Faculty Association, one of the 19 unions that represents federal civil servants, I feel qualified to offer some comments on Grubel's piece. And the first comment is that Grubel sounds remarkably like Michael Ignatieff, a great commentator and Monday morning quarterback but really a little ignorant of the real world. For seven years I was involved with contract negotiations for CMCFA with Treasury Board. Treasury Board always had the upper hand, negotiated hard, and when times became difficult, whatever the political party in power, imposed pay freezes and rollbacks to previously agreed contracts. I don't believe Treasury Board has ever been overly generous to civil servants but if Grubel has a grievance, it is with Treasury Board not the unions.Two other comments follow: For transparency, I would like Grubel to disclose his lifetime earnings as an SFU professor, senior fellow at the Fraser Institute, and Reform MP, including handsome pensions. I guarantee that he has earned more over his lifetime than all civil servants, except perhaps for a tiny handful of deputy ministers. Second, for the few years that I worked at Ford of Europe headquarters and for what is now KPMG, I saw more waste, perks, expensive dinners, parties, free use of cars, free product, unnecessary travel and self-indulgence than I ever did in 36 years with the civil service. These non-pecuniary rewards do not show up in the salary comparisons cited. Peter Dunnett, professor of economics, Royal Military College, Kingston
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 Flaherty's G20 coupFinance Minister takes sensible stand against bank tax By Jack M. Mintz O ur Minister of Finance, Jim Flaherty, staged a major coup in resisting a global bank tax that was to be discussed at the June G20 meeting. Several countries including Japan and China agreed that a better approach to safeguarding global financial markets is to fix up regulations, such as through a Canadian-proposed contingent bank debt that would be converted to equity if a financial crisis strikes again.While we are unlikely to see any global bank tax soon, and perhaps ever, don't think that the idea won't rear its monstrous head again. Some powerful economies -- including those of the United States, United Kingdom, France and Germany -- are rolling out their own taxes to please their unhappy electorate. They might push other countries to do the same. A leaked confidential IMF report provides support for two ill-advised taxes, a "Financial Stability Contribution" and a "Financial Activities Tax." The first would be a payment for the costs incurred by governments to support banks during a financial crisis. The second is meant to curtail excessive risk-taking by banks that can count on government support as a lender of last resort. The tax would fall on bank profits and payroll costs. The IMF is a distinguished organization so its reports are highly respected. This one, however, should be treated with a great deal of skepticism. As betrayed by the IMF document's title, A Fair and Substantial Contribution by the Financial Sector, the report is highly political. Like beauty, fairness is in the eyes of the beholder. The gist of a special bank tax is that it would cover the cost of government support provided during a crisis when banks are "too big to fail." It might be fair to impose the levy for this reason but it must be remembered that a bank tax would likely raise borrowing costs for consumers and businesses or reduce interest paid to depositors. Except in some limited cases, business taxes rarely fall on the owners - they can shift their investments to other opportunities in global markets. Whether these taxes are fair is a matter of judgment. Other government bailouts, whether for auto companies deemed "too big to fail" or smaller financial institutions, are not expected to make a "fair contribution" to cover taxpayer losses. The IMF fairness argument is weak. So is an argument to impose new taxes on the financial sector since Value Added Taxes exempt financial services in many countries. The IMF report makes the unsubstantiated claim that this exemption has led to too much growth of the financial sector. There would be some truth to this if financial services were provided only to households. However, financial services sold to businesses are heavily taxed since borrowers cannot claim an input tax credit when remitting VAT charged on the goods and services sold to consumers. Moreover, the financial sector has grown rapidly in non-VAT countries -- the United States is a primary example. The IMF also claims bank taxes are needed to curtail excessive risk-taking by financial institutions. What it did not point out was that corporate income taxes already serve that role -- governments take their share of the net profits but not of the losses.A better case for bank taxes could be based on improvements to financial market performance and stability. It can be reasonably argued that governments providing guarantees to companies -- whether banks or any government-sponsored entity -- should charge a risk-related fee to reduce moral hazard. Public-supported deposit insurance is based on this principle although it is not entirely clear that the governments have ever successfully achieved risk-based premiums, especially for smaller financial institutions that are often given a special break. Central banks do provide lender-of-last resort facilities so the principle of assessing some fee on bank assets to cover costs is not unheard of. The Swedes have developed a financial contribution fee to fund a reserve equal to 2.5% of GDP that would be merged with its deposit insurance fund. The U.S. House of Representatives has a similar scheme with a similar principle.While this approach makes some sense, a fee-based system may not work well with global risks. Systematic risks are not easily measured in relation to assets held by a single institution. Governments are also unlikely to coordinate taxes and fees given different regulatory frameworks and financial needs. Further, it is far from clear as to how big a reserve is needed. A lot of money could sit for years before ever being used. Alternatively, with fees set at a low rates, the amounts would be far too small to cover the rare financial crisis, like the one we saw in 2008.Better approaches should have received much more attention in the IMF report. One is to simply allow banks to fail with a reorganization that would protect depositors. This has worked with Bear Stearns, Merrill Lynch and smaller banks -- there is no reason to discontinue the practice. Another is to use the regulatory system, which is already being co-ordinated at the international level to enhance global stability. Governments could agree on minimum capital adequacy requirements, which probably would act better in curtailing risk-taking by guaranteed institutions. The IMF report unpersuasively argues for supplementary bank taxes. As it argues, these taxes would need to vary by type of asset risk held by institutions, no different than risk-related capital ratios. But risks cannot always be easily measured. Capital adequacy ratios such as those faced by Canadian banks would likely assure financial stability better than any tax unrelated to risk.The case for global bank taxes to pay for financial crisis has not been made. It seems far better to rely on regulations that at least get some airing through international co-ordinating bodies. Mr. Flaherty had it right -- too bad some big countries and the IMF don't.Financial PostJack M. Mintz is the Palmer Chair in Public Policy at the School of Public Policy at the University of Calgary.
