Harper meets with Turmel

By Aaron Wherry - Friday, February 3, 2012 at 6:36 PM - 0 Comments

A statement from the interim NDP leader on a meeting with the Prime Minister.

I have just concluded a face to face meeting with Prime Minister Stephen Harper.  The meeting was cordial and focussed on the upcoming budget. I urged Mr. Harper to ensure that the upcoming budget does not harm families or cut the services they rely on in these tough times.  I also urged him, in the face of rising unemployment numbers and yet another plant closing today, to ensure his budget focusses on real job creation above all else. I shared with him what I have heard from Canadians in the past month. Too many families are worried about their jobs and their future. Too many of them are waiting months for the unemployment insurance they’ve paid for their entire lives.  These Canadians know that with further budget cuts coming, it will be even harder for them to make ends meet.

The Prime Minister and I also discussed the relationship between the federal government and the provinces, which I believe requires immediate improvement.   Canadians want the federal government to work with the provinces to improve front-line health services for Canadians.   I asked him to listen to those like the Quebec Premier who don’t want to see the federal government act unilaterally in cutting Old Age Security for future generations.

It was a good discussion and I believe the Prime Minister understood my concerns.  I hope that he will act on them in the upcoming budget. In these tough times, the government simply can’t leave families out in the cold.  It’s time to focus on job creation, and on helping families make ends meet.

And a report from the Prime Minister’s Office. Continue…

The Commons: Having it both ways

By Aaron Wherry - Monday, January 30, 2012 at 6:28 PM - 0 Comments

The Scene. For the benefit of the House, Nycole Turmel relayed what she’d taken from what the Prime Minister said last week when he was some 6,264 kilometres from here.

“Mr. Speaker, Canadians are bracing themselves for the deepest round of cuts since Paul Martin, cuts to services Canadians need, like the OAS and EI,” she offered.

Members of the government side audibly whined at this reference to the previous prime minister.

“These cuts will hurt people, hurt seniors, hurt jobs and hurt our communities,” Ms. Turmel continued. “When will the Prime Minister tell Canadians the bad news, on his next trip to Switzerland or somewhere else in the world?”

Last week, so far away from this place, the Prime Minister had been full of dramatic phrasing. “Major transformations,” he said. Demographics posed a “threat” to that which we “cherished.” The deep holes of Europe and the United States threatened to grow deeper. The very future of our society hung in the proverbial balance. Continue…

Is now a good time?

By Aaron Wherry - Monday, January 30, 2012 at 11:43 AM - 0 Comments

Stephen Gordon projects the sort of job cuts the public service might be facing.

Federal program spending accounted for 7.4 per cent of GDP in the fiscal year that preceded the spring 1995 austerity budget, and this share fell by 1.3 percentage points over the next two years. In 2011-12, federal program spending was projected to be 7.0 per cent of GDP, and was to fall by 0.8 percentage points by 2013-14. In other words, the cuts in program spending announced in last year’s budget were roughly 60 per cent as large as what we saw in the mid-1990s.

Federal public service employment fell by 29,000 in 1996, and by an additional 26,000 in the following three years. If the effects of the planned cuts are proportional to what was experienced in the 1990s, then the number of job lost would be on the order of 30,000.

Stephen also considers whether now is a good time for austerity. Not that this spring’s budget will have anything to do with austerity.

See also: Looking the wrong way

Cuts, cuts, more cuts

By Alex Ballingall - Friday, January 27, 2012 at 11:50 AM - 0 Comments

The winds of change are blowing from the chambers of power in Ottawa, carrying the call for austerity to all corners of the country.

Speaking Thursday, Treasury Board President Tony Clement announced the Conservative government is planning to introduce deeper spending cuts than the ones detailed in the 2011 budget, when a 5 per cent program spending cut was touted as a means to shave $4 billion a year from the federal budget. Now, Clement says the Tories are aiming for as much as double that target.

“I have led a cabinet committee to review the plans of federal departments and agencies to achieve savings of between 5 and 10 per cent in their program budgets; in other words, reductions of anywhere between $4 and $8 billion,” said Clement.

Meanwhile, a hop skip and a jump away in Davos, Switzerland, Prime Minister Stephen Harper was outlining his visions for the Canadian future. And it was a future of skinnier government programs and the accommodation of business interests. Citing the demographic realities of the country—an aging population expected to strain the public purse with social security and old age pensions—Harper told the gathering that Canada will reform its pension system to cut costs.

“In the months to come, our government will undertake major transformations to position Canada for growth over the next generation,” the CBC quoted him as saying on Thursday.

With its major campaign promises out of the way and passed by Parliament last year—scrapping the long gun registry, instituting mandatory minimum prison sentences for non-violent crimes, and dismantling the Canadian Wheat Board—the Conservatives appear intent on forging ahead with a wholesale re-tooling of the way the government spends money. And with their coveted majority in Parliament, not to mention an Opposition in disarray, who’s going to stop them?

