The Fan Klub, Churchill, and taxes - update

As the provincial Conservatives and New Democrats filibuster the levy bill in the House of Assembly that Winston Churchill quote about taxes popped up again.

The ones pushing the quote hard on Twitter seem to be mostly charter members of the Danny Williams Fan Klub. That's not surprising given that responsibility for the financial mess,  the chronic, deliberate overspending and the morass at Muskrat rest solely on his shoulders.

The House and Twitter #nlpoli

Guest post by Simon Lono

The latest House of Assembly Twitter flap raises more issues that it first appears.  Leaving aside the wisdom of the timing, it’s worth understanding why the point was raised at all.

The Telegram, in their Saturday thundering and mocking editorial condemned the whole exercise because “We actually have a right to know if you or your fellow MHAs don’t deign to come to work”.

This is true but ultimately irrelevant to the issue.  And like so many rules of parliament, pointing out absence or presence of members just seems silly until you examine why it’s there.

Entitlements and examples #nlpoli

Canadian income tax law requires that all people over the age of 71 must take payments from their registered pension plan.

Lorraine Michael is over the age of 71 and so she is collecting her pension from the House of Assembly.  She's earned it.  She's got every right to receive it.

Michael is also collecting her full salary as a member of the House of Assembly. The Telegram's James McLeod broke the story last winter.  Michael said two things about it.  First, she felt she was entitled to even more money because she was doing extra work in the House of Assembly as the de facto leader of the third party.  Second, Michael told CBC she had to double dip because that's what the law said she had to do.

Well, no, it doesn't really.

What's next for Nalco? #nlpoli

Just so that everyone is clear on this, it has taken Dwight Ball every single day from May 23 until June 2 to admit that he knew Ed Martin had received a severance payment on his departure from Nalcor despite the fact that Martin has supposedly resigned.

In effect,  Dwight Ball - as the chief representative of the only shareholder in Nalcor  - approved of the severance with his silence.  The same thing went for natural resources minister Siobhan Coady.

What's more, Ball reminded us all again that whatever happened with respect to Martin's contract was solely at the discretion of the Nalcor board, which has since resigned.

Right.

So what exactly has Dwight Ball's knickers in such a bunch?

Seriously.

Priorities #nlpoli

While everyone has been pre-occupied with Dwight Ball's psycho-drama this past couple of weeks, odds are most people missed a little bill that went through the House.

The second Loan Act for 2016 set the maximum borrowing for the province this fiscal year at $3.4 billion.  An earlier version had set the borrowing at $1.6 billion but that was actually too low once the Estimates appeared and showed the cash required to balance the books was $3.0 billion.

Some people might a bit shocked by the apparent doubling of the borrowing requirement but that really isn't the figure.  The $1.6 billion was wrong at the time it appeared in the House.

What you should notice is that the cash deficit this year has already increased by 13% and that was before the House session even finished.  40% of government spending this year will come from borrowing.

Meanwhile, Dwight Ball is worried about being held responsible for $6.0 million in severance to Ed Martin.

Maybe Dwight  needs to give his head a shake.  That is, if he can find time to pull it out of his  backside.

-srbp-

Anger Ball

Premier Dwight Ball got angry on Tuesday.

He's angry at the suggestion that he approved paying severance to Ed Martin.

Well, really he's angry at is how much Martin wound up getting now that the amounts are becoming known and unpopular but we'll get back to that.

There's actually no question that Ball was aware Martin got severance.  As the Telegram's James McLeod has noted,  VOCM's Fred Hutton asked specifically about severance on April 21.  Here's the exchange:

VOCM News Director Fred Hutton: Has Ed Martin’s severance been worked out yet? 

Martin continues to set provincial political agenda #nlpoli

On the surface, Ed Martin's statement on Monday confirmed what we already knew.

Dwight Ball knew about and approved of Ed Martin's severance payment from Nalcor.  Ball may not have known the precise detail of the amount Martin received from his severance  - about $1.4 million - and Martin's twin pensions.  James McLeod at the Telegram has chased down that angle on the story and is awaiting a reply from Nalcor about whether Martin took the lump sum payout option on his pensions.