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 Lawrence Solomon: Virginia Launches Investigation into Climategate's Michael MannThe State of Virginia has decided to investigate possible wrong doing by Michael Mann of Climategate fame. Michael Mann is best known as the scientist, associated with the UN's Intergovernmental Panel on Climate Change, who came up with the controversial Hockey Stick Graph that became the icon of the global warming movement. Virginia's investigation is the first by a government on this side of the Atlantic into possible wrongdoing related to climate change. Other government investigations are likely, particularly if the Democrats lose control of the House or the Senate in the November elections. To see the State of Virginia's Civil Investigative Demand, click here. The unauthorized release of the Climategate emails last year have led to several government investigations in the U.K., as well as some by non-governmental agencies. In the investigation to be conducted under the Virginia Fraud Against Taxpayers Act, Virginia's Attorney General Ken Cuccinelli II, has demanded that the University of Virginia produce documents to determine whether Mann misused taxpayer funds in obtaining climate change research grants. At issue is some $500,000 in research grants involving Mann while he was at the University of Virginia between 1999 and 2005. Mann conducted his Hockey Stick research while at University of Virginia. Cuccinelli's investigation directly flowed from the Climategate emails, which raised doubts about the legitimacy of climate change research. If Mann knowingly presented inconsistencies in obtaining government research funds, Cuccinelli explained, Mann would be culpable. Lawrence Solomon is executive director of Energy Probe and author of The Deniers. LawrenceSolomon@nextcity.com
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 Is Greece next?The average recovery rate on defaults is 50%. Greece would return less By Achim Peijan S overeign defaults have been quite common in the past, but the characteristics are quite different in every single case. After the Second World War, Moody's counts 108 cases of sovereign defaults. The average debt-to-GDP ratio at the time of the crises was about 70%. The average recovery value was about 50%. In most cases, debt was restructured by offering bonds with extended maturity and/or reduced coupon to the old debt holders. Moody's characterizes a sovereign default by a missed or delayed disbursement of interest or principal payment or a distressed exchange whereby the issuers and creditors agree on a new contract that results in a diminished financial obligation relative to the original security. When looking back further in history, a recent study found Venezuela to be the sovereign default champion, with 10 episodes since independence in 1830. In some cases, countries successfully organized "voluntary" exchanges of securities (e.g., Ukraine 1999) which avoided missing scheduled payments. However, Moody's also considers this as a default, as conditions turn less favourable for bond holders.Unlike companies, countries do not go bust or go out of business. The decision to stop serving debt normally results from a cost-benefit analysis that involves political and social considerations. As a consequence, countries often default before they run out of resources and normally the "willingness to repay" rather than "the ability to repay" triggers the event. Ecuador provides an extreme example. In November 2008, Ecuador missed an interest payment and authorities announced that some of the securities were "illegal" and "illegitimate." The restructuring plan included a 65% haircut on the face value of the bonds. One study says the ratio of external debt to GDP was roughly 70% on average for the defaults they identified over the past 40 years. But the indebtedness ranged between 20% (e.g., Ecuador 2008, Turkey 1978) and above 100% (e.g., Ecuador 2000, Costa Rica 1981).Moody's estimates recovery rates by reporting the average trading price on sovereign bonds 30 days after a missed interest payment and by comparing the value of the new securities received in exchange to the original obligations. Both approaches provide very similar results: The average historical sovereign recovery rate was about 50% during 1983-2009, Moody's says. But the recovery values range between around 20% (Russia) and 95% (Dominican Republic). In no case did investors experience a complete loss. The lack of a supranational framework for enforcing debt contracts across borders is the reason why a default is mainly a political position. There are many different ways debt is restructured. Often the maturity of the debt is prolonged, i.e. the redemption is shifted some years out in the future. Reducing the coupon or introducing a step-up coupon scheme, where coupons increase over time but especially in the short term, give some breathing space (e.g., Grenada 2004, Belize 2006). Turkey imposed a retroactive withholding tax on interest income on all outstanding domestic currency securities issued by the government prior to December 1, 1999. Economically this resulted in a reduction of the coupon. In 1998, the Government of Ukraine declared a moratorium on debt service for bearer bonds owned by anonymous entities. Only those entities willing to identify themselves and convert to local currency accounts were eligible for debt repayments. Argentina defaulted by missing an interest payment on January 3 2002. The IMF declined to bail Argentina out by making an advance payment on a previously agreed loan. In December 2001 and early January 2002, there was a rush on the banks to convert pesos into dollars at the one-to-one Currency Board exchange rate. Argentina, subsequently, defaulted on its foreign debt. After prolonged negotiations with its lenders and multilateral institutions to restructure the debt, Argentina completed several exchange offers covering various series of defaulted bonds. By some estimates, the ultimate haircut taken by investors was as high as 65%. In