Marcel Latouche, finance expert and founder of LEAD Calgary, exposes how municipal budgeting—like Calgary’s $500M reserves and Canada’s $11B in surpluses—prioritizes political legacies over taxpayer needs, using "overcap pensions" and union resistance as examples. He advocates zero-base budgeting to cut costs via private sector efficiency (e.g., failed garbage collection pilots) and redirect surplus funds back to citizens while shifting public art/infrastructure financing to philanthropists and tax-free bonds. Supporting conservative candidates through PACs like LEAD Calgary, which targets school board, municipal, and federal elections, could curb tax hikes and influence policies like critical race theory, proving local governance is just as pivotal as federal battles for conservative priorities. [Automatically generated summary]
Marcel Latouche: Public Sector Accountability00:05:20
Oh, hey rebels, it's me.
Maybe for some of you, your favorite rebel, Sheila Gunread, and you're listening to a free audio-only recording of my weekly Wednesday night show, aptly called The Gun Show.
But you know what?
This is the internet, so you can listen or watch whenever you feel like.
Tonight, my guest is somebody completely new to my show, to Rebel viewers, but he's been on my radar for a little bit.
His name is Marcel Latouche, and he's with the Institute for Public Sector Accountability.
And you know me, I love public sector accountability.
Now, we're talking about the upcoming municipal elections, how municipal budgets are not budgeted the way that you think they are, and just how much of your tax dollars are going to salaries and benefits at the municipal level.
Friends, it is chilling.
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What is the true cost of public sector pensions to your municipality?
And we're also talking about the need budgeting trick that allows municipalities to keep asking you for more and more money every single tax season.
I'm Sheila Gunn-Reed, and you're watching The Gunn Show.
Friends, on Monday night, I was at a campaign event for my friend, United.
We roll organizer Glenn Carrot.
You see, Glenn's running to be the mayor in Innisvale, Alberta.
And full disclosure here, Glenn is also a Fight the Fines client after he hosted an Easter event for the locked down children in his community and the RCMP showed up.
Graciously, they did not take the Easter bunny off to the slammer.
However, the cops did ticket Glenn.
And we are helping Glenn at no cost to him fight that lockdown ticket in court through fightthefines.com.
Anyway, the show tonight is not about Glenn Carrot.
However, one of the reasons I really like Glenn, one of the dozens of reasons I really like Glenn, is that he thinks municipalities are so often out of control in their spending and unaccountable to the people.
Today's show, though, is about somebody I met at Glenn's event.
His name is Marcel Latouche.
And boy, that is such a fun name to say.
Anyway, Marcel is with the Institute for Public Sector Accountability, which sounds like it's the Institute for me.
Now, at Glenn's event, Marcel gave the most amazing explainer of how government budgeting and private sector budgeting don't look the same.
Government budgeting is skewed so that governments can continue to ask you for more and more money.
And so I thought, Sheila, we better have Marcel on the show to explain this to everybody else.
So here's the interview Marcel and I recorded Tuesday morning.
Take a listen.
Joining me now from his home in Calgary is Marcel Latouche.
Marcel is with the Institute for Public Sector Accountability.
And I heard him speak on Monday night at Glenn Carrot's campaign event in Innisfail.
Glenn's running to be the mayor there and one of the few politicians that I like and trust in the entire world.
And Marcel, you've been on my radar for a little bit, but you were saying some things there that I think a lot of politicians need to address, especially during this municipal election cycle.
But before we get into that, why don't you tell us a little bit about yourself, your background, and the work that the Institute for Public Sector Accountability does.
Politician's Pension Perks00:05:23
My background is in finance and economics, and I have been in the public and private sector as a financial manager for over 50 years.
I worked at the city of Calgary for 17 years as a senior financial accountant.
And after that, upon retirement, I moved on and I started lecturing at both Mount Royal College and not university.
And if people want to know why, I will tell them later.
And I went to SAIT, where I designed a program called the Public Sector Finance Program.
So it's all accounting about the public sector because most people don't understand that the private sector accounting standards and the private sector accounting standards are totally different.
And this is where we have this problem with people understanding what happens in the public sector.
Mostly, I will discuss those issues from a municipal point of view because we have a big election coming up at the municipal level in Alberta.
The key with that is that we have a problem in Alberta.
Most, if not all, local authorities and municipalities have a major component of their operation dealing with salaries and benefits.
And within those benefits is something called the overcap pension, which councillors of large municipalities are entitled to.
It was started in Calgary, very nicely done by administrators who wanted to boost themselves and their pension fund to go over and above the amount that they could not contribute to their RSPs.
So what they did in Calgary was very simple.
And we disclosed this in my book, Take Back City Hall, in 2004.
And we told people about this overcap pension, but nobody paid attention because they didn't really understand it.
When we talk about it, the media totally ignored it until Farkas, the new young councillor in Calgary, brought it up again.
And what that means is these councillors have an additional pension fund, which was passed by saying the administrators told them, if we get it, you will get it too.
So what has happened now, this has proliferated to the big municipalities.
And my point of view is if the big municipalities are doing it, local authorities are going to say, why not us?
So this is going to be a burden that is going to be on all taxpayers if this proliferation continues.
The problem we have is that, for instance, right now, there is a PAC that has been started by a retiring councillor, Keating, who's leaving politics, but he started a PAC.
And today I found out he's supporting Cara, Kole Arcot, DeMong.
One is a leftist, a liberal, Cara.
Then he has DeMong and Kole Arcot, who've passed themselves as conservatives, but most of their decisions in the past does not really show that they have been conservatives since they voted for tax increases.
But more importantly, he's now supporting somebody who left council years ago, Councillor Putmans.
My point is, people be very careful.
Why are they supporting each other?
It's very simple.
They want to continue what they've been doing for years, the policies that have hurt Calgarians and taxpayers for years.
Why would you vote for somebody who you don't want to vote for, despite the fact that he's left politics, he's supporting the same people that he worked with to continue this proliferation of tax and spend that they've done for a number of years?
And in effect, this is why part of what we do at the Institute have been to monitor the finances of municipalities.
There are excesses all over the place in municipalities.
They get into things outside of their jurisdiction to create political legacies.
And what happens is it is always passed on to the taxpayer because municipalities don't produce anything that they can sell.
What they do is they produce services that they deliver to you.
But the increase in taxation from the property tax does not really reflect an increase in your services.
It's the same services at a higher price.
Municipalities' Excesses and Accountability00:02:15
So I just wanted to, before we keep going here, I wanted to go back just a second to talk about these insane pensions, because the second a politician, a local politician says, let's bring these perks, benefits,
and pensions back in line with the private sector, you're being accused of, you know, wanting mass layoffs and completely destroying the public sector when all you want is a little bit of accountability and to bring it in line with the people who are paying the bills, the private sector.
What portion of a municipality's budget is going to pensions, salaries, and benefits?
It's over 50% in most of them, in the majority.
Over 50% is of your operating budget is in salaries and benefits.
And most people don't know that.
When they issue their report at the end of the year, they never break it down in the components of the budget.
What they tell you is the amount of money being spent on police, fire, streets, and so on and so forth.
But what the public should really find out when they examine the finances of a municipality is to find out what are the components, salaries, consultant fees, outside contractors.
These are the things that we are going to have to tell people that these are the elements you should be focused in.
How much you spend on police?
Fine.
How much you spend on fire?
Fine.
But what are the components of those expenditures?
And as I said to you, 50% of the total operating costs of the majority of municipalities is over 50%.
And that includes benefits, those high pension funds that they have told you about.
You know, that's outrageous.
And you just, you briefly touched on something there that one of the things that really annoys me about municipal governments doing is these legacy projects that they do.
Why Not Philanthropy?00:12:27
Ugly public art, solar panels in Edmonton's River Valley that serve no purpose.
