Inkless Wells

Paul Wells on all the latest out of Ottawa—along with the occasional post about jazz. Follow Paul on Twitter: @InklessPW
He also offers his thoughtful perspective of Stephen Harper’s last 10 years in his recent eBook, The Harper Decade.

Categories: Capital Read, Inkless Wells

Peering into tomorrow, blind as a bat

by Paul Wells on Thursday, March 4, 2010 4:41pm - 104 Comments

“Let’s be clear,” Jim Flaherty told a news conference during today’s budget lockup for journalists. “This is a tough budget.” Several journalists watching in the room next door burst out laughing.

Like its predecessors, the 2010 budget (“Leading the Way on Jobs and Growth” — the rhetorical inspiration here comes for once not from Australia, but from Paul Martin circa 1994) features a few killer charts that seek to tell the whole story. One of the big ones this year is titled “Rapid Decline In Deficits.” It begins with a rapid increase in deficits, from $5.8 billion in 2008-2009 to $53.8 billion in 2009-2010, wafting gently down to $49.2 billion in 2010-2011, then to $27.6 billion, $17.5 billion, $8.5 billion, and finally to $1.8 billion in 2014-2015. Hey, that’s a rapid decline in deficits.

It had better be. For once I packed away a couple of old budgets to keep me company in the lockup. And here’s what those deficits were projected to be, only a year ago: $1.1 billion in 2008-2009, $33.7 billion in 2009-2010, then $29.8 billion, $13 billion, $7.3 billion and $0.7 billion in 2013-2014. So: over the six years where the two forecasts overlap, Flaherty is admitting he screwed up his forecasts last year by an aggregate total of $76.8 billion.

That’s really bad.

You kind of need to watch this guy Flaherty. “We are going to eliminate the deficit,” he said, sternly, all serious-guy like. “I’m the guy who paid down $37 billion in debt in my first three years as finance minister.”

And that’s true. The figure includes $13 billion in surplus from Ralph Goodale’s last budget. Flaherty had been Canada’s finance minister for six weeks when he cashed Goodale’s check. So Flaherty is the guy who swiped one-third of his bragging rights from the Liberals.

And now, every few months, he gets into a feud with Kevin Page, the Parliamentary Budget Officer. Page says the deficit will be bigger than Flaherty projected. Flaherty puts on his little Irish-cop smirk and says, poncy little crat doesn’t know what he’s talking about. And then the deficit turns out bigger than Flaherty projected.

Every time.

It’s clockwork, like Lucy with the football, but Flaherty’s poker face never wavers. There’s something almost admirable about it. Which is handy because when it comes to the sort of thing you’d like to be able to admire a finance minister for, like, say, being dependable, he’s got nothing for you.

These kinds of outcomes are to be expected because in the delicate work of projecting economic growth, Flaherty is out here commando. The hated Liberals used to use “prudent” projections, which meant they assumed growth would be lower, by a set amount, than the average of private-sector forecasts. Then they added a “contingency” fund of, typically, $3 billion a year, which would protect program envelopes if the growth forecasts were wildly over-optimistic.

Almost every year the only surprise that resulted was substantially lower deficits or higher surpluses than expected. A high-class problem, especially in retrospect. Flaherty throws out both the belt and the suspenders. He takes the average of the private-sector forecasts, uses no contingency, gets it all badly wrong, digs the country a little further into the hole, rinses and repeats.

Anyway. Colleagues Coyne and Geddes, elsewhere in our coverage, will tell you how little credibility there is in the details of Flaherty’s deficit-elimination strategy, but beyond that micro-incredibility, I thought it’d be useful to belabour the minister’s (and by extension his boss’s) macro-incredibility. They have consistently failed to hit a barn door with their most basic forecasts.

But we were not only told, in the festival of leaks and briefings that preceded this budget, that it would be tough on the macro numbers. We were also told it would cast the eyes of the government and nation forward into a bright and shiny future: with innovation, productivity, science, technology, all that jobs-for-tomorrow stuff.

Wrong again.

In among various other bits of Kafka-meets-Orwell language (“Responsibility for conducting environmental assessments for energy projects will be delegated from the Canadian Environmental Assessment Agency to the National Energy Board…”) there is indeed a lot of talk about the Future. But the new sums allocated for science and technology — always a fairly small amount of any year’s budget — are strikingly smaller this year than in recent budget years, let alone in the heyday of the late 1990s. Budget 2010 gives the very strong impression of a national science-and-technology effort that is grinding to a halt in exhaustion and confusion.

For example. A PMO guy buttonholed me in the cafeteria lineup and asked what I thought of what the budget document calls “a new and prestigious post-doctoral fellowships program to attract top-level talent to Canada.” And indeed: the budget provides $45 million over five years to fund up to 140 grad fellowships a year.