The Globe and Mail

CBC News

The cost and savings of OAS

By Aaron Wherry - Friday, January 27, 2012 at 11:48 AM - 0 Comments

Kevin Milligan considers the ramifications of changes to Old Age Security.

By 2031 — at the peak of the baby-boom retirement wave — the share of GDP spent on Old Age Security will rise to 3.14 per cent, for an increase of 0.73 per cent over today’s level. Now, an increase of 0.73 per cent of GDP cannot be ignored, but neither is it disastrous. To provide some scale, David Dodge and Richard Dion project that spending on health will grow from 12 per cent to 18.7 per cent of GDP by 2031, for an increase of 6.7 percentage points. In the fight for government spending dollars in 2031, health is the elephant and the Old Age Security pension is the mouse…

In research in progress, I am finding that around three quarters of those not working in the years just before reaching age 65 have other sources of income sufficient to get them out of low-income range. Of course, the flipside is that one quarter of them do not. If the retirement age increases, these Canadians may suffer as they wait for their public pension cheques to begin flowing.

What does it all mean?

By Aaron Wherry - Thursday, January 26, 2012 at 5:08 PM - 0 Comments

On the same day the Prime Minister promises “major transformation,” Tony Clement hints at deeper budget cuts.

Paul thinks we just heard a Throne Speech. Mark Kennedy figures the age of eligibility for Old Age Security will be raised from 65 to 67. Peter Julian and Scott Brison are worried.

“Now, he’s threatening … seems to be trying to precondition us to cuts to the OAS, which is there to help the lowest income Canadians,” charged Mr. Brison. “At a time when other global leaders at Davos are addressing income inequality not only is Harper ignoring it he’s threatening to make it worse.” Mr. Brison asserted the OAS is “very important for low income seniors and one of the reasons why Canada is successful economically is because we are progressive socially and we help vulnerable people.”

Tangentially, Susan Delacourt notes that the Prime Minister was recently advised to think “big.”

And for whatever insight might be gleaned into where this is all going—or at least what the next little while is going to sound like—here are the official Conservative talking points on the Prime Minister’s speech. Continue…

‘To seize and to master our future’

By Aaron Wherry - Thursday, January 26, 2012 at 2:39 PM - 0 Comments

The prepared text of the Prime Minister’s remarks in Davos today.

“Thank you Professor Schwab for that kind introduction, I also want to thank you particularly for the invitation to speak here that you extended to me earlier this year.  But more than that, Professor, you have made the World Economic Forum an indispensable part of the global conversation among leaders in politics, business, and civil society.  And in the face of continuing global economic instability, the opportunity this gathering provides is now more valuable than ever.  So I know everyone here joins me in thanking you for, in service of the common good, your vision and your leadership.

“My Greetings to Ambassador Santi; to the Governor General of the Bank of Canada, known internationally as Chair of the Financial Stability Board, Mark Carney; to our hard-working Minister of International Trade, Ed Fast; and to the best finance minister on the planet, Jim Flaherty.  And let me just say that I’m especially proud to see so many outstanding Canadian business leaders making their presence felt here in Davos.

“Ladies and gentlemen, I will use my time today to highlight Canada’s economic strengths and to frame the choices we face as we work to secure long-term prosperity for our citizens in a difficult global environment that is likely to remain so.

Continue…

The austerity that dare not speak its name

By Aaron Wherry - Wednesday, January 18, 2012 at 9:19 AM - 0 Comments

The Finance Minister might be ready to cut some departmental budgets by more than 10%, but he’s not ready to say this has anything to do with “austerity.”

As he did last week, Flaherty bristled at the suggestion he is preparing to table a so-called “austerity budget” that will slash departmental spending beyond the previously announced $4 billion. Instead, Flaherty said he will seek to strike a balance between the need to restrain spending while at the same time supporting growth.

“The budget is about economic growth and jobs,” he said. “If you want to see an austerity budget go to the United Kingdom … with hundreds of thousands of people being laid off. That’s not Canada. Our purpose is to ensure that we have a balanced budget in the medium term and that we have long-term stable, solid fiscal realities.”

Indeed, one wonders if the Conservatives have decided to avoid the a-word altogether. A search of Hansard shows just two Conservative MPs have uttered the word in the last three years and both of those (Cathy McLeod and James Rajotte) did so to refute the suggestion that the government was engaged in any such thing.

Looking the wrong way

By Aaron Wherry - Tuesday, January 17, 2012 at 11:48 AM - 0 Comments

Alex Himelfarb attempts to put austerity in perspective.