In Calgary, very nearly ended up with a very expensive in the realm of I think probably $10 billion in Olympics would have been.
And all of that would have been a legacy project for Mayor Nahib Menshi.
How do we as taxpayers, I guess, put the pressure on our municipal politicians to say, this is not what you're supposed to be doing.
You're supposed to be making sure the garbage is picked up and the potholes are fixed, not putting up massive art installations that look like garbage left along the side of the road.
But you see, we at the Institute, we have a different tack on this.
It doesn't matter.
I was at the center of the against the Olympics 2026.
I attended meetings, I made speeches and so on and so forth.
I was extremely glad that we killed that.
Then has come the entertainment center.
And I will come back to this in a minute.
What is the problem with the way we do things?
I don't like art.
In fact, I dabble in art myself, but that doesn't matter.
That's a hobby.
But I have proposed from the Institute's point of view, there is a better way of doing it.
Instead of using taxpayers' money to promote art, why don't you give an incentives to the number of great people we have in Calgary who are philanthropists, who would give money to make art, to give to the art center, to give to the art projects in Calgary.
What you do is very simple.
You take what they give and you ask them in your property tax or your corporate taxation, we will reduce your taxation or your contribution to your property tax over a number of years when you donate.
So it's an incentive for them to give.
It's an incentive to get better art and as opposed to legacy art from a political point of view.
The other thing that we have proposed is we don't mind international artists, we don't mine international cooperation, but we must have transparency in the selection of the artist.
And that has changed a little bit.
We've been successful in doing this.
The other problem we have is the way we finance projects.
Let's look at the entertainment center and the entertainment arena.
I'm all for it, but it's the funding.
The institute has opposed the funding of the arena, which by the way, the arena is now going to be 1,000 seats less than the saddle dome.
The community rink promised that was going to be part of the project has disappeared.
And we have another additional contribution from the city.
The problem we have is certain projects and certain facilities should have an element of public sector.
But how we finance it is totally ridiculous.
Straight from taxpayers' money.
We have proposed that new projects of large expenditures should also have an element of financing through tax-free municipal bonds.
That will give the ordinary taxpayer an opportunity to take part in the investment of that particular project.
What they need to do is lobby the provincial government and the federal government to allow the tax-free municipal bonds.
And that would be part of the financing.
So the burden would be less on the taxpayer, as opposed to just creating debt to be repaid in future years when the taxpayer has got to bear it.
So many taxpayers cannot afford their property tax, let alone new taxes to pay for legacy projects.
And that's why we've always said we need tax-free municipal bonds.
You can put it in a TFSA.
You can have a contribution that will be part of what they always talk about, engage the public.
That was the way that we think that will be total engagement by the public.
We will be part owner.
We'll be investing in the project.
Now, Marcel, you said something on Monday night that I think surprised a lot of people in the audience when you were at Glenn Carrot's event.
And that was that municipal government, though they keep raising our taxes, they're not actually as broke as they let on.
And you pointed out that this has a lot to do with how they calculate their budgets and do their accounting.
Yeah, the budget is done on a cash basis.
The financial statement is done on an accrual basis, meaning it's on a historical accumulated basis.
When you do the budgets, they just tell you this is the amount we are going to spend to provide your services, including our big pensions.
So then we are going to look at this amount and we are going to say we need to raise that amount for taxation, either property taxes from residential or non-residential taxes to pay for what we have.
Included in this is always the fact that they tell you that we don't have the right to have a deficit in municipal government.
There's the first bundle.
I don't like it, but it exists.
You can have a deficit at the municipal level, but you have to repay it within the next three years.
So I don't like it, but it is there.
So an excuse for the municipalities to do this is very simple.
We can't have a deficit, so we're going to raise the money.
And what happens is we have and create surpluses.
Surpluses are a good thing as long as you use it properly.
I don't mind reserves.
We have reserves in Calgary right now, which is about half a billion dollars.