That’s worth doing. It’s also about one-third (in any given average year) of the $87.5 million over three years the 2009 budget allocated to Canada Graduate Scholarships. They’re different programs, but you see the difference in scale.

Similarly, the motor of basic research in the country is the three granting councils, SSHRC, NSERC and the CIHR. Budget 2010 gives them $32 million a year in new funding, beginning in 2010-11. Which is great (not really; it’s very modest) until you remember that last year’s budget imposed a $43 million cut on the three councils for ’10-11. So now they’ll only have to find $11 million in cuts next year. Hooray.

There are other funding announcements in the budget, but they don’t go toward the kind of breakthrough-potential basic research the granting councils support. There’s nearly $400 million over five years to develop new RADARSAT remote sensing satellites. That’s like buying a new laptop: it replaces off-the-shelf technology from a few years ago with new off-the-shelf technology that has benefitted, automatically, like falling off a log, from Moore’s Law in the interim. Let other countries support the cutting edge of science; Flaherty will put his bets on the dull edge of technology.

Now, two big reports last year from the Council of Canadian Academies and the Industry department’s Science and Technology Innovation Council pointed out that the real drags on Canada’s productivity aren’t in Canada’s labs, which are well-funded and produce research that receives disproportionate attention from Canadian scientists’ peers around the world. No, the real drag is in the private sector, which fails to implement new ideas into the development of products and processes as a matter of routine. That’s a tougher nut to crack. The new budget demonstrates this by making big moves that won’t help.

Very nearly the largest line item in this budget is the $457 million over two years to make Canada a tariff-free zone for manufacturers. It’s an interesting idea. It’ll allow, say, a razor-blade manufacturer in Moncton to import steel and machinery tariff-free. Eliminating those tariff lines will cost $457 million over the next two years, but I’m willing to believe that cost will be covered in tax revenues from new economic activity.

But what that activity won’t be, necessarily, is innovative or extra-productive. If I want to import my materials and machinery from Slovakia or Japan to run the same lazy-ass domestic-market-obsessed innovation-blind company that dominates the Canadian business landscape, it’s not this tariff-free scheme that’ll kick me out of my rut.

The good news (he said warily) is that, four years after it was elected and two years after it released its science and technology strategy, the Harper government is getting ready to think about science and technology. Here’s the relevant language in the budget:

“To ensure that federal funding is yielding maximum benefits for Canadians, the Government, in close consultation with business leaders from all sectors and our provincial partners, will conduct a comprehensive review of all federal support for R&D to improve its contribution to innovation and to economic opportunities for business. This review will inform future decisions regarding federal support for R&D. The Government is currently developing the terms of reference for the review.”

It is never easy to get excited about a review. This budget announces a lot of reviews to not-get-excited about. It also announces reviews of the Canadian Payments System, aboriginal infrastructure, and airport security (I like to think of this as the Helena Guergis clause). Summoning what may be an excess of optimism, I note that this R&D review, with provincial and business participation, looks a little like what the presidents of Canada’s five major research universities were asking for last summer in a much-remarked interview with Maclean’s. But I note that the budget calls only for input from business, not from the research community.

To repeat: every study shows that Canada’s researchers out-perform the world, not only in their level of funding but in their ability to produce research that influences international peers. It’s Canada’s businesses that underperform, even though they, too, already benefit from generous tax treatment of private-sector R&D. A review of our science strategy that ignores our scientists would amount to a decision to put the weakest performers in charge of strategy. In the international competition for the best ideas and minds, that would be a decision to flee the podium.

Tags: Budget, deficit, innovation, Irish cop, Jim Flaherty, Kevin Page, parliamentary budget officer, RADARSAT, Ralph Goodale, research, Stephen Harper

More by Paul Wells

jay

"A review of our science strategy that ignores our scientists would amount to a decision to put the weakest performers in charge of strategy."

As far as this government is concerned, it's the snub that matters.

http://intensedebate.com/people/Thwim Thwim

Oddly, when I read this sentence, I thought Wells was talking about us.. the voters.

Mike T.

Don't worry. if there was going to be a recession, there would have been one by now.
J Teller

So, what would the opposition do differently? You see, while we can all agree the Harper government has made a helluva mess of things, I honestly don't see what the opposition would do differently. This is a budget that reflects the reality of a minority Parliament. It is bereft of new ideas because the minority exists. Moreover, I'm starting to honestly believe that if the government had not last year gone into a deficit position, NOTHING would have happened to the economy. They had to go into deficit because they would have lost the confidence of the House… period. Again, the opposition has not offered even the tiniest fragment of what they would do differently, so really, this budget reflects how bad things have gotten in Ottawa. While the national media (you included, Paul) engaged for the past four years in a game of "will there be an election?" "will there be an election?" you could have held the opposition accountable for precisely how they would run a better ship of state.