Uruguay (2003) contagion from the Argentina debt crisis in 2001 led to a currency crisis. To restore debt-sustainability, Uruguay completed a distressed exchange with bondholders that led to extension of maturity by five years. The historical default experience indicates that a possible default by Greece would also be primarily a political decision. Unlike past experience, other countries in the eurozone have a strong interest in the case. In their view, a default of Greece would destabilize the common currency and countries such as Portugal, Ireland, Spain and Italy. In this case, the contagion argument would speak for a relatively high recovery value and for political pressure on Greece to offer rather favourable terms. Greece might be willing to offer relatively high recovery values to rebuild some political capital that was lost when the international community was misled by wrong debt statistics for years. From this point of view, we would rather expect the recovery value to be somewhat above the historical averages of 50%. However, we must also admit that the debt-to-GDP ratio of about 115% (in 2009 according to Eurostat) is clearly above 70%, the average debt-to-GDP ratio at the time of the average default in the past. And while an average recovery value of 50% left the average countries with a debt level of 35%, such a target would leave recovery at 30% in case of Greece. While this would bring Greece into a more favourable starting position, it would put even more pressure on Portugal, Spain and Italy as their relative position would become worse, putting their stained economies under additional pressure. Therefore, such a low recovery value might not be politically opportune. Financial Post-- Achim Peijan is a strategist with UBS AG. This is an excerpt from a UPS Wealth Management Research report.
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 Canada's high-cost public serviceBy Herbert Grubel T he Canadian Federation of Independent Business (CFIB) in 2008 published a study that compared the incomes of employees in the public and private sectors in Canada. The results of this study have not been given the attention they deserve at the present time when governments are searching for ways to eliminate large deficits: If the incomes of public sector workers were equal to those in the private sector, fiscal deficits of governments would be lowered by at least $19-billion. The CFIB's comparisons involve only occupations that have the same responsibilities in both sectors, such as office clerks, accountants, administrative officers and human resource specialists. Excluded are professors, urban transit drivers, firefighters, elected government officials and senior government employees such as deputy ministers who are not found in the private sector. The data are also adjusted for age to account for the fact the public-sector employees on average are older than those in the private sector. To justify any reduction in public-sector compensation, it is essential to understand that the existing gap is due entirely to the higher levels of unionization of the public sector and to the disproportionate power the public-sector unions have in raising the incomes of their members. What explains this power of public-sector unions? The answer is that public-sector workers produce services that are free to the public and that face no competition from the private sector. At the same time, politicians face direct and grave consequences if strikes inconvenience the public while the consequences of covering higher labour costs through increased taxes are relatively minor, especially in a world of economic growth and automatically rising tax revenues. The merit of policies to reduce public-sector incomes must also take into consideration that public-sector incomes are unfair and inconsistent with Canada's effort to ensure "equal pay for equal work." Office clerks, accountants and others in occupations compared in this study should be paid the same whether they work in the public or private sector. The blame for the existing income differences falls fully on politicians who gave public-sector employees the right to strike without making any provisions to prevent the observed, inefficient and unfair outcome. Unions and their members simply and understandably have been taking advantage of the opportunities offered them by the politicians. What measures would help reduce the existing fiscal deficits and restore equity in the compensation of public- and private-sector workers? The most obvious measure would be the elimination of public-sector unions, which would probably appeal to the vast majority of Canadians who are not members of unions. A second-best policy would permit public-sector unions to exist but deprive them of the right to strike for higher compensation. Under these conditions, the main function of the unions would be to represent individual workers whoe have grievances against management. The existence of such an institution would improve the quality of the work environment and raise productivity. The elimination of public-sector unions' right to strike should be accompanied by the adoption of a formula that ties annual increases in public-sector wages and compensation to those in the private sector. To eliminate the existing gap, the public-sector increases should be a fraction, say 50%, of private-sector increases, until the levels in the two sectors are equalized. Politicians would be reluctant to accept such proposals because they would face fierce opposition from unionized workers in both sectors, endangering their electoral prospects. However, the effectiveness of such union opposition can be blunted significantly and can even raise electoral prospects if the vast majority of non-unionized Canadians are made aware of the consequences of not doing so: unjustifiable income advantages for a privileged group and higher deficits or taxes for the rest.Financial Post-- Herbert Grubel is professor of economics (emeritus) at Simon Fraser University and a senior fellow at the Fraser Institute.