And suddenly with an election, we can see all sorts of expenditures coming out of those reserves.
And this is what I call political legacies or buying votes in an election year.
All these years that they've told you, we don't have any money, they've been accumulating surpluses and they've been purchasing or accumulating assets over the years.
We've been telling people about this for 20 years.
Finally, the CD Howe Institute produced their own report and came up with the figure of surpluses in Canadian municipalities of $11 billion.
And since municipalities don't create any wealth and all the money comes from taxpayers that has been created through over taxation, this $11 billion of surplus is your money being used by politicians to create political legacies.
So it is important for people to look at new ways of doing budgets.
And this is why at the Institute, we are pushing forward the idea of zero-base budgeting for municipalities.
Meaning, you start every year when you do your budget with the idea that you're starting afresh.
Everything is new.
You look at it.
With technology today, so many things can be done differently.
If the private sector is putting rockets in the air now instead of NASA, I bet you we can collect our garbage by a private company.
So by doing zero-based, you're going to look at the best way of doing and providing services for the taxpayer.
So when you start afresh, you say to yourself, where do we go from here?
So now that we've reviewed how we can deliver services better, we will need a new level of taxation.
Hopefully, it will show that technology has brought down the amount of taxes required to provide the same services or better services.
Then, if you have a surplus at the end of the year, we propose one thing.
What you do is you look at the surplus and you say, maybe we should have no more than 5% of our operating costs as reserves.
The remainder of what you have left as a surplus should be returned immediately in the following taxation year.
Then you will start having accountability, but we need transparency first for us to have accountability.
And that's one way of doing it by having zero-base budgeting.
You know, it's funny, Marcel, that you brought up garbage collection and private garbage collection because in the county that I live in, I can get garbage pickup to my rural, very rural house, thanks to the county.
However, I've opted out of that and I use a private garbage collection service because it is cheaper, more efficient.
And I think that has a lot to do with those public sector union pensions and benefits that I don't have to pay the guy tossing a garbage bag in the back of a truck, you know, an over-inflated salary coupled with over-inflated benefits.
And so just even for me as my family, I can see that as a practical thing that we're already saving money on.
So multiply that across the entire county that I live in.
Absolutely.
Let's talk about garbage because that's what we have a lot at the municipal level.
Yeah.
Garbage politically and garbage that we distribute, right?
So let's put it this way.
When they first put this on the agenda at council, we made a presentation and we warned people that putting the garbage under the jurisdiction of the municipality was the wrong thing to do because the first thing was they put three businesses out of operation.
They killed three businesses.
Now, the absurdity of it all, having been warned that this was not going to work and there are better ways of doing it, the city of Calgary decided we're going to have a pilot project to see if we can get it from the management.
And this is the garbage we have nowadays.
You know, we get to do a pilot project after the fact.
Right.
I mean, you know, this is so absurd.
We spend millions of dollars.
So now if we go back to the private sector, what are we going to do?
Sell all these assets that were bought for to deliver the service at a lower price.
Once again, the taxpayer loses because to sell it would be at a loss.
And the fact is, they do not want to hurt any negotiations between the taxpayer and the union because that's what it is.
I mean, anything happening at the municipal level is a negotiation by our representatives, the councillors, with the unions.
So they do not want to take that step and say there is a better way or there are better technology to deliver the services.
Unions, in effect, have outlived their existence.
Technology is going to make them obsolete if they do not agree to make changes on how they are compensated.
And that is a major, this is why we have 50% of our operating cost in wages and benefits.
Yeah, from your lips to God's ears that the unions have outlived their usefulness.
Conservative Candidates Unite!00:06:39
Marcel, you told me a little something before we jumped on camera here, and that's that you've started a political action committee.
Can you tell us about that?
Correct.
We've started a political action committee to advise and listen to people, select candidates, and provide a platform for the next municipal election in Calgary.
Our PAC is called LEAD Calgary, and we are already interviewing candidates.