So what if Flaherty sucks as a Finance Minister? He's what we've got and again, the opposition COULD bring the government down over this budget, but it ain't gonna happen because really, Ottawa isn't about prudent management of the nation's finances or that whole vision thing – it's about winning elections and our national media enables that climate of ineptitude.

http://intensedebate.com/people/TJCook TJCook

"Ottawa isn't about prudent management of the nation's finances or that whole vision thing…"

Funny, when the Liberals were in charge, Ottawa really was about prudent management of the nation's finances.

Also: I think if Stephen Harper clearly communicated his real vision for Canada, he wouldn't win his own riding, much less a majority in the next election.

http://intensedebate.com/people/thehulk thehulk

Yeah, and the Liberals balanced the books in the 90s thanks in part to the hated GST that Mulroney brought in. What J Teller up there is asking is which party TODAY would do anything differently? Remember, the opposition was screaming for stimulus spending. Do you really think the Liberals or NDP would have spent less? Which party advocated NO stimulus spending? None! Basically, right now our choices are spend, spend more, and spend it all. All the opposition does is complain without saying what they'd do differently. Can you imagine how much the Liberals would spend? National day care program, national drug program, Kelowna accord, etc. I'm not happy with Harper's reckless spending ways, but I don't see any alternative that would do better at this point.

http://intensedebate.com/people/Thwim Thwim

So you're arguing that the cuts to the transfer payments had nothing to do with balancing the books?

DPT

Tranfer payments yes, but what also had a lot to do with balancing the books was the overcharging on EI payroll and employer deductions. Billions that could have been returned to taxpayers and employers. Paul Martin got more credit than he deserved on that file.

http://intensedebate.com/people/Thwim Thwim

At this point, I think it might be better to bet on the devil we dont know rather than the one we do.
kcm

So essentially the gov't is bereft of new ideas because the opposition dont have any either, and the media encourages this state of affairs? Ok i misrepresented your last point a little. But really, minority governance = bad governance because the media wont let them…wow! I guess you must be right since minorities have never worked in this country…and it's a refreshing change from the liberals made us…no, what! They did?
http://intensedebate.com/people/sea_n_mountains sea_n_mountains

would the opposition parties do any better? not sure. on one hand the bar is pretty low. on the other, they haven't exactly shown that the elevator goes all the way to the top floor. that said, i wholly reject your basic premise that the lack of ideas is attributable the existence of minority government. previous domestic and international experience plainly disabuses that notion.

J Teller

Then you're living in a dream, dude. Minority parliaments are all about political posturing so that you can form a majority at the soonest possible date. Dramatic legislation that can act as a hallmark for a political party is shelved because it won't pass muster with the Opposition. We need majority governments to bring down legislation that deals with the big picture – health care, the environment, education and child care – these four issues require a majority government because there can never be consensus on how to address them under the auspices of a minority parliament.

http://intensedebate.com/people/sea_n_mountains sea_n_mountains

Dramatic legislation that can act as a hallmark for a political party is shelved because it won't pass muster with the Opposition. We need majority governments to bring down legislation that deals with the big picture – health care, the environment, education and child care – these four issues require a majority government because there can never be consensus on how to address them under the auspices of a minority parliament.

Uhmm, dude, were you joking? Canada's health care system was created under a minority government! The Liberals and NDP under the same Pearson 1963 minority government that created our system of universal health care also collaborated to introduce the Canadian Flag and the Canada Pension Plan. That is one example of minority government.

Peter Russell, in his book Two cheers for minority government: the evolution of Canadian parliamentary, recently wrote: "The actual records of minorty government pute the lie to the myth that minority governments are feeble and cannot get anything done. Despite their relatively short duration, most minority governments we able to achieve a good deal. Only three were real duds…The other nine…all had significant achievements."

As Huxley wrote: “That men do not learn very much from the lessons of history is the most important of all the lessons that History has to teach”

J Teller

That was a different time when 2/3 of Canadians didn't even own televisions. Canadians went to church on Sundays and we didn't have a 24 hour news cycle. There wasn't the constant focus on messaging and spin. Pointing to the early 60's and saying we could do it now under a minority parliament is a ridiculous suggestion because it's apples and oranges. It was a different Canada then – one that is long forgotten.

That said, since you are pointing to the health care debate, I'd suggest to you that Tommy Douglas wouldn't ever make it as a national or even a provincial leader in 2010 because he was a preacher.