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 Naked Aussie tax grab
Falling in popularity, Rudd is accused of pulling a 'mini-Chavez'
By Peter Foster
This week the increasingly unpopular Australian Labour government of Kevin Rudd announced a new "super profits tax" on the mining industry, starting in 2012. Who couldn't be in favour of taxing super profits? They sound awfully unfair. But what "super" means to the Ruddites is apparently any return above that of government bonds, which will be dinged at a rate of 40%. If there were ever a definition of punishing risk-taking, this is it.According to the government, the tax will haul in US$11-billion over its first two years. The problem is that it has knocked more than that off the value of mining stocks so far this week.While this doesn't exactly rank with Canada's infamous 1980 National Energy Program, which not only hoisted taxes but also set prices and sought to promote Canadian ownership, it comes into the same category of no-consultation, populist, them-and-us, grab-the-windfall, damn-the-consequences political grandstanding. If one were to seek a more recent Canadian parallel, it would be Alberta premier Ed Stelmach's hoisting of petroleum royalty rates three years ago in the name of "fairness." We all know what happened next. Investment went elsewhere, the province was hit particularly hard by a drop in oil and gas prices, and two months ago Mr. Stelmach was forced to reverse the decision, thus further imperiling his own tenuous political future.Behind an appeal to "soak the fat cats," Mr. Rudd's move is a naked tax grab on behalf of a cash-strapped government. The Australian mining sector has been booming, thanks significantly to buoyant demand from Asia in general and China in particular. Spot iron ore prices in China are up some 70% this year alone, and the value of iron ore exports seems certain to smash the 2008-2009 record of US$34-billion. So what better time for a tax assault backed by suggestions that big mining companies are not "fair dinkum Aussies" anyway? One of the most depressing features of the announcement is its appeal to nationalist prejudice. Mr. Rudd argued that since mining giant BHP Billiton is 40% foreign owned and Rio Tinto is 70%, their "massively increased profits ... built on Australian resources are mostly in fact going overseas." This obviously applies even moreso to companies such as Canadian miner Barrick Gold, which has significant Australian operations. BHP, which has more than half its activities in Australia, calculates that its tax rate under the proposal would increase from 43% to 57%. Analysts have estimated the super tax could reduce BHP's earnings by 17% and those of Rio Tinto by 21% by 2013. The proposed hike has already caused one company to halt exploration in Western Australia, and may also endanger U.S.-based Peabody Energy's bid for Macarthur Coal.According to the government, the tax grab will go to funding "good things," such as lowering other business taxes, boosting retirement benefits, and building infrastructure. Significantly, its role in helping pay down the hefty debts piled up in the name of "stimulus" has not been highlighted. Under Mr. Rudd's floundering regime, government spending as a percentage of GDP has been rising.The impact of higher taxes is always to reduce economic activity and drive investment to lower-taxed jurisdictions. Indeed, Canada should be a beneficiary of this move. Meanwhile its impact goes beyond mining. It makes all investors more nervous. There are already rumours that the banks might be next.Having announced the tax without negotiation, the government is now delivering mixed messages about whether it might be prepared to negotiate, at least on existing projects. The mining industry has inevitably come out swinging against the new tax and the perverted statistics used to sell it. The government claims it has suffered a US$35 billion tax shortfall during the boom of the past decade. While mining profits have grown by $80-billion, it says, state royalties have increased by "only" $9 billion. But those figures exclude corporate taxes.BHP's chief executive Marius Kloppers has vigorously refuted the notion of the industry not paying its "fair share." He pointed out that mining generates more taxes for Australia than any other sector. "Clearly,' said Mr. Kloppers, "this higher tax will make investing in Australia less attractive and in the end this means less investment and less wealth for all Australians."Mr. Rudd, however, is far more concerned with his own plummeting popularity and an election later this year. His government has just slipped behind the opposition Coalition in the polls, and his own approval rating has recently taken a nosedive.Mr. Rudd came into office trumpeting climate change as his number one issue but suffered a humiliating defeat when his emissions trading scheme was deep sixed. Again, this was a scheme that would have done only harm to the Australian economy.One critic this week accused Mr. Rudd of pulling a "mini Chavez," referring to the business-bashing and economy-wrecking president of Venezuela. That may be a bit strong, but Mr. Rudd's new tax will undoubtedly damage Australia's reputation. Mr. Rudd has presumably calculated that the spoils -- and the popular appeal -- will be worth the cost. But only to him and his government.
