The Road To Bankruptcy Is Paved With Good Intentions

I believe that when the CBC began, it was absolutely essential at almost any cost.  It was one of the only mediums of communication, and for many parts of Canada it was the only television available.  It was undeniably a key means of getting information out from coast-to-coast, and held great cultural value in terms of defining Canada a country.  I believe it certainly justified its fairly high cost to the public purse in times past… wait for it… *sound of other shoe dropping*… Unfortunately for the CBC, the world we live in today is not the world of yesteryear.  I believe the current financial commitment in tax dollars to the CBC should be slashed much more dramatically than the current budget suggests (roughly 10%), because its importance to Canadians is vastly diminished relative to even 15 years ago.  Imagine what hundreds of millions of dollars could do in terms of plugging the holes in education, health care, or infrastructure?  These are the priorities I believe most Canadians have, and the CBC, while a nice luxury to possess, is simply one we can’t afford any more.

Unfair Competition

The CBC has consistently lost market share to their private rivals that do not benefit from a taxpayer subsidy.  This fact alone dictates that people have voted with their television remotes already.  The CBC likes to spin the government funding they receive (a fairly substantial $1.16 billion) by saying that it creates 3x that much for the Canadian economy.  My response is that a private company could take those assets and do even better for the Canadian economy as a whole (as evidenced by their already more efficient business models).  In addition to losing out to their television adversaries, the CBC has been rendered much less irreplaceable in terms of a news source to a majority of Canadians because of the internet and cheap satellite TV capabilities.  There are almost no isolated communities that solely depend on the CBC any longer, and I challenge people to find me more than a handful of Canadians under 25 who watch the CBC at all.

Do I Hear $.50 For Don Cherry’s Wardrobe… Going Once…

My mouth is watering at the sale of some of the CBCs assets.  Just the premium real estate that their studios sit on must be worth a fairly healthy amount.  Think about the bidding war that would begin over the Hockey Night in Canada property between Canada’s multimedia corporations.  I have absolutely no idea how we could value their assets, and my meagre research skills didn’t turn up any estimates online, but if we immediately applied that amount to our debt, it would be a great contribution!  I don’t agree with selling government assets just for a one-time cash influx if they are profitable, but clearly the CBC is not capable of even standing on their own two feet, never mind actually making money.

I have several friends in the journalism industry, and they all report the same reality – that everyone wants a CBC job because they are better-paying and much more cushy in terms of benefits and expectations.  While this might be great for the unionized workers at CBC, it is definitely not advantageous to the average Canadian.  Nor is it fair to the other networks that compete with the CBC.  Why should the Canadian taxpayer fit the bill for salaries that are driving up costs in the market?  It is the classic private-public dilemma, and balance desperately needs to be restored.  When Don Cherry (a CBC employee) makes double what the Prime Minister does, there is definitely something wrong.  If Cherry can get that much on the free market all the power to him (I still find him entertaining), but there is no way Canadians should have to pay for that when we are making cuts to healthcare and education.

An Alternate Proposal

We don’t have to do away with the CBC entirely, just pair it down and call it what it really is.  Why are we trying to fund an entity to compete with the legitimate businesses?  Instead, let’s allow the CBC to become a specialized niche channel that is a Canadian version of PBS.  It can apply for funding on a project-by-project basis like that station does, it can still put out a centralized national newcast if it wishes, and it can focus on education-related topics and cheap Canadian content.  What are we getting right now – Jeopardy and Wheel of Fortune in primetime?  Great Canadian content there, Alex Trebek might be a good Canadian ambassador, but he isn’t exactly a Vimy Ridge-esque part of the Canadian fabric.  The public broadcasting spectrum in the USA costs $1.38 per person.  Let’s be generous since we all know we are pinko socialists up here and budget $2.00 a person, and hopefully that can cover the CBC website too.  That’s around 70 million a year.  I for one would be happy with that compromise.  Would you?

No related posts.

Do We Need the CBC? originally appeared on Canadian Finance Blog on April 5, 2012.

One of the big announcements was the new property tax deferral program for families with children living under the age of 18. They were hoping to implement this as soon as June 2010. The provincial government was hoping that families would utilize this if one parent lost a job temporarily, or families will use the extra money they saved from having to pay property taxes to pay off their car loans or credit card debt instead.

Colin Hansen says in his budget to The Speaker:

The point is, it’s their choice. The option is available to help them enhance their quality of life in whatever way they choose.

So you might be instantly thinking “Score! Time to make me some babies! I’m all for enhancing my quality of life!”

But note the key word, DEFERRAL.

That means that expenses of $200-$500 a month are deferred and paid later, when the home is sold. The deferred tax must be paid back to “The Best Place on Earth” province in full + interest when the home is sold. It’s plus interest! So the government is loaning you money.

What does this mean?

This could mean that when you sell your house, a big chunk of your home equity could be slashed off. If you don’t pay your property taxes (let’s say average $350 a month) for seven years (the average time before a home owner usually sells their home), then the government might be holding out their hand asking for $29,400 and this is NOT including the compounding interest that will be added on. If you add compound interest of a measly and super reasonable 3%, after 7 years it won’t be $29,400, it’ll be $38,313.28. Either you should budget that into your expenses (which defeats the purpose of deferring your property taxes IMHO) or you hope that real estate prices will be booming when you sell!

Colin Hansen says again:

Of course, Mr. Speaker, property taxes are only part of the housing equation. For countless families, owning a home is still just a dream because, in some communities and neighbourhoods, prices are simply out of reach.

No, Colin, REALLY? Vancouver is listed as the most unaffordable place in the western world, pretty much (out of 300 cities studied)!

I’m not really sure if it’s such a good idea to encourage people to borrow more money from the government. In my opinion, they seem to be encouraging young people to continue to live the lavish lifestyle they currently lead. Also, they haven’t released the rates they plan to charge you yet.

What should one do?

I think that staying away from utilizing this “incentive” every single year is a good idea. Otherwise, like any debt it’ll surprise you and kick you in the rear later on down the road.

If it’s necessary then might as well budget for this on a month to month basis, and invest the money you sock away for the monthly property taxes so it’ll grow…instead of buying that home entertainment system.

I think it’s a good idea for emergency situations, like if one parent lost their job or became ill, though (knock on wood!).

On a brighter note, you can now follow the Federal Finance Minister Jim Flaherty on Twitter @FinanceCanada. He’s planning to tweet his Federal Budget 2010 live. Is it a good sign or is it slightly disturbing that our government is hopping on the social media bandwagon?

So what do you think of this new budget idea for young families from the BC government? Good idea? Bad idea?

Any other interesting budgets from other provinces (or territories!) out there?

This is a guest post from Young and Thrifty. If you liked this post, please consider subscribing to her RSS feed and following her on Twitter!

Related Posts:

• Is it a Good Idea to Buy and Import a Car from the U.S. to Canada?
• Purchasing a Vacation Property in the US
• When Greed Is Not Good

Property Tax Deferral For Young Families A Good Idea? originally appeared on Canadian Finance Blog on March 4, 2010.

On Monday, Trade Minister Stockwell Day repeated this claim in the Penticton Western News, writing  “I’m not kidding. The recession is over… Last week, after pouring over all the numbers he was able to declare, not on a whim but based on economic fact that the nasty ‘R’ word no longer applied to Canada.”

But then this Tuesday, when Finance Minister Jim Flaherty was asked if the recession is over he said ”No, I think we will have to look back as we always do and look at this quarter. There are good signs that the economy has stabilized, and there are the beginnings of a recovery. And I wouldn’t put it any stronger than that.”

Transport Minister John Baird had a similar statement on Wednesday, “What we want to make sure of is that we don’t pop out the champagne just yet. There’s a lot of Canadian families that are still feeling the pain of the economic times that are going around the world.”