But there is no doubt Ball knew about and approved of the arrangement to pay Martin severance even if the official story was that Martin said he quit.  Ball has said as much on several occasions, as noted by McLeod last week.  He's also made the fine - but entirely meaningless - distinction that he had no part in discussing the details of Martin's severance.

The Running Man #nlpoli

With questions swirling about what Premier Dwight Ball knew about severance payments to former Nalcor boss Ed Martin and when he knew it,  Ball has asked the province's auditor general to take a look at whether or not it was appropriate to pay severance to Martin.

Different question.

That's a pretty transparent effort to run away from the controversy that exists purely because Ball refuses to tell the truth about what he knew and when he knew it.

The Oracle of Brunei and The Prophet of Boswarlos #nlpoli

You know that the local news media are hard up for stories when they  post the musings about the current budget of somebody from Newfoundland currently swanning it in Brunei.

Well, it helps that the body is former Conservative finance minister Charlene Johnson, but if you look at what she said, it's hard to understand why she got any attention.

There are three things to notice about Charlene's ideas on how to save a penny or two that the local media didn't mention.

The Oracle on the Parkway #nlpoli

Crude oil was trading north of US$50 a barrel for about 30 seconds this week.

What with the government's cash deficit being $3.0 billion and all, CBC had someone write up a little story about what that would mean for government finances.

You will see a lot of these stories when oil jumps because they are easy to write.

Could we be richer than we think? the headline asked.

Good question.

$1 change in crude prices brings the government an extra $23 million.  That means we could get an extra $230 million if oil averaged $50 a barrel this year instead of the $40 the government assumed in the budget. Extra 10 bucks a barrel, right?

Okay.

So how much would crude oil have to hit in order to fix the financial mess for this year alone?

Last Rites #nlpoli

This week Premier Dwight Ball became the punchline to a joke.

Ball spent yet another day not giving straight answers to simple questions about what they knew and when they knew about Ed Martin's severance.  For good measure,  the opposition Conservatives managed to drag natural resources minister Siobhan Coady into the mess.  She had the same lines as Ball.  That's no good for her.

The Telegram's James McLeod tweeted on Thursday that Ball had denied in the scrum that afternoon that he knew any details.  Then someone reminded Ball of his interview with  his answer to VOCM's Fred Hutton during a news conference on April 21, the day after Martin's resignation.  Ball said that he would be speaking with Nalcor board chair "Kenny" Marshall to find out details of what Ball described as Martin's severance.  Later that afternoon,  Ball told reporters about the other payments approved by the board that morning, confirming in the process that he had spoken with Marshall immediately after his morning interview with Hutton.

McLeod is apparently planning a piece for the paper this morning that tries to document the twists and turns Ball's version of events has taken.  If anyone can pull it off, McLeod can.  What he will be doing, in effect, is writing Ball's political obituary.

Alarums and Excursions #nlpoli

Dwight Ball is hiding details of his involvement in the decision to give an enormous and unwarranted severance package paid to Ed Martin despite the fact Martin had quit as Nalcor's chief executive.

That became plain in Ball's responses to repeated questions from both opposition politicians and reporters on Wednesday.  They all asked Ball repeatedly if he discussed severance with Martin in either of two meetings the Premier had with Martin in mid-April. Ball's answer was deliberately evasive.  He had clearly rehearsed the wording precisely because he repeated it over and over and over again. The question required a mere yes or no in reply. Instead,  Ball said again and again that the matter of severance was one for the board.  Every word Ball said more than either yes or no confirmed that what he was saying was not true.

Ball also said repeatedly that he only became aware of the details of the severance on May 5. He stressed the word "details" because it is an important word for him.  Ball repeatedly stressed the word as if knowing the details of the severance were more important than knowing about and approving of the fact that Martin had received severance in the first place.

That's the sort of distinction that only comes to a certain breed of lawyers or people who would describe *themselves* political strategists.  They think this sort of thing is clever.  It isn't.  It is merely too cute by half.  Everyone knows the ploy for what it is.  It's as transparent as saying someone has quit an important job to spend more time with his family.  No one believes that one because we have heard the same lie so many times. Had we all played a drinking game with Dwight Ball on Wednesday, we'd be in hospital with acute alcohol poisoning for taking a shot every time he dodged.