Different times. This is a meaner, spin-focused Parliament. Would not fly in a jillion years.
http://intensedebate.com/people/sea_n_mountains sea_n_mountains

"There wasn't the constant focus on messaging and spin. Pointing to the early 60's and saying we could do it now under a minority parliament is a ridiculous suggestion because it's apples and oranges. It was a different Canada then – one that is long forgotten".

does this not make clear that the lack of visionary policy and legislation in not attributable to minority government as per your earlier submissions, but to other contextual changes? (PS: the answer is yes).

As further evidence, consider this passage on New Zealand's experience from a recent UK report Making Minority Government Work:

But there are some general lessons. First, a hung Parliament need not be disastrous. Multiparty
governance, where two or more political parties cooperate on a regular basis to govern,
can be far more stable than critics suggest, if sensibly and practically managed. Concerns about
government durability, executive ineffectiveness and small parties holding a disproportionate
influence have not come to pass. There are various reasons for this, but amongst them are the
fear of punishment by the electorate; the conflict-averse nature of politicians; the imbalance of
power between the larger established parties and the smaller supporting parties; and perhaps
most fundamentally, good coalition and support management.

you need to read more broadly and do a better job of understanding that correlation does not mean causality.
J Teller

Pointing to other countries and saying "it will work here" is a hallmark of someone with a fundamental lack of insight into the Canadian psyche. That which makes Canada such a difficult country to govern is distinct to this nation and this nation only.

Causality – what are you?. Hey, there's like three people in the entire western hemisphere who use that word with any regularity ….

@#$% Iggy… what are you doing on here? I told you to stop stalking me, dude.
http://intensedebate.com/people/sea_n_mountains sea_n_mountains

you got me J Teller, you got me on all counts.

Kenneth

So J Teller, will you admit that Minority parliaments are Not all about political posturing now that you have been schooled?

J Teller

They are about posturing. We have not had "peace, love, cooperation and goodwill" in a minority government in Canada during my lifetime and I'm 43. They last, at best 18 months – this is common knowledge. I don't give a rat's ass about a report from the UK or what may or may not work in New Zealand. I live in Canada and the last time I looked, minority governments last 18 months on average and during those 18 months the national media is FAR FAR FAR more interested in reporting about when the next @#$% election will be as opposed to policy, planning and legislation.

Take your causality and stuff it – I live in the real word.

http://intensedebate.com/people/sea_n_mountains sea_n_mountains

also just a minor point that you might find valuable: our democratic system does not require consensus on passing legislation.

http://intensedebate.com/people/Be_rad Be_rad

Your New Zealand example also pyts the lie to any notion booted around that somehow a coalition is inherently evil or contradicts the "will of the people".
http://intensedebate.com/people/sea_n_mountains sea_n_mountains

it does Be Rad….

the Making Minority Government Work report is near essential reading

http://www.instituteforgovernment.org.uk%2Fpdfs%2Fmaking... target=”_blank”>http://www.google.com/url?sa=t&source=web&amp…” target=”_blank”>http://www.instituteforgovernment.org.uk%2Fpdfs%2Fmaking-minority-gov-work.pdf&ei=fDSRS-qqKs-vtgfhu9SgCw&usg=AFQjCNEYHLQTqEv5CRJ9h8KLRSf4O5Csdg&sig2=9uBzn7cyOKDeV2z0GzGz5g

It also calls us out for what we are: dysfunctional!
J teller

We are dysfunctional because parties are focused on partisanship and posturing and finding that illusive majority. Your statement proves my point.
http://intensedebate.com/people/Be_rad Be_rad

I htink there is a distinction to be made: parties make up minority and majority parliaments. But they are not one and the same. I think it is more accurate to say "our current parties are more focused on partisanship and posturing" than it is to say, as you did above, "Minority parliaments are all about political posturing". The parties are to blame, not necessarily the fact that it is a minority parliament.

A minority parliament could, even in this day and age, in this country even, be functional. That they are not is by design or at least the direct outcome of decisions taken by the party leaderships. Who did what to whom first is, of course, and endless debate only satisfied by one's personal bias or affiliation.
Loraine Lamontagne

We are dysfunctional because Stephen Harper sits in this parliament and, worse, he leads the government. In my sixty years, I have never witnessed a more negative and belligerent political leader. In my sixty years, I have never received such filthy, degrading and negative communication pieces as the Conservatives tenpercenters. His leadership is such that now other parties are following course.

We are dysfunctional because of Stephen Harper. He wrote the book on it!

AT1

I'm disappointed with the minor increase in the science council funding. As I sit on one of the CIHR peer-review panels in May, it will be a rather dismal meeting knowing how few grants, even amongst the excellent ones, will go on to be funded.