I prefer Mr. Flaherty and Mr Baird’s cautious statements, especially with the jobless rate at an 11 year high and EI payments at their highest level since Statistics Canada began tracking in 1997.  More importantly, being too much of an economic cheerleader might lead to another crash if, 3 months from now, the projection turns out to be incorrect. Ultimately, these mixed messages will not help a nervous stock market or a fragile consumer confidence.

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The Recession Is Over! No Wait, It’s Not originally appeared on Canadian Finance Blog on July 30, 2009.

The fact that two companies have been fined for not abiding by the rules should not sway you from joining the Do Not Call List. In fact, the CRTC has strengthened the purpose of the registry by enforcing its rules in this way, hopefully convincing telemarketers to be more diligent in removing these numbers from their call lists.

In a post earlier this year, I suggested registering on both the CRTC’s National Do Not Call List and the CMA’s Do Not Contact Service. By signing up for both of these lists, you can greatly reduce the amount of phone calls and junk mail you receive.

Related Posts:

• National Do Not Call List & CMA Do Not Contact Service
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Telemarketers Fined For Violating The Do Not Call List originally appeared on Canadian Finance Blog on July 9, 2009.

This could be a great step towards improved financial literacy in Canada. I have long believed that there should be a mandatory personal finance class at the high shool level. This would provide students with the knowledge they need for when they move out on their own. While many students finishing high school can complete complex math equations that they may not need in their future, those same students do not understand the basic resposibilities regarding credit card interest, their credit score, or the power of compound interest.

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• What is Financial Literacy? Part 1

Task Force on Financial Literacy originally appeared on Canadian Finance Blog on July 2, 2009.

The scope of the review, conducted by Deloitte and Touche, was to specifically determine if the unreconciled difference in gold was the result of an accounting or transaction recording error. The report concluded that “the unaccounted for difference in gold does not appear to relate to an accounting error in the reconciliation process, an accounting error in the physical stock count schedules, or an accounting error in the recordkeeping of transactions during the year.”

The Deloitte and Touche report identified three other areas for consideration:

1. A technical review of operations – As the Mint applies scientific processes and formulae to various aspects of refining, such as process losses, the Mint may wish to review and update its benchmarks and/or third party studies regarding such technical processes and formulae.
2. An accounting review of prior periods – Precious metal reconciliations have been performed by the Mint twice annually in prior years. Although, in theory, revisiting prior period reconciliations could explain the difference, it would be difficult to complete such a review due to the passage of time, the availability of supporting documentation and the turnover of Mint staff.
3. Security reviews – A more in-depth review of systems security and an assessment of potential inappropriate activity by both internal and/or external parties.

“As a Crown Corporation, we understand that Canadians hold us to a high standard of accountability and the Mint’s Board of Directors will continue to work closely with management in ensuring that this matter is pursued vigorously,” said James B. Love, Chairman of the Board of the Royal Canadian Mint.

“In response to the report’s recommendations, the Mint has engaged third parties to assist the Corporation in its review of specific aspects of its operations, including refinery processes and internal controls,” said Ian E. Bennett, President and CEO of the Royal Canadian Mint. “We have also requested the RCMP’s assistance to investigate the matter and the Mint has committed to fully co-operate with them.”

The amount of the unreconciled precious metals at this stage is approximately $15.3 million. Mr. Bennett emphasised that “the Mint will aggressively continue its efforts both internally and with outside experts to determine the sources of the unreconciled difference.” In the interim and on the basis of the Deloitte and Touche report, the Corporation has notified its insurance carriers that it intends to file a claim under its “All Risks” insurance policy which, if successful, will largely offset the amount of any unreconciled difference.

Related Posts:

• As Much As $50 Million Missing In Canadian Ponzi Scheme
• Mint.com Has Added Canadian Banks
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Royal Canadian Mint Missing $15.3 Million In Gold originally appeared on Canadian Finance Blog on June 30, 2009.