Today’s austerity, however, is not primarily about fiscal prudence. If it were it wouldn’t be proceeding in tandem with large, unaffordable and unnecessary tax cuts for the most affluent among us. These tax cuts make deeper program cuts inevitable. The persistent emphasis on low taxes and cuts to services and public goods  looks more like ideology masquerading as fiscal common sense. In this light, austerity seems rather to be about cutting back the state and rolling out the free market agenda. Less public, more private; less collective, more individual. It is, in other words, the fulfillment of the neoliberal counter-revolution rather than an economic plan for the future…

We need to have the debate – and the starting point cannot be some assumption about the inevitability of austerity. In fact, it ought not to be about big government versus small government. It ought to be focused on what will work to enhance the quality of life for most Canadians and what will make Canada more resilient for future generations. It ought to be a debate about what challenges, what problems, most urgently cry out for our collective attention and action. The preoccupation with austerity should not blind us to what really matters for our collective well-being.

Who pays for what?

By Aaron Wherry - Monday, January 16, 2012 at 4:41 PM - 0 Comments

In an interview with the CBC—to be broadcast this evening—the Prime Minister rejects the idea of a health care innovation fund (as proposed by Brad Wall and endorsed by Dalton McGuinty).

“What I think we all want to see now from the premiers who have the primary responsibility here, is what their plan and their vision really is to innovate and to reform and to make sure the health-care system’s going to be there for all of us,” Harper said, according to an excerpt from the interview. “So I hope that we can put the funding issue aside, and they can concentrate on actually talking about health care, because that’s the discussion we’ll be having.”

The idea of a separate fund for the provinces to use for innovation in the delivery of health care got no support from the prime minister. ”I’m not looking to spend more money. I think we’ve been clear what we think is within the capacity of the federal government over a long period of time.”

Meanwhile, in an interview with CTV yesterday, Mr. McGuinty mused intriguingly of “disentanglement.”

The feds do jails and we do jails. The feds do training and we do training. The feds inspect meat and we inspect meat. Why don’t one of us, alone, take responsibility for some of those areas. I think that introduces more efficiencies, it introduces more transparency, accountability is more easily evident. I think those are the kinds of conversations that we need to have going forward in an era of fiscal restraint.

The Ontario premier arrived at this point in response to a question about the Harper government’s crime policies and the burden they will place on the provinces, so perhaps this seems tangential to the health care debate. But maybe it’s all part of the same discussion. Consider the analysis of Scott Clark and Peter DeVries that I noted this morning. Continue…

The quiet cuts

By Aaron Wherry - Monday, January 16, 2012 at 12:07 PM - 0 Comments

Last week, Environment Canada declared 60 scientists and researchers to be surplus.

Meanwhile, the Canadian Food Inspection Agency will apparently eliminate about 200 jobs that were originally added after the listeriosis outbreak in 2008.

Brand reform

By Aaron Wherry - Monday, January 16, 2012 at 10:33 AM - 0 Comments

If the Prime Minister is looking for advice, Scott Clark and Peter DeVries have already posted their budget submission.

Mr. Flaherty, you have recently referred to the need for politicians in Europe “to show political leadership and courage” to solve the EURO area’s problems.

Although Canada is not in a fiscal crisis, the federal government, nevertheless, does face policy challenges that will require that you also show political “leadership and courage” to address them. You will need to put ideology aside. You will need to reverse some past budget decisions. You will need to confront entrenched economic interests and do what is right for the economy. You will need to become more transparent and accountable, and you will need to make Canadians part of the policy development process.

Included in their recommendations is major tax reform: the elimination of special tax breaks, the elimination of EI premiums, raising the GST by two points and lowering both personal income and corporate taxes. They also advise deeper expenditure cuts, with that money reallocated to infrastructure spending.

Brand management

By Aaron Wherry - Monday, January 16, 2012 at 8:30 AM - 0 Comments

In a letter to the Conservative caucus, the Prime Minister looks forward to “Economic Action Plan 2012,” or what used to be called “the federal budget.” He seems to have decided what he generally wants it focus on, but he’d like his cabinet ministers to consult with the people all the same.

Therefore, I am requesting that Ministers take time in the coming weeks to travel the country and consult with Canadians on Economic Action Plan 2012. I want to ensure that our Government gets the views of small business owners, workers, entrepreneurs and hard-working Canadian families on the policies that we should adopt to continue to create jobs and economic growth. We must work hard to ensure the concerns and priorities of Canadians are reflected in our plan.

In closing, 2012 will undoubtedly be another challenging year for Canada. We have come through the global economic recession stronger than almost any other industrialized country. However, there are tough, important choices that must be made to create jobs, keep our economy growing and keep Canada as the greatest country in the world. We must make those choices – choices that will lead to greater prosperity – but we must make them together with the Canadian people.

Paying the bills (II)

By Aaron Wherry - Tuesday, January 10, 2012 at 5:30 PM - 0 Comments

The CBC reports the government will cut deeper into departmental budgets than previously planned. The Finance Minister raises the possibility that some departments may have to cut more than 10% from their budgets.

The Post reports that the Conservatives may try to adjust MP pensions, but the Finance Minister seems to defer.

On the issue of whether changes are afoot for the pension plans of members of Parliament, Mr. Flaherty said that is a decision for the House of Commons Board of Internal Economