Sunday, October 19, 2008

Tom Flanagan: Mr. Harper's Canada

This is from the Globe and Mail.
I must admit that Flanagan is a good writer, much better than some better known columnists for sure. Even much of the substance of what he writes is quite correct. However, it is also clear that the content is given a certain spin which is hardly surprising given Flanagan's conservative leanings.
As Flanagan points out, Harper will have little wiggle room as far as spending is concerned. Although Flanagan admits that running deficits is a possibility and not to be rejected out of hand he plainly thinks they are dangerous and to be avoided. No doubt Harper channels Flanagan on these issues! What he does not say because it might upset the audience is that this will be an opportunity to restrict spending on some social programs. Flanagan rightly points out that there will be lower revenues with an economic slowdown. If the budget is not to go into a large deficit programs will need to be cut. Cuts won't likely be in military spending as Flanagan regards the military as underfunded.
Flanagan recommends a speak softly and carry a big stick or whip policy for Harper. This is no doubt already evident in Harper's conciliatory words after his victory. However, the same rhetoric followed his last minority victory. As long as he can wheedle the Liberals or someone else into supporting him he will not need the threat of confidence votes but if that policy fails out comes the whip. In either case the main opposition, the Liberals, are likely to be co-operative or supine, sitting on their hands again. Harper himself maintains that even if he got a majority he would govern on his platform and as if he had a majority. On this Harper will probably keep his word for a change.

Mr. Harper's Canada

From Friday's Globe and Mail
October 16, 2008 at 9:59 PM EDT
To every thing there is a season.
-Ecclesiastes 3:1
Prime Minister Stephen Harper invoked these words from Scripture in his election-night speech not to announce a social conservative theocracy but to signal a strategic shift. The Conservatives won this election by polarizing against a divided centre-left, but the way to govern for the next couple of years will be to tack back and forth between the opposition parties, using the arts of conciliation and compromise to build support for each piece of legislation as needed. Mr. Harper will use the coalition-building talents he showed when he reunited the fragmented Canadian Alliance, then pursued the successful merger with the Progressive Conservatives.
It is essentially the way Mr. Harper operated in the first half of his previous minority government, before the Liberals became more combative under their new leader, Stéphane Dion. Thereafter, Mr. Harper switched to intimidation, using confidence votes and the threat of dissolution to pursue his agenda. It worked well in terms of passing legislation, but it also encouraged the opposition to fight back by hijacking parliamentary committees. If Mr. Harper eases up on confidence votes, it should encourage a more co-operative spirit among the opposition. If not, he can always go back to the lash.

Dealing with the international liquidity crisis is not Parliament's responsibility; it will depend mainly on the regulatory authority of the Bank of Canada and executive actions of the Department of Finance, not new legislation. Mr. Harper's softer approach should be sufficient for the parliamentary task at hand – which is to pass whatever parts of the not very ambitious Conservative election platform that the government thinks it can afford under deteriorating economic conditions.
Indeed, the government's main challenge will be to deal with these new conditions. It is obvious that the next two fiscal years will be a period of slower or even negative growth, in which federal revenues are bound to level off, if not decline. This situation will provide the first real test for the incremental conservatism that has brought Mr. Harper to power.
Since forming the Conservative Party of Canada in 2003, Mr. Harper has won elections and maintained support in government by disbursing the federal budgetary surplus. Conservatism in power meant a piñata of tax cuts and popular new programs such as the child-care allowance, while also transferring more money to the provinces and addressing the long-neglected needs of the Canadian Forces. But the party is over because there will soon be little, if any, federal surplus to distribute.
After doing the easy and popular part of incremental conservatism, Mr. Harper now has to tackle the hard and unpopular part – wrestling the annual growth in federal expenditures back down to a combination of inflation, population increase and real economic growth, which amounts to about 4 per cent a year. In contrast, four years of minority government have put federal expenditures on an unsustainable growth track of more than 7 per cent a year.
Moving back from 7 per cent to 4 per cent may not sound like much, but it means immediately reducing program spending by $6-billion a year – not an easy task when most federal spending consists of monetary transfers to people and provinces that are fixed by legislation and can only be reduced by changing the law. In fact, some federal expenses are bound to go up in hard times. Think of employment insurance (more people will be unemployed) and pensions (more people will retire as an alternative to unemployment). The discretionary part of federal spending is really quite small in proportion to the size of the whole budget.
In theory, running a deficit in periods of economic slowdown is a good idea as along as the budget is balanced over the business cycle but, in practice, has proved impossible to do responsibly. It's like an alcoholic saying, “One drink won't hurt.” Canadians learned this lesson when we went through 20 years of chronic deficit spending from the mid-1970s to the mid-1990s.
Another easy way out is dodgy accounting. It might be tempting, for example, to use the $4.2-billion from the Advanced Wireless Spectrum auction to cover a deficit. But that really won't work, because it is a one-time windfall, whereas spending has to be reduced for the long term.
Mr. Harper spoke during the campaign of gradually making Canada a more conservative country, and he has made some progress on that score. For example, his family-oriented tax cuts and grants have proved an effective substitute for the publicly financed institutional child care proposed by the parties of the left. But the fiscal surplus gave him something to work with; he could put money in parents' pockets to replace the allure of a state system.
It will be harder in the next few years to sell the merits of conservatism without money to spend – harder but not impossible. It is a question of leadership. Mr. Harper ran and was re-elected on this strength of his leadership; now it will be put to the test.
Tom Flanagan is a p rofessor of political science at the University of Calgary and a former Conservative campaign manager

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