With respect to the Flaherty vs Page financial predictions, let's keep an open mind. These are predictions, largely guesswork without a lot of basis to them. Who could have predicted 5% GDP growth (annualized) in the final quarter of 2009. Certainly not Kevin Page who was fairly pessimistic. Amongst the most optimistic predictions was BoC governor Carney, and he was subjected to some ridicule for his positive assessment of the Canadian economy. The current quarter's corporate tax haul may yet surprise everyone (BMO and TD just posted a rather sizable profits).

Page is popular with the opposition because he undermines the government revenue predictions. That doesn't make his long term predictions any more accurate than Flaherty's.

Mike T.

he undermines the government revenue predictions. That doesn't make his long term predictions any more accurate than Flaherty's.

That's true. His superior methodology and stronger record is what makes him his long term predictions more accurate than Flaherty's.
http://intensedebate.com/people/Stewart_Smith Stewart_Smith

Page has only a short track record in his current post, Flaherty on the other hand has a length track record when one includes time as Finance Minister for Ontario. The reality is that Flaherty consistently misrepresents in his forecasts and lies in his reviews of economic performance.

DPT

"The reality is that Flaherty consistently misrepresents in his forecasts and lies in his reviews of economic performance."

That's pretty strong language considering that a substantial part, if not all of the stimulus package spending was essentially extorted by the combined threat of the opposition parties to bring down the government. My recollection of Flaherty in his provincial capacity is not strong so you may be correct in asserting he tends to be overly optimistic
but lying is a stretch.

http://intensedebate.com/people/Stewart_Smith Stewart_Smith

The most flahgernt lies (so far) were while with Ontario, where Flaherty argued that one-time sales of fixed assets could be used to avoid the development of a structural deficit. What he managed to do was hide a developing structural deficit until it became a big issue for the province. Fortunately, I believe he has now inoculated the country from that type of idiotic, economic thinking.

Three notes: 1) I don't believe Flaherty is an idiot, hence he knew he was lying. (The commentators that supported Mike Harris style confrontation-based economics were the idiots.)
2) Federally, he has managed to put an enormous structural deficit in place almost immediately.
3) I beat Wells in getting the Lucy analogy on the web by 5 or 6 minutes (mine was in a comment to Coyne and includes visuals)
http://intensedebate.com/people/YYZ YYZ

"…essentially extorted by the combined threat of the opposition parties to bring down the government."

Just to be clear: you believe the Conservatives sacrificed doing what they thought was right in order to stay in power. Do I have it right?

DPT

"The reality is that Flaherty consistently misrepresents in his forecasts and lies in his reviews of economic performance."

That's pretty strong language considering that a substantial part, if not all of the stimulus package spending was essentially extorted by the combined threat of the opposition parties to bring down the government. My recollection of Flaherty in his provincial capacity is not strong so you may be correct in asserting he tends to be overly optimistic
but lying is a stretch.

http://intensedebate.com/people/Inkless Inkless

Here are Page's deficit projections from six months ago ("Economic and Fiscal Assessment Update – Nov. 2009"):

'09-'10 $54 billion; '10-'11 $43 billion; '11-'12 $28 billion; '12-'13 $23 billion.

I'm trying to track down what Flaherty said about those projections, from November 2009. It's striking that Page's projections, which came before any of the measures announced in today's budget, track that budget's deficit projections almost precisely.

AT1

That's conveniently after the government budget…so the 09-10 prediction wasn't news, as for the rest, we'll only know next year.

My main point was not to support Flaherty, but to point out that our GDP growth numbers are substantially better than Page's predictions last year. Unfortunately, I'm too lazy to dig up his actual numbers.

Jan

Call me old fashioned .but I prefer conservative (I guess we'll have to re-define our terms, after this government) estimates.

Trillium

What happened to the 'jobs of the future'???

This is a dead fish of a budget. Sounds like it was written on the back of a napkin after Harp got home from his Olympic photo-ops.

Certainly there was no need to prorogue, as no 'recalibration' took place.

http://intensedebate.com/people/Thwim Thwim

I'm sorry, did you think they meant the near future?

http://www.clangmann.net langmann

Well said J Teller. Couldn't have said it any better.

We're in a huge deficit because governments are all about winning elections and satisfying the "gimmme more" crowd, and not about us.

Opposition is even worse. Wells is also to blame as you said aptly.

http://intensedebate.com/people/Inkless Inkless

I thought conservatives believed in individual responsibility. You're saying society made Flaherty a delinquent?

http://intensedebate.com/people/Thwim Thwim

No, no.. he's being more specific. He's saying *you* made Flaherty a delinquent.
DPT

by default, yes. they elected enough opposition members to ensure that the opposition extortion worked.

http://intensedebate.com/people/PhilCP PhilCP

If the opposition is running the show, wouldn't it be advisable to officially hand the reins of power over to them and get out of the way? That way responsibility for today's troubles would be obvious to everyone, and we could avoid te mistaken belief that the CPC is running the show right now.

http://intensedebate.com/people/OntarioTown OntarioTown

Wells responsible? Good grief, I wasn't aware that Wells planned the budget, spending, etc.

