Baby boomers’ long term care goes bust

The long term care of boomers is an unfunded liability. Unlike the Canadian Pension Plan and Old Age Security, the long term care of boomers is not funded at all. Our health care is not prepared to receive their numbers.

image: genx67.com

Other countries with similar long-term care pressures, such as Germany and Japan, have established various forms of public long-term care insurance. Not in Canada.

As it now stands, long-term care falls on the shoulders of family members who provide for 75 per cent of home-care for older Canadians, unpaid. Canadians typically don’t see the gaps in the current publicly-funded care programs until they or a family member falls through them.

Research from the National Institute on Ageing at Ryerson University shows that if Canada continues on its current track, the cost of publicly funded long-term care for seniors – including nursing homes and home care – is expected to more than triple in 30 years, rising from $22-billion to $71-billion, in today’s dollars. Authors of the research, Bonnie-Jeanne MacDonald and Michael Wolfson, warn:

“There is no special fund or program to cover the costs of long-term care in Canada. And it is not covered under the Canada Health Act in the same way as physician and hospital care (Globe and Mail, October 8, 2019).”

Canadians are dreaming if they think that our health care system can deal with the onslaught of boomers that will be falling into long term care. Hospitals are now struggling to place seniors in long-term care facilities and the wave of boomers hasn’t even hit yet.

Private long-term care insurance is available but expensive because of the low number of people buying it. It hasn’t worked here in Canada and is unlikely to work in the future.

Private long-term residences are having trouble staffing. In Kamloops, Berwick on the Park’s supportive living unit will close next year leaving 20 residents without round-the-clock care, despite the fact that residents pay $5,000/month for the service. The director of Berwick wrote to residents:

“There are significant challenges to retain healthcare staff in the current labor environment. An extraordinary amount of energy has been directed at recruitment and onboarding staff to meet the obligations to successfully operate our licensed care unit. The forward looking labor forecast indicates that these challenges will continue for the foreseeable future (Kamloops This Week, October 10, 2010)”

Even if private long-term care were available, many boomers couldn’t afford it. Debt among seniors is increasing according to Stats Canada. In 2016, the proportion of senior families with consumer and mortgage debt doubled since 1999.

Boomers have led privileged lives. They grew up during a period of increasing affluence due in part to widespread post-war government subsidies in housing and education. Baby boomers were more active and more physically fit than any preceding generation and were the first to grow up genuinely expecting the world to improve with time. While they have accumulated wealth, many boomers have lived beyond their means.

Boomers’ optimism for a better world is going to be severely tested as they age.

Canada needs to establish a new long-term social insurance program.  Given that health care is controlled by provinces, a patchwork system will be the likelihood as boomers totter into old age.

The current rickety long-term care system is not prepared for the wave of boomers.

 

 

Closure of the Vavenby mill was so predictable

Who could have predicted the collapse of B.C. forestry industry 15 years ago? Bob Simpson, that’s who. Back then the NDP MLA for Cariboo North was derided by the BC Liberals in the B.C. legislature and dubbed “Chicken Little” when he raised concerns about the future of our timber supply.

image: Kamloops This Week

Now, the sky is falling. As the wildfire season approaches, it’s the ashes of what was once marketable timber.

The writing was on the wall when the pine beetle turned 50 per cent of B.C.’s commercial lodgepole pine a rusty red a decade ago. Lumber mills worked overtime to harvest the trees before they became worthless. What remains now lie on the forest floor, ready to burn.

The Vavenby sawmill, 150 kilometres north of Kamloops, was just the start of a string of closures. It’s closing for good in July, wiping out 180 direct jobs in a community of just 3,500 people.

Canfor is shutting down all sawmills, except one, for at least two weeks. Not just sawmills but also their oriented strandboard plant in Fort St. John is closing, affecting 190 workers. The lack of wood supply is forcing Canfor to close their pulp mill until August 5. West Fraser will permanently close its Chasm lumber mill and eliminate the third shift in their 100 Mile House mill.