Ball digs himself deeper into hole #nlpoli

Dwight Ball's latest version of Ed Martin's departure from Nalcor only deepens the political quagmire into which the Premier and his staff have worked themselves with diligent effort and persistence.

Here's how.

Red Flags #nlpoli

If you want to understand the depth of Dwight Ball's political problem,  understand that as of Victoria Day,  Paul Lane - never the sharpest of political knives in any drawer - has gotten the better of the Premier politically for the second time in a week and the third time in a year.

The first time was when Lane managed to get Ball to accept him into the Liberal caucus as a perfect "fit."  That's no mean feat given that at the time Lane was a big part of the Conservative goon squad along with Steve Kent and Sandy Collins. Overnight, Lane went from being an enemy to a close ally.

The second time was last week when Lane managed to get out of the Liberal caucus with Dwight Ball's unreserved endorsement. Had it been up to him,  Ball likely would have kept Lane in caucus. As it is,  Lane got away without a single critical word from the Liberals.  They even allowed Lane to frame his departure right down to the point of letting Lane's old political ally Steve Kent tell the world the Liberals had resorted to tactless move of sending Lane an email that he'd been voted out of caucus.  

That endorsement has now given Lane his hat-trick,  allowing to emerge on Monday as an apparently credible voice opposing the government and its very unpopular budget.  Lane can say all the things the other critics have been saying but without the stigma of being a partisan. Lane is supposedly a disaffected Grit who wanted to stay with the Liberal caucus, instead of being a Tory or Dipper. Lane can criticise the Liberals with all the credibility of someone even the Premier and the Liberals agree with:  they don't like their budget either.

How government decides - From Bow-Wow to Basenji #nlpoli

The Liberals' signature policy initiative is Bill 1.

It is so important that it is the only piece of new legislation the Liberals have introduced in this session that is directly connected to their election promises.

Bill 1 creates a new appointments commission that is supposed to ensure individuals appointed to positions by cabinet will be selected as the result of what the proposed law calls a merit-based process.

A merit-based appointments process for every appointment is such an important policy for the Liberals that, when faced with their first significant appointment,  they abandoned their own process last week.

How the other half pays #nlpoli

Brian Jones.

Statistics Canada can be your friend.  CANSIM 204-0001 to be precise.

You don't have to manipulate numbers.

There are roughly 221, 455 who earn below the $29,600 median income for all tax filers in Newfoundland and Labrador.  The figures are for 2013, but the general pattern still applies.

The average income in that group was $15,900.  The median income (precise half-way point) was $16,600.

Two things:  the average person in this income bracket will NOT pay any of the levy because their gross income is less than the floor on the program.

Second thing:  the amount of gross income for these focus would be something around $3.5 billion if we used the average figure.  That's twice what you claimed.  Note that they pay about five percent of the total provincial income government tax haul.

Among the crowd above the half-way point for income,  you have 197,380 people.  They make - on average - $71,400 each.  That gives you about $14 billion.

No matter how you slice it, the problem is not that we don't take enough from the folks in the top.  The problem is that the people on the lower side of the divide make so very little.  What we should be doing is trying to figure out a way to build those folks up, not find a way to suck more out of the other half.

You see,  those 221,000 folks paid an average of $700 each in federal AND provincial taxes. That's $155 million in total to both governments.  The other half of the population paid $2.8 billion.

If you have people making $3.5 billion who pay $155 million in tax, they are giving, collectively about four percent of their income to income tax.  The folks on the other side of the line are paying 20%, collectively.  That's five times as much.

And you have to remember that the bulk of those folks  on the high side of the divide are making a lot less than the folks on the sunshine list, on average. There's not a lot of room to suck cash from the middle, in other words.

The numbers tell one story, honestly, without any manipulation beyond addition, and the other math functions.

The numbers will lie if you try to do math using ideology.

Don't manipulate numbers, Brian.

-srbp-

A different kind of P3

Paul Lane won Mount Pearl-Southlands in 2015 by a mere 241 votes.

In 2011, he won a seat in the House of Assembly by 700 votes.

Anyone who tells you Paul Lane is a popular politician hasn't looked at the facts.

Did you hear the one about the Lane and the Ball? #nlpoli

Paul Lane has taken Dwight Ball's measure.

How Ball and the Liberals respond to Lane's challenge will determine the fate of the administration.