Jan

When he's not sabotaging 'Rights and Democracy , apparently this is how he spends his time. If we could only find elected representatives with this kind of work ethic.

http://intensedebate.com/people/Stewart_Smith Stewart_Smith

Thanks for bringing attention to the business-only directed science agenda Paul. I am sure your comments will be misconstrued as a plea for scientists to work on whatever they please. Certainly Canada should continue to be a leader in fundamental areas of science in part because it is the source of tomorrow's technologies, but also because it is part of the culture of an advanced society. Effective applied science policy certainly requires input from industry as to societal needs and business realities however it also needs to be informed by scientists as to what is possible now and what may be possible tomorrow.

As a sidebar, there is a simple, almost free thing the Conservatives could have done to build the "jobs of tomorrow". Capital and companies interested in developing nanotechnology are leaving Canada because we lack a coherent national framework for developing environmental, public safety and occupational health regulations. Everyone knows that this is an area that will eventually have specific regulations, and smart money is looking for at least a sign of a stable market before committing. So sometimes regulations are good for business.
Andre

"Almost every year the only surprise that resulted was substantially lower deficits or higher surpluses than expected."

How much money exactly has the Liberals repaid on the debt. How much howling was done for $100 million in kick backs.

The sound of conservatives giving up their ideals for a cheap partisan shot at an otherwise highly consistent liberal party. And look where we are now.

Happy? Idiots.
kcm

"It’s clockwork, like Lucy with the football, but Flaherty’s poker face never wavers. There’s something almost admirable about it. Which is handy because when it comes to the sort of thing you’d like to be able to admire a finance minister for, like, say, being dependable, he’s got nothing for you"

It's been said that it takes a genius to be wrong "everytime'. Flaherty's not quite there, but he's a hell of a smart cookie. I sense this budget doesn't merit the Well's thumbs up…must go see what the contrarian thinks. But this gets my thumbs up. A well written and funny piece.

http://intensedebate.com/people/SamDavies SamDavies

I was more of a fan of "Flaherty puts on his little Irish-cop smirk and says, poncy little crat doesn’t know what he’s talking about."

I can actually picture it. LoL!

Steve M

"But I note that the budget calls only for input from business, not from the research community."

Well, if the Canadian research is already world-class, and the bottle neck is indeed in the private sector, then isn't it just the private sector that Gov't needs to be meeting with?

After all, if I may quote a related Wells article:
"This thing is starting to get a bit unwieldy: federal government, provincial governments, academia, industry. What are its chances of actually getting anything done?"
http://intensedebate.com/people/Inkless Inkless

Ah. Well then. I will not shrink from accepting that responsibility.

Jan

Seems you're becoming more influential by the day. Do you take requests?
http://intensedebate.com/people/Thwim Thwim

I'd say how it just goes to show that you're a bigger man than Flaherty, but I expect photos do that just as well.

http://intensedebate.com/people/Thwim Thwim

Or billions that could have been put on the debt.. which.. oh wait.. it was.
common man

I`m not too enthused about this deficit position we have got ourselves into but since we`re there I feel a lot more confident about getting back to solid ground with Harper and Flaherty than the gang of opp. it would need to form gov`t. I can`t imagine constructive solutions coming from the likes of Layton or Duceppe or the ever-increasing left side of the Liberal Party.

It was the austerity influence of Manning and Harper in the Reform Party that encouraged Chretien and Martin to slay the deficit in 4 years in the 90`s. I don`t remember any positive suggestions from Bouchard and McLaughlin.

http://intensedebate.com/people/tobyornotoby tobyornotoby

More objective commentary from the "common man" I see.

You must have missed Harper's incessant criticism of Liberal surpluses and advocacy of reduced taxes. Martin rejected those "good ideas" but wait, we now have a good comparison of the alternative. Harper has implemented his GST reductions and other tax cuts along with more optimistic predictions and successfully implemented his no surplus promise. Hoooray!

common man

I do recall Harper being critical of the high payroll taxes ( EI ) which were used to create the surplus.You`re right about Harper`s belief in keeping all taxes low when the economy is rolling along like it was 5 or 10 years ago. You, however, appear to be more of a high tax, big spender type.

You seem to be critical of Harper`s tax cuts including the GST cut. If you had contributed your wisdom to the Budget today, what taxes would you have raised immediately ?

Lord Kitchener's Own

"I do recall Harper being critical of the high payroll taxes ( EI ) which were used to create the surplus".