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 Terence Corcoran: Why BP should pay spill's full cost
Short of outright prohibition, the most effective accident-prevention mechanism is to enforce property rights and make sure that companies know in advance and under law that they are fully and directly responsible for whatever havoc their activities cause
By Terence Corcoran
B
y some merciful force or just good luck, the giant BP oil slick in the Gulf of Mexico yesterday remained the greatest environmental disaster that hasn't happened.For more than three days, news reports have been filled with alarming tales of imminent disaster, but then the wind direction shifted and the worst failed to materialize. Maybe millions of gallons of oil will eventually crash onto the shores of the U.S. gulf states, creating untold damage to the environment and the lives of millions of people. Or maybe fate will push the oil on a course that will avoid an unprecedented catastrophe. If the worst does happen, let's hope the full cost of the affair is borne by the perpetrators. That would be BP. A lot of gun ships are riding this oil slick with other agendas -- environmental, political and economic. Environmentalists aren't waiting; they want U.S. offshore oil exploration and development halted. The World Socialist called the still-pending Gulf Coast event "an American Chernobyl." Paul Krugman, the Nobel economist, warned President Barack Obama to take on the "Drill, baby, drill" crowd and predicted a reversal of what he called a long slide in the influence of environmentalism. Arnold Schwarzenegger, governor of California, withdrew support for drilling off the coast of California.On the other side, economic nationalists say offshore oil is a national imperative and America's only hope for energy independence. A spill is a price to be paid. As a British company, BP is being painted as an unworthy foreign operator, while the Obama administration is accused of tardy action. On the far right, the rig explosion that triggered the oil spill is said to be the work of saboteurs of various origin.Politicians all over, meanwhile, are coming forward to guarantee the impossible, that nothing like this should ever happen again. In Canada, Prime Minister Stephen Harper joined leaders from Newfoundland and British Columbia in issuing assurances that Canada's offshore energy sector is solid and at no risk. "The behaviour of the companies in question is completely unacceptable," said Mr. Harper, "and would be completely unacceptable in this country."But environmental disasters, no matter what their origin, are always completely unacceptable. And they will always happen, no matter what the rhetoric about absolute prevention, zero tolerance and triple fail-safe regulation. Risk is always there. Short of outright prohibition, the most effective accident-prevention mechanism is to enforce property rights and make sure that companies know in advance and under law that they are fully and directly responsible for whatever havoc their activities cause.As a company that has long claimed to be the world's greenest oil corporation, BP has so far assured Americans that it will pay the full clean-up cost, a bill that could run to tens of billions of dollars, depending on where the oil spill goes next. But it is not clear whether BP would pick up all the costs, including damages."We will absolutely be paying for the cleanup operation," said BP CEO Tony Hayward, appearing to leave open the issue of damages, the losses to the livelihoods of people working in coastal fishing and tourism industries. Environmentalists are skeptical that BP will live up to the pledge, which was offered by Mr. Hayward during U.S. television interviews.Under U.S. law, however, the direct liability of oil companies for environmental damages appears limited. According to the U.S. 1990 Oil Pollution Act, the liability of individual companies is set at a maximum of $75-million, the result of past compromises between politicians and the oil industry over who will cover pollution risks. Yesterday, some U.S. Democratic Senators scrambled to retroactively change the law by introducing the "Big Oil Bailout Prevention Act" to raise the liability limit to $10-billion.This is classic political ass-covering. How did the original act get through Congress? The oil industry has often sought limited liability protection. The act itself is a shambles of unfulfilled promises and commitments. It set up an Oil Spill Liability Trust, a fund to be built up by a tax on oil production. But the fund has never been maintained properly and, thanks to Congressional fiddling, is not equipped to handle a disaster. In its latest report, with $1.5-billion in assets, the Oil Spill Trust said it "will be able to cover its projected non-catastrophic liabilities" for years to come, leaving catastrophic events to fate.For years there have been warnings that the Trust's funding is inadequate. In 2004, the fund was heading to a zero balance and a Homeland Security report said, "A single major or catastrophic oil spill could have a significant impact" on the fund's projections.Now that the worst catastrophe threatens, the politicians are scrambling to cover up something that should never have been established. Some call it the polluter-pays principle. In law, it is simply a matter of enforcing property rights. In oil drilling, those rights are taken away and operators have less interest in avoiding disaster. There are 3,500 oil production platforms in the Gulf of Mexico alone, operating under a law that limits their responsibility to protect the property of others. BP, in the Gulf of Mexico, appears, to its credit, to be ready to stand behind property rights rather than its legal rights. Financial Post