You can tell by the way Lane threw down the challenge to Ball's leadership on Wednesday.  He voted with the opposition against his own caucus on an NDP motion about the budget. Then Lane announced he would be voting against the budget unless Ball made unspecified changes to the budget.

But Lane went a step further. He dared Ball to kick him out of the caucus:

Whether or not I remain a member of the Liberal caucus is totally in the premier’s hands. It’s not in mine. If the premier decides that he can’t have me there, I guess that’s his decision, and he’ll have to make that decision, he’ll have to stand by that decision.

That's not about Lane taking a position on a matter of principle. If Lane firmly believed the levy was such an evil thing, he'd cross the floor of his own accord. Weaseling about it, as Lane has done, is just a guy screwing over his colleagues. It's not brave. It's about the sort of pandering that got us in this financial mess in the first place.

A dose of reality for Lorraine and her friends #nlpoli

During Question Period in the House of Assembly on Tuesday, Lorraine Michael asked the finance minister for the information that showed that 35% of the tax filers in the province account for 88% of the government's income tax revenue.

Lorraine should have been able to find the information for herself.

According to Statistics Canada (CANSIM 204-0001), the top 50% of tax filers in 2013 - all 197,380 of them - earned more than $31,400.  They paid an average of $14,200 in federal and provincial taxes and accounted for 94.8% of federal and provincial taxes.

So it isn't much of a stretch to see how a relatively small portion of the folks with an income in the province carry most of the tax burden.

The top 10% of tax filers in Newfoundland and Labrador  - 41,865 people - accounted for 51% of the federal and provincial taxes paid in 2013, the last year for which the table gives figures. They paid an average of $36,500 in federal and provincial income taxes. The thresh-hold to get into the 10% club was $89,200, which is less than Lorraine and her colleagues in the House receive as a base pay.

The median tax paid for the top 10% was $28,600.  That's an interesting figure because the median pre-tax income for the 418,000 or so people who filed taxes in this province in 2013 was $29,300.

But what about that One Percent Club?  Well,  the 3,135 folks who made more than $222,000 paid an average of $114,600 in taxes in 2013.  They accounted for 12.1% of federal and provincial taxes paid.

At the 50% level, 47% of the tax filing population paid 95% of the taxes.  Yes folks, that means about half the folks filing taxes accounted for about five percent of the government's total income tax haul.

At the 10% level, 10% of the tax filers covered 51% of the tax burden.

At the one percent level, 7.5% of the people filing taxes paid 12% of the taxes.

The information in plain view.  It's amazing that Lorraine and her friends find it so hard to believe there is no gigantic, secret stash of money hiding in the very small number of people who make a lot of money.

-srbp-

Six Rationalisations Pretending to Be Policy #nlpoli

Policy solves problems.

At it's simplest level,  policy answers a question.

Cancelling Muskrat Falls is a good example.  We are facing a financial crisis.  Muskrat Falls is a huge expense.  There's the problem.  Turn it into a question and it becomes whether or not we should cancel Muskrat Falls.

To answer the question, you'd have to look at other issues. Muskrat Falls  was supposed to be the answer to our power needs. We'd have to look at that issue:  do we need the power?  We'd have to look at finances:  can we afford it? What would it cost to take one course versus another?  We'd have to ask about legal implications:  what do our legal commitments say we must do?

Implicit in those questions is the idea of alternatives.  What choices do we have?

A written report on those questions would have some structure to it.  You'd expect it to start out with a clear statement of the question the author reviewed.  It might even be posed as three options: continuing as we are,  halting the project completely, or an intermediate options like slowing the project,  cancelling bits of it, and so on.

The paper would review the existing state of the project and then project ahead based on what we knew.  Then it would have to branch off from today to examine each of the answers to our string of questions.  Given the size of Muskrat Falls and the complexity of itl you'd imagine any serious discussion of cancelling the project would take months to prepare, would involve a great many people, and would certainly take more than 10 sheets of paper.  Just to make sure you appreciate the magnitude of what we are talking about, go back and look at just a tiny bit of the paperwork prepared for the public utilities board review of the project.  The Manitoba Hydro report was enormous.

Now read the 20% of a document prepared for Dwight Ball's cabinet released to CBC under the access to information law.This briefing note is apparently about the implications of cancelling the project.