At the end of August, but now perhaps a little bit later because of the upcoming federal election, we are going to issue a list of candidates with a series of ideas and ask them to be part of a new way of doing business at City Hall.
So leadcalgary.ca and we are on Facebook at lead Calgary.
So that's what we are going to do.
Well, you know, it seems like, at least in media, sometimes I'm a bit of a lone wolf in driving home the point that conservatives should not really walk off the field of municipal politics.
This is where all those bad ideas are so often born and then they grow up towards the federal level because they start off with all those pilot projects you point out that happen after you start the project itself.
And, you know, municipal politics, they're the things that it's the thing that affects you first and the most.
And that enormous property tax bill is one of the largest tax bills, single tax bills you'll pay all year.
And so it's important for us to be holding our politicians to account.
Now, Marcel, one last thing.
How do people support the work that you do at the Institute for Public Sector Accountability?
And how do they find out about some of the things that you're doing?
We have our website.
We have all our reports published on it.
It's called theipsa.org.
T-H-E-I-P-S-A dot org.
Well, Marcel, I want to thank you so much for taking the time.
I know I just sort of sprung this interview on you, but you know what?
You're a sharp guy and you know your stuff, obviously.
We'll have you back on again really soon because I'd be very interested to see the support, the sort of people that you identify through your PAC initiative.
Actually, I will be delighted to have a platform like the Rebel to do this, actually, because we are going to seek social media support of all sorts to be able to reach people out there.
One of the things I want to add: we have an idea that because the federal election has been called virtually at the same time as the municipal campaign, I wrote a book called Conservatives, Dead or Alive.
And it is important for us to do this.
To me, 2021 is a very big year for politics in Canada in general.
At the municipal level, I ask conservative candidates to help conservative candidates at the municipal level campaign together, support each other, because if you have the same goals of freedom of speech and free market economy, you should have a complete joint platform to talk about the same thing at the doors.
So I'm requesting, I'm asking candidates to work together, because otherwise we are going nowhere.
This election 2021 year is extremely important.
Well, Marcel, I could not agree more.
And again, I think conservatives, we forget what happens at the school board level.
If we're concerned about the things that our kids are being taught in school, why aren't we getting involved in the school board elections?
Why aren't we asking the people who are knocking on our door, what do you think about critical race theory?
How much money do you think we should spend on recycling if it's the local town councillor running for office this year?
We have to ask those questions.
And I think it's important that if folks are conservative or progressive and they're running, they need to identify themselves as such.
And we don't see enough of that.
We see a lot of gray area.
And then people find out the hard way once, you know, our elected municipal politicians start voting.
We find out who they really are.
But this is where the media should come through.
You bet.
You know, what has happened is all these issues are intertwined in one single thing.
It's about conservative, small C common sense conservative values.
And if we work together, we'll get better results.
And I will leave you with that thought and ask your listeners to start working together because they are all intertwined issues.
School, municipal, federal, they are all about the freedom of conservative values.
That's what it's all about.
Marcel, thank you so much for being on the show.
Thank you for taking the time.
And we will check in very, very soon because, like I said, I'm very interested to see who you identify as the lead Calgary slate.
I thank you.
I accept that very generously.
And it was a pleasure to speak with you this morning.
Thank you.
Marcel's been at this a very long time, first uncovering the double pensions of Calgary's public sector way back in 2004.
And yet, 17 years later, very little has changed.
And I think the problem lies with us conservatives.
You see, we mostly look at the big macro issues.
Right now, we're so focused on Justin Trudeau that we're not focusing on the things that we can fix right in front of us at the municipal and local levels.
It reminds me of something Jordan Peterson says, and boy, am I ever paraphrasing here, but he says something like, you can't change the world unless you start with your bedroom.
So clean your room.
You know, it's good advice for life in general, but also really good advice for politics.
Well, everybody, that's the show for tonight.
Thank you so much for tuning in.
I'll see everybody back here in the same time in the same place next week.