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 Financial deformSo-called U.S. bank reform does little but hurt taxpayers By Hans Bader T he CEO of Goldman Sachs, the Wall Street firm the SEC has accused of fraud, has endorsed the so-called financial "reform" bill backed by U.S. President Barack Obama and congressional leaders.The bill would enrich Goldman Sachs at the expense of taxpayers and smaller competitors. While the bill contains lots of red tape and fees that will harm insurance policyholders and Main Street, it contains selective "carve-outs" from consumer-protection laws for cronies of Senator Chris Dodd. Dodd recently attracted criticism for financial and ethical lapses, such as his receiving "a sweetheart deal on an Irish 'cottage' from a crooked stock-trader" and "two preferential discount mortgage interest deals from the now-bankrupt Countrywide." Goldman Sachs is the fourth-largest donor to Democratic campaigns, ranking just below public-employee unions and trial lawyers in its massive support for liberal politicians.The financial bill contains goodies for Big Labour and "too big to fail" banks and financial institutions, at the expense of taxpayers and competing firms.Obama has collected millions from Wall Street special interests, his administration contains many Wall Street lobbyists, and he supported the unnecessary US$700-billion bank bailout. But now, he's pushing a deceptive financial regulation bill with phony rhetoric about "reform," claiming it is "not legitimate" to point out that the bill could lead to yet more bailouts and government takeovers.Obama's legislation would do nothing to rein in the worst offenders behind the mortgage crisis, the government-subsidized mortgage giants Fannie Mae and Freddie Mac, while enriching left-wing lobbying groups and community organizers, and giving the government the permanent ability to bail out and take over Wall Street firms. Obama's proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama's Treasury Secretary, tax cheat Timothy Geithner, even though he admits "Fannie and Freddie were a core part of what went wrong in our system." Worse, the Obama administration lifted the US$400-billion limit on bailouts for Fannie and Freddie, so they could continue to buy up junky mortgages at taxpayer expense, and showered their executives with US$42-million in compensation. The Obama administration is now expanding the bailouts of these mortgage giants so that they can lavish pay on their CEOs and reduce the payments of deadbeat mortgage borrowers. (At the direction of the Obama administration, Freddie Mac is now running up US$30-billion in losses to bail out mortgage borrowers, some of whom have high incomes. Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.)Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk. As The Wall Street Journal reported""From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime."Why did they buy these risky loans? They put up with Clinton-era affordable-housing regulations that required them to buy up lots of risky loans, in order to curry favour on Capitol Hill and thus retain their annual $10-billion in tax and other special privileges (which they possessed owing to their status as "Government-Sponsored Enterprises" or GSEs). They paid their CEOs millions in the process, and engaged in massive accounting fraud -- US$6.3 billion at Fannie Mae alone -- to increase the size of their managers' bonuses. As GSEs, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.Banking expert Peter J. Wallison, who prophetically warned against the risky practices of Fannie Mae and Freddie Mac for years, says that Obama's proposals will lead to "bailouts forever" and give big, politically-connected banks that are "too big to fail" the ability to drive smaller rivals out of business at the expense of consumers and taxpayers. His colleague Alex Pollock notes Obama has not lived up his administration's claims that it would back reform of Fannie Mae and Freddie Mac.Obama claims it will not lead to more bailouts, but even congressional Democrats admit that it will. As Congressman Brad Sherman (D-Calif.) admitted, the "bill has unlimited executive bailout authority.... The bill contains permanent, unlimited bailout authority."Government pressure on banks to make loans in economically-depressed neighbourhoods was another key reason for the mortgage meltdown and the financial crisis. If Obama has his way, that pressure will increase. The House earlier approved Obama's proposal to create a politically correct entity called the Consumer Financial Protection Agency. "The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities." It would do so without regard for banks' financial safety and soundness, even though the Community Reinvestment Act was a key contributor to the financial crisis.Obama's proposed financial regulations would also harm retail banking operations used by middle-class people and small businesses.Financial PostHans Bader is senior attorney and counsel for special projects at Competitive Enterprise Institute. This article first appeared on the CEI blog OpenMarket.org
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 Pensions: All is not wellCounterpoint By Stephen Donald O n April 13 Alberta Finance Minister Ted Morton said that Canada should consider an "incrementalist" approach to pension reform. He would give the private sector another 10 years to improve retirement options for Canadians before deciding on the need for a government-led solution such as a new national pension scheme. He said there is no urgent need for changes to the retirement system in Canada because it is "not broken" and it already works well for many people.Canada's Finance Minister Jim Flaherty has also said there is no need to rush. "It has to be dealt with carefully, judiciously and deliberately. We can't do this on the back of an envelope. One can do harm to what is a sound system. We need to cover all the issues and don't unintentionally cause detriment to the current system."One of the chief sources of this "all is well" view is the December 18, 2009 Jack Mintz report Summary Report on Retirement Income Adequacy Research prepared after the first ministers' conference in May. So far there has been little discussion or critique of his report, to my knowledge. I suggest the politicians have overly generalized his conclusions and the report should be reviewed by an independent researcher, given the impact it has had.The Mintz report says 30% of Canadians are not saving enough for retirement at the 100% consumption replacement level; for some subgroups, that increases to 45%. It demonstrates that the subgroups of the general population who are not saving enough toward retirement tend to be modest and middle-income Canadians. Since civil servants enjoy relatively rich defined-benefit plans, it follows that the subgroup facing inadequate retirement incomes is the private-sector middle-income worker. Pension reform needs to focus on this group and reasonably quickly -- it takes 30 years for a retirement savings regime to mature unless special provisions are made. But Morton seems to have glossed over this fact. Flaherty, on the other hand, has made a few comments that indicate he is aware of this hole in the Canadian retirement system and that changes are needed, but not knee-jerk solutions.In fact, the hole in the system may actually be large. The report discusses ideal pre-tax income replacement levels and suggests the typical target of 70% may be too high. This is based on an OECD report that suggests 60% is adequate and, for those earning $90,000, 50% may be adequate. But who in the $90,000 income bracket would be happy with post-retirement income of $45,000?The Mintz report leans heavily on Keith Horner's Report for the Research Working Group on Retirement Income Adequacy in answering the question "are Canadians saving enough for retirement?" Horner uses a stylized model with very simplistic assumptions. It assumes people save for retirement from age 30 to 64, retire at 65, and live to age 84.It assumes that those who raise children need less income in retirement than those with no children. In Horner's words, "this reflects child-related spending and the assumption that the parent will seek to replace only 'own consumption' after retirement." His results indicate that for households earning $80,000, for example, the couple without children needs to save 8% of earnings while the couple with children need save only 4%. The result is that those with children tend to show up in the report as financially well prepared for retirement -- though in real life, they may find themselves a lot closer to the poverty line.To answer whether Canadians are saving enough for retirement, you have to look at how much they are actually saving and compare it to the developed target rate. For members of a registered retirement plan, Horner assumes their reported pension adjustment is equal to the actual contributions made on their behalf. If actual contributions are overstated, then the report underestimates the number of Canadians not saving adequate amounts.One factor omitted from the analysis was the impact of civil servants' pensions on the results. Because of their relatively rich pension plans, they tend to bring the "adequate" averages up. Conversely, one can probably assume that the averages for the private sector are lower than those shown in the report. This will be further exacerbated in the future by the continual decline in private-sector pension coverage.While I am not saying these assumptions are wrong, I am saying they need further scrutiny and the public and the policymakers need to know the underlying assumptions. The Mintz report, despite the politicians' conclusions that all is well, does indicate that the middle-income private sector is falling far short of adequate retirement savings. An independent review of his report is necessary to see if that hole in the system is not larger than he indicates. Pension reform should focus on the modest and middle-income private-sector worker. A "go slow" approach will not work. There is enough tax-assisted room in the current system for this group but they need a nudge of some sort to use it. It is the job of pension reform to somehow provide that nudge.Financial PostStephen Donald is a consulting actuary with Buck Consultants.
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 FP Letters: A simple flat tax, not so simple
Re: Our costly taxes, April 30Niels Veldhuis's flat-tax solution to tax return complexity is itself simplistic. To illustrate the real problem, have a look at the Alberta tax portion of the personal income tax return (AB428). Alberta has a flat tax, but it is still riddled with tax credits and special calculations (including alternative minimum tax, AMT). If flat tax is the answer, why does it take two pages (significantly more than the back of an envelope) to calculate the Alberta taxes of 10% of taxable income?The calculation of the tax is only the final step and a flat tax calculation, per se, is no more complicated than calculating the federal graduated tax, particularly with computer assistance.The complexity lies with determining the income to be taxed. This requires an examination of eligibility for the many preferential credits and deductions available to taxpayers with different concerns (age, retirement, disability, medical, children, etc.). Eliminating these deductions and credits would simplify the returns, but would such changes be popular with the average tax payer?Chris Woodward, CalgaryOil sands revenueand education
Re: The Reverse National Energy Program, April 30Terence Corcoran's column states that in a 2009 speech to the Public Policy Forum, I advocated "imposing a tax on oil sands that would be used to fund education programs." That is not what I said, and neither this misquote, nor anything else I said in the speech, indicates anything of the kind. My words were as follows: "How do you diversify and support the very long-term strategy under the model I'm proposing? By investing the revenues from oil sands development in the best possible industry to support sustainable long-term growth and prosperity for Canada: education." This is a suggestion to governments that they consider allocating some proportion of the taxes and royalties they currently collect from the oil sands industry to the education sector. How does Mr. Corcoran move from this to a call for a new tax to be imposed? A growing number of business leaders and organizations such as the Canadian Council of Chief Executives and the Energy Policy Institute of Canada have joined me in calling for a Canadian energy strategy. The growing consensus is that producers and consumers will have to share the cost of bridging to a renewable, more sustainable energy supply. Energy producers themselves clearly understand the need to take steps to achieve a more sustainable energy future, and are actively exploring and debating a number of options with stakeholders and governments. I've raised a number of these options - including a cap-and-trade system or a carbon tax - in various forums. Yet Mr. Corcoran suggests that I am recommending they all be introduced, and simultaneously -- again a distortion of the facts. We need to move forward on these issues, which encompass the future of one of Canada's most critical industries and the efforts of all Canadians - businesses and individuals - to protect the environment. It is regrettable that Mr. Corcoran's column does not further this debate. Patrick D. Daniel, president and CEO, Enbridge Inc.Re: Enbridge Chief Defends Gateway Pipline. April 30It was fascinating to read how Enbridge CEO Patrick Daniel is advocating for corporate socialism as he flogs his company's Northern Gateway Pipeline project.Mr. Daniel's suggestion that Canadians will need to massively subsidize the transport of tar sands crude through a series of confiscatory tax mechanisms in order to make it viable is transparently ironic. However, his suggestion that tar sands development and the Enbridge pipeline, as well as the attendant oil tanker traffic that will put British Columbia's coastal environment at great risk, is at heart an egalitarian crusade to help the world's poor is cynical beyond belief.Terence Corcoran is spot on when he states that what Enbridge "appears to be looking for is not so much a National Energy Strategy as a national regulatory system to codify massive transfers of wealth from one energy source to another, from consumers to the oil sands, and from the oil sands to Third World countries." But more than that, in effect Enbridge wants to externalize the cost of the inevitable catastrophic oil spill on B.C.'s coast.Attaching a dollar value to the damage that spilled oil does to marine and terrestrial ecosystems is an impossible task. The cost of the Exxon Valdez spill has been estimated at US$9.5-billion, of which Exxon paid US$1-billion, with taxpayers footing the rest of the bill. Further, does that even begin to cover the price of a pod of killer whales driven to extinction or the demise of a coastal fishing community's way of life?Chris Genovali, executive director,Raincoast Conservation,Sidney, BC
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 FP Letters: We're Twittering oil's enemies
Re: Whole Foods Eviscerates Oil Sands Ostrich, Feb. 18.Canada's oil and gas industry is firmly committed to improving its environmental performance and communications with stakeholders and the public, both in North America and internationally. We strive to be open and transparent in our communications and we welcome considered and well-informed feedback on our efforts. Unfortunately, Robert Remington's recent column over-simplifies the issue and ignores efforts being made by industry and government to address concerns related to oil sands development.CAPP and the individual companies involved in oil sands have been proactive in communicating about the oil sands with a broad diversity of stakeholders in Canada, the U.S. and internationally. We are engaged in this dialogue through a variety of channels -- including mainstream media, publications, alliances with third parties, speaking engagements, tours and social media (Twitter.com/OilGasCanada).This is much more than the battle of media releases and soapbox sloganeering that the Post's article makes it out to be. Canadians and all stakeholders want and deserve a considered and balanced dialogue and that is what we remain committed to delivering.David Collyer, president, Canadian Association of Petroleum Producers, CalgaryTwo views on InfowayRe: The Chopping Block: Which Way, Infoway?, Terence Corcoran, Feb. 18, and B.C.'s eHealth Joins Sick List, Terence Corcoran, Feb. 20. Terence Corcoran's article Feb 18 on the Infoway couldn't have been more timely for BC readers. The headline on the same day's Victoria Times Colonist reads "Auditor to keep close eye on eHealth." The sub-headline reads "Switch to electronic records poses big risks and costs, Doyle says. John Doyle is the BC Auditor General and is examining the BC effort, which appears to be a developing boondoggle.Here are a few quotes: "...it appeared the first priority was to secure money from the federal government." and "The Province lacked measurable objectives, failed to provide a full cost estimate and had no way to report its progress, Doyle said."There is also an associated RCMP investigation regarding the activities of an assistant deputy health minister.The project started in 2005 and is scheduled for "completion" in 2013.More millions down the drain.Fred Peet, VictoriaOntario's approach to to health balances government leadership and collaboration with many others, including service delivery agents, private sector vendors and clinicians. The creation of electronic health records (EHRs) for Canadians is crucial to improving patient care, safety and access. Investors in EHRs have realized tangible patient benefits. In order for EHRs to realize their full potential, diffuse and complex health information systems must be "connected" to each other. They must be interoperable to allow patients to move through a continuum of care, for example, from check up to a lab result to a hospital prodedure and then to rehabilitation. Other jurisdictions such as Denmark and Spain have reached similar conclusions.The complexity of Canada's health care system cannot be overstated. There are almost 400,000 health care providers, more than 700 hospitals and 1,600 long-term care facilities, supported by thousands of labs. Every minute in Canada there are 2,000 health care transactions. An interoperable system will allow the information from these transactions to be shared appropriately and efficently to deliver quality care.Ray Hession, chairman, board of directors, eHealth Ontario.
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