The loss of forests is threatening B.C.’s woodland caribou. If B.C. doesn’t do something to protect them, the feds will.  Environment Minister Catherine McKenna has threatened to impose an emergency protection order if we fail to implement species-at-risk protection. B.C. is one of the few provinces in Canada without a species-at-risk law, and yet we have the greatest number of species in danger.

The politics of navigating the dwindling lumber supply versus jobs is tricky. While inaction by the BC Liberals while in power to address the pine beetle, climate change, and endangered caribou is obvious neglect, Todd Stone, BC Liberal MLA for Kamloops-South Thompson sees it differently:

“British Columbia’s forestry industry is in crisis as mills close and job losses mount due to John Horgan and the NDP’s increased taxes, red tape and growing uncertainty on B.C.’s land base (CFJC Today, June, 13, 2019).”

Bob Simpson is familiar with the politics of forestry. His prophecy of doom for the forestry industry did not go over well in the previous provincial election. It was a hard message to swallow. Before the election, Simpson was warned by his staff that his message of an unsustainable lumber industry would be a hard-sell in mill towns. He was too blunt. After deadly blast levelled the main sawmill in Burns Lake in 2012 he said “You can’t be a sawmilling town forever (Globe and Mail, June 6, 2012).”

Speaking the truth in politics is dangerous. Simpson lost his seat in the riding of Cariboo North in the previous provincial election. Now as mayor of Quesnel, Simpson is preparing for the “industry meltdown.”

Like the cod in the Atlantic, B.C. forests seemed eternal. Our forests have not only been marketed as a provincial brand, they are part of our identity –an image that now needs a makeover.

Mexico could ease Canada’s cannabis problem

The plan to drive illegal cannabis growers out of business is going slowly.

The problem is supplying enough legal cannabis to lower retail prices. Eventually illegal sellers will be a quaint memory, something like the bootleggers of alcohol of the past. For that to happen, a plentiful supply of cannabis has to be available and it’s going to take years for that to happen with Canadian growers only.

image: Greenhouse Canada

The cost of legal cannabis remains nearly 50 per cent higher than potleggers according to crowd-sourced data obtained by Statistics Canada. The cannabis store Kamloops seems to fairly well-stocked but in some parts of Canada like Quebec, stores have had to close on some days of the week due to lack of supply.

One way to lower retail prices immediately is to reduce taxes; a solution favoured by the cannabis industry. In addition to provincial sales taxes, the federal government charges one dollar per gram excise tax and an annual cultivation fee of 2.3 per cent of revenue.

Some jurisdictions in the U.S. with legal cannabis markets, such as California, are considering such temporary tax reductions to lure customers away from the illegal market after disappointing early sales.

I don’t think lower taxes are the solution. The whole idea of legalization of cannabis is generate revenue so that other taxes could be reduced. Like other “sin taxes” on recreational drugs such as tobacco and booze, taxes on cannabis provide revenue on a product not currently taxed.

Regardless, Canada has no intention of following the U.S. lead. A Canadian Finance Department spokesperson said: “There are no planned changes to the existing duties at this time (Globe and Mail, February 4, 2018).”

Another way to reduce legal cannabis prices is to increase supply.

Mexico plans to legalize cannabis. The new interior minister of the Obrador government has introduced draft legislation to regulate cannabis. Mexico has been studying Canada’s model of issuing licences for the cultivation, processing, packaging, sale and possession of cannabis.

Mexico has something going for it that Canada doesn’t -climate.  Cannabis doesn’t need to be grown in greenhouses there. The president of Mexico’s National Association of Cannabis Industries says:

“We’re going to be able to create a new industry based on new regulations, to produce cannabis for the rest of the world – our geographic situation and our labour [pool] gives us a major advantage (Globe and Mail, November 8, 2019)”

Enthusiasm is mutual on this side of the border. Canada’s Canopy Growth Corp. is looking at investing in Mexico. Their co-CEO said:

“We think [Mexico] is a real opportunity. When you’re on both sides of America with really well-positioned products, this could be a very good platform to reflect both sides of the border with the U.S. and enter an economy that is substantial.”

However, Mexico faces hurdles. Much of Mexico is controlled by drug cartels who oversee the growth of illegal marijuana. Seizing control of agricultural land will be a challenge. Also, Columbia is also poised to compete in the legal cannabis market and have a workforce experienced in its growth.

Of course, Canada’s fledgling cannabis industry needs to be protected but controlled importation could help our supply problem.

Can blockchain save Robin Hood?

The Robin Hood Co-op was started by a group of artists at the University of Aalto outside Helsinki in Finland. It’s a hedge fund like no other, formed as a piece of “economic performance art.”

image: Information Age

Problems started when the artists began to raise money and invest in the stock market. The university administration took issue with the concept and forced the co-op to shut down.

Instead of shutting down, the artists left the university to venture out on their own.

Since then they focused on building a global network of countercultural investors from Helsinki to California.

The Robin Hood Co-op doesn’t exactly steal from the rich to give to the poor. The goal is to distribute profits to worthwhile causes globally. “Part of the profit generated by the fund is invested into projects building the commons,” according to their website.

They have no regular offices and meet in different places, often abandoned buildings, to hold workshops in conjunction with a local host group.

Reporter Brett Scott went to one of these places in a graffiti-strewn former slaughterhouse in Milan occupied by a radical arts group called Macao. He writes:

“In the hall is a naked woman painted blue, wearing a gas mask, dancing to the sonic violence of industrial deathmetal music. Next door is a punk street-theatre collective manufacturing artificial vomit in buckets to throw at a protest (CCPA Monitor, Nov/Dec, 2018).” Among the assembled were hackers, coders, designers and artists. The meeting had the feeling of the blend of an intellectual salon, a hackathon and a political campaign meeting.

Not your average corporate boardroom.

Portuguese artist Ana Fradique, who co-manages the fund, describes Robin Hood as “artivism”—a mix of arts and activism.

Robin Hood has its critics like Serbian activist Branko Popovic. “I understand you’re trying to be like a vampire on the market,” he says, “but why be a vampire on vampires? They have nothing to give us.”

That’s an ongoing tension amongst activists: do you work within the system to build a more equitable world or tear down the system and rebuild it from scratch?

I many respects, Robin Hood Co-op is conventional. They invest in the Wall Street stock exchange using an algorithm they invented called “The Parasite.” Assets in the co-op are called Robyns. In the first year of investment, they made double-digit returns.

Some of its first distributions went to the autonomous arts space Casa Nuvem in Rio de Janeiro (€5,000) and the activist broadcaster Radio Schizoanalytique in Greece (€6,000).

However, Robin Hood Co-op members are impatient to grow. They plan to expand the model beyond the Parasite algorithm to implementing blockchain. “Robin Hood 2.0.” will be “even more monstrous” than the first incarnation said one of the co-founders.

Rather than being based in Finland, they wants to transform Robin Hood into a decentralized global cryptofund using blockchain -the underlying technology of cryptocurrencies such as Bitcoin and Ethereum.

While Bitcoins are turning out to be a bit of a dud, the technology of blockchain is promising. It’s an indelible ledger in which anything can be permanently recorded, including shares in an activist hedge fund. The advantage of blockchain is that it’s decentralized and global.

It’s a big leap. Implementation of blockchain will require a change in the culture of the co-op and paid staff.

Time will tell whether this chimera of art and capitalism will prosper.

 

BC Liberals suppressed Hydro rate hikes

For decades, B.C. governments have hidden the true cost of Hydro rates -especially the BC Liberals.

image: Common Ground

Under the direction of the BC Liberals, the Crown utility used “inappropriate” accounting to pile $5.5-billion in what are known as deferral accounts says B.C.’s auditor-general.