The you must just LOVE the fact that part of Flaherty's "deficit fighting" budget plan is to RAISE EI PREMIUMS.

common man

I love the fact that Harper understands that EI premiums are meant to pay for EI payouts, therefore when unemployment is high premiums have to increase. When unemployment was low 5 to 10 years ago the Liberal gov`t increased EI premiums and treated them as just another tax on employers and employees.
http://intensedebate.com/people/Be_rad Be_rad

Instead of, say, keeping the stable to build up surpluses in good times to cover off the deficits in bad times?

I know, I know, the premiums weren't being put in a special piggy bank, segregated from the rest of the CRF. So what?

As we can see right now, it all ends up coming out of the same piggy bank in the end, doesn't it? Just like at home: if you have credit card debt and are saving for a big screen TV, what do you do? Put your savings in an envelope or low interest bearing account and allow the higher interest rates on your debt eat at your equity, or pay down the debt?

Kenneth

GST. One point immediately.

http://intensedebate.com/people/thehulk thehulk

No, no, no! We just finally start getting some tax relief, and the opposition would just raise taxes back up again! Cut spending instead! Why does our govt need to spend so much??

kcm

"In among various other bits of Kafka-meets-Orwell language (“Responsibility for conducting environmental assessments for energy projects will be delegated from the Canadian Environmental Assessment Agency to the National Energy Board…”) there is indeed a lot of talk about the Future"

This doesn't sound good…unless you believe the economic good should always trump the environment. Who is the NEB when they're at home. Hope it's nothing like the energy board in AB. I don't believe they've turned down a project in the province yet.

matt

The CEA Agency doesn't make decisions. Under the CEA Act it coordinates process. Ministers and ministries make decisions under the CEA Act. The NEB is sometimes one of those decision makers. This move puts the NEB in charge of process in circumstances where the CEA Agency has been falling down. It also matches the geography better as well.

http://intensedebate.com/people/Thwim Thwim

And just to be clear "falling down" means "consulting with stakeholders who aren't happy about the project"

matt

No. My complaint (here) is not with what the CEA Agency does. It is that they do not do it well.

http://intensedebate.com/people/Thwim Thwim

And the NEB doesn't do it at all.
matt

I'll take NEB staff running a hearing over CEAA staff running a hearing any day.

http://intensedebate.com/people/Thwim Thwim

Yes, a paucity of imagination is well understood as a hallmark of Harper's people/supporters.
http://intensedebate.com/people/Gaunilon Gaunilon

Colour me confused (as usual) about the post-docs funding.

(1) Is that the MITACS funding? Or is it something entirely different?
(2) If the're putting more money into post-docs, isn't that a good thing? So what if it's small compared to the CGS – isn't it still better than before?

http://intensedebate.com/people/Inkless Inkless

I'm actually trying to figure out what MITACS is so happy about. I believe the post-doc funding is for something else. It'll take a couple days to be sure.

http://intensedebate.com/people/sea_n_mountains sea_n_mountains

The Budget includes the line:

Budget 2010 provides $45 million over five years to the granting councils to establish a new and prestigious post-doctoral fellowships program to attract top-level talent to Canada.

Based on the language I assume it is broader than MITACS. But who knows…

Jack

"every study shows that Canada’s researchers out-perform the world, not only in their level of funding but in their ability to produce research that influences international peers"

Are these studies Canadian? I would be interested to see an evaluation by a group outside of Canada.

This was a great piece btw
http://intensedebate.com/people/jessehelmer jessehelmer

The budget, while announcing the new post-doc fellowships, also proposes to clarify that all post-doc fellowships are taxable. On a net basis, that's probably a reduction in support to post-docs. See http://www.budget.gc.ca/2010/plan/anx5-eng.html

AT1

I believe PDFs have always been taxable. I remember being particularly envious of my European colleagues who would clear $40K US while I was getting less than $30K CAN and having to pay taxes on it. That was back in the late 90's.
http://intensedebate.com/people/Gaunilon Gaunilon

It's definitely a stark contrast for PhD students on NSERC – they don't pay taxes on the scholarship while in the PhD, but if they win a PDF their net pay will drop dramatically since it's suddenly taxable. If the goal is to keep top PhD grads in Canada this is not going to work.

http://intensedebate.com/people/madeyoulook madeyoulook

Is there a reason a post-doctoral fellow (i.e. with a JOB) deserves to pay zero income tax compared to the rest of us with jobs? If your answer is "well, the pay stinks so they should have a break so their real income is on a higher level befitting their PhD" then please don't bother. Those of us shmoes earning an income similar to their stinky pay and paying taxes on it would not take too kindly to the social justice calamity you are supporting.

http://intensedebate.com/people/Gaunilon Gaunilon

Relax, I'm not saying a PhD should give one special tax treatment. Au contraire, I think no one should pay income taxes.

I'm just pointing out the problem: they want to keep top PDFs in Canada. But a top PDF has probably held an NSERC or a CGS, so he's going to be looking at a serious net pay reduction if he stays, but not if he goes to (say) the US. Particularly if he's got kids, since the US has considerably larger tax breaks for families. Ergo, it's not going to work.

I think the solution is to give no-strings-attached funding to research groups and let them allocate as they see fit. This way the professors will pay whatever it takes to keep the best PDFs around. Tax breaks for families to match the US would help too. Free market principles, you see.

peng

Budget also includes 2 more years of funding for NRC Regional Clusters program that supports both the fuel cell and nanotechnology institutes and a bunch more across the country.
KRB

I am surprised by the deficit number, seeing as many of the items from last year were one-offs (i.e. the $10 billion to GM & Chrysler). I thought it would be in the mid-30's range.

Ignatieff thought there'd be cuts last night. And there were none. The Conservatives could've pushed the envelope more here, what with the Liberal policy sessions coming up. They would look for anything to support the budget, even if it did cut here and there.

Colour me disappointed.
Guest

Who knew something on the budget could be so entertaining? Great writing.
http://intensedebate.com/people/sea_n_mountains sea_n_mountains

I think Paul's point was most clearly and forcefully driven home today when Flanagan, appearing on the CBC, stated unequivocally that Kevin Page was more reliable than the ridiculous claims that the government has made to date (e.g., that controlling spending will the fix deficit).

While the claim, as Paul details is, not a difficult one for Flanagan to make based on the facts of the matter; given who Flanagan is, watching him drive the point home is powerful.

kcm

I hear there's a hue and cry in the pmo tonight…" That's it, no more…that bastards definitely off the senate appointments short list…and no more bloody Christmas cards either"!

http://intensedebate.com/people/sea_n_mountains sea_n_mountains

i think Flanagan's efforts of late to make clear that he is not a "Harper stooge" as he put it are interesting. Is he getting ready to back a new horse? Is Ian Brodie going to run in the next election?
http://intensedebate.com/people/Be_rad Be_rad

Flanagan as senate possibility: is he actually a Canadian citizen, or just visiting?

http://intensedebate.com/people/Tceh Tceh

Glad to see the truth is finally sinking in on this joke called Flaherty. 4 years ago it was all smirks and winks from Canada's media types when Income Trust investors got the surprise of their life from this dumb Irishman and the economist. Like all IT investors I've wanted a plausible explanation to explain their tax leakage case after they decided to clip Trust Investors for an additional 31.5% in tax without any good reason. But these guys are too cocky to give give explanations or show the numbers.

Instead we get 18 blacked out pages of signifying nothing: http://www.caiti.info/resources/fla_docs.pdf

Harper and Flaherty are too smart by half and they've never had the decency to explain something they cannot explain because their logic is screwed and to admit that would be to admit what failures they really are at running the finances of Canada.

Welcome to the world of Income Trust investors Canada! We've been howling about these two experts for years and now it dawns on you why.

http://intensedebate.com/people/tobyornotoby tobyornotoby

- 1 for calling him a "dumb Irishman", no need to append the ethnic reference.

http://intensedebate.com/people/madeyoulook madeyoulook

An excellent piece, Paul. I have only one item to attempt to nuance. And I know you were hoping for hours that I would let you in on MYL's quibble. Well, you may now sleep soundly:

If I want to import my materials and machinery from Slovakia or Japan to run the same lazy-ass domestic-market-obsessed innovation-blind company that dominates the Canadian business landscape, it’s not this tariff-free scheme that’ll kick me out of my rut.

True enough. But if I want to import machinery and technology from anywhere to run a new and improved company that will one day dominate the world market, this tariff-free scheme will marginally help kick me out of my rut. And my high school economics teacher drilled into us that decisions are made on the margins.

Oh, and it's a prosperity-helping gesture that has the dual virtues of being the right thing to do and a fine example to the WTO jerk countries polluting the earth with tariffs and barriers.
Amateur Hour

"It’s Canada’s businesses that underperform, even though they, too, already benefit from generous tax treatment of private-sector R&D."

This is Canada's most hobbling economic weakness. Despite record profits year over year (with one blip) for more than a decade, we're still talking about cutting taxes for businesses. Unfortunately, success in Canada is defined by one of two things: 1. Being vested in a big bank that faces no real competition; 2. Selling a promising company or nascent technology at an early stage to a bigger, foreign-based company. We start juniors and sell them to majors. We grow nothing. This needs to change.