“That debt amounts to $1,300 for every residential customer, more than $10,000 for each commercial and light industrial ratepayer, and almost $5-million for each large industrial consumer,” according to the Globe and Mail, February 7, 2019.

Deferral accounts are not improper when correctly accounted for. They can be used as a temporary measure to avoid the shock of sudden rate hikes. After rates are gradually increased, the deferral account can be paid off.

But that’s not what happened. To keep voters happy and to make governments popular, BC Hydro rates were kept artificially low leaving future governments to deal with the problem of billions hidden in deferral accounts.

“BC Hydro was not allowed to charge its customers enough to cover its operating costs each year,” Auditor-General Carol Bellringer wrote.

The current minister responsible for BC Hydro, Bruce Ralston, said his government is committed to fixing the problem but it will take time given the size of the debt. “We are going to keep rates affordable. No one’s rates are going up by $1,300 in a year.” His government has already reduced the deferral accounts by $950-million by bringing that debt onto government books.

The NDP government also intends to prevent misuse of deferral accounts by future governments by restoring the role of the independent regulator, the BC Utilities Commission (BCUC) and ensuring that BC Hydro adopts ordinary accounting practices.

Industries who are used to cheap hydro are not happy with the prospect of paying the real cost of producing electricity. Industry representative Richard Stout says industrial customers shouldn’t absorb the shock of getting Hydro back on sound financial footing. Since the government is responsible for the mess, they should pay:

“I think most would agree the appropriate source of paying down the debt should be from government, rather than the ratepayer.”

Huh? He wants taxpayers (the government) to pay for the meddling of former governments rather than ratepayers? Last time I looked Hydro users and taxpayers were one and the same.

Critics of BC Hydro will point to the debt incurred in building the massive hydro dam at Site C as an additional source of the problem. The project was started by the BC Liberals and given green light by the NDP who said the project had gone too far to abandon.

The government is faced with a hard choice, says Bellringer: “You can either have a rate increase or you can end up with a deficit that ends up getting covered by the government at some point.”

Hiding Hydro debt, which in reality is our debt, is not an option.

Transferring BC Hydro’s debt to the government’s books is the right thing to do but government debt is not popular with voters because it’s visible. Turning control of BC Hydro over to an independent regulator is the right thing do but hydro rates will go up.

We’ll see if doing the right thing pays off for the NDP in the next election.

China “understands” the developing world

China is taking a page out of the American playbook in their massive global investment called the Belt and Road Initiative (BRI).

Image: Wikipedia

“Belt,” is short for the Silk Road Economic Belt and refers to the overland routes for road and rail transportation; “road,” is the 21st Century Maritime Silk Road referring to sea routes.

In America’s version, the Marshall Plan, they invested $100 billion in the war-torn regions of Europe after the Second World War. The stated goals were to remove trade barriers, modernize industry, and improve European prosperity.

The unstated goals of the Marshall Plan were to establish an economic presence in Europe. The Soviets understood this. Soviet Foreign Minister Vyacheslav Molotov, in opposition to the plan in 1946, said: “If American capital was given a free hand in the small states ruined and enfeebled by the war [it] would buy up the local industries, appropriate the more attractive Rumanian, Yugoslav … enterprises and would become the master in these small states.”

According to China’s official newspaper, the People’s Daily, the goals of the Belt and Road Initiative are: “To construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database.”

It’s the largest infrastructure project ever with $1 trillion designated for South-east Asia, Eastern Europe and Africa. The plan is expansive. It includes 71 countries that account for half the world’s population and a quarter of global GDP.

Western countries worry about ulterior motives. Jonathan Hillman at the Center for Strategic and International Studies in Washington says: “It’s a reminder BRI is about more than roads, railways, and other hard infrastructure. It’s also a vehicle for China to write new rules, establish institutions that reflect Chinese interests, and reshape ‘soft’ infrastructure.”

Martin Jacques, former editor of Marxism Today is less suspicious. He thinks China is developing sources of commodities in Africa so developing nations can improve their economies and be less dependent on Western demand.

“Secondly,” says Jacques, “and this is why I deeply resent the argument that China is the new colonial power in Africa, China understands the problem of developing countries. One of the big problems is developing infrastructure that delivers transportation, energy and the necessary building blocks of a more developed economy (New Internationalist, July/August, 2018).”

Maybe China can do global supremacy better than the Western world. Resource extraction by Canadian mining giants in Africa has been less than stellar. At a tantalum mine in central Mozambique owned by Pacific Wildcat Resources based in Vancouver a man was shot and killed, inciting community members to set some equipment ablaze. At the Montréal-based Kiniero mine in Guinea, the military killed three in a bid to drive away small-scale miners away. Soldiers also shot a woman and burned her baby

While American foreign policy amounts to bluster and bravado, China is climbing to superpower status by integrating itself into local economies. China will inevitably make mistakes but the Belt and Road Initiative is more systematic than the Western World’s haphazard corporate colonialism.

The U.S. talks tough about China but they can no more stop China’s ascendancy than they can stop the sun from rising.

 

 

When nature gives you tar sands, make carbon fibres

Oil sands crude prices have hit rock bottom. The future could be in the tar -the bitumen. The original name for the deposits, tar sands, should be restored because that’s where their potential value exists.

Image: Mining.com

Extracting oil from tar sands is done at great cost. Huge tracts of land are stripped and the tar sands are dug up or injecting with steam. Once it’s dug up, the thick goo has to be diluted just to get it through pipelines. To turn into useable petroleum, it has to be sent to refineries thousands of kilometres away. Because there aren’t enough pipelines to get it to refineries, and because convention oil is relatively cheap, the extraction of oil from tar sands is not profitable.

Beyond the cost of extracting oil from tar sands, there is the cost to the environment. Because extraction is so energy intensive, more greenhouse gases are produced than from conventional sources. Canada is the fifth largest producer of crude oil in the world but we produce 70 per cent more greenhouse gases per barrel than global averages according to Corporate Knight magazine (Fall, 2018). That higher average is because of the tar sands.

Then there are investment pressures that are moving away from fossil fuels. Europe’s largest asset manager is increasing its “decarbonized portfolios” and so is Canada’s second largest pension fund, Caisse of Québec.

Instead of burning the stuff as fuel, a better plan would be to extract the valuable byproducts of bitumen. An Alberta government agency, Alberta Innovates, is looking to producing derivatives of tar. In their report “Bitumen Beyond Combustion,” they suggest three possibilities.

The most obvious is asphalt for roads. The global market for asphalt is currently at $65 billion and is expected to grow. The tar sands now produce asphalt but the current method of transportation requires that the product be kept very hot for transport. A better way of moving asphalt to market is to turn it into pellets and ship it to markets. An engineer for Stantec engineering who worked on the report says:

“The infrastructure, the rail cars, are out there, the global pull, the pricing mechanisms – people are building roads all over the world everyday.”

Less obvious is the production of carbon fibres. Like any organic compound, bitumen is right for making carbon fibres. The fibres have a wide variety of applications including strong lightweight composite materials used in aircraft, aerospace, and wind industries. They strengthen cement and steel.

When used on their own, they can replace steel in automotive manufacture. If carbon fibres took just one per cent of the global steel market by 2030, that would require 3 million barrels of bitumen a day, one study found.

Another surprising component of tar sands is vanadium used in making batteries and high temperature metals. While one a barrel of bitumen contains only 30 millilitres of vanadium, millions of barrels would produce a lot of the metal.

At the current value of crude oil, it’s not worth mining the tar sands for petroleum. The bitumen, once regarded as a troublesome byproduct, may be the future of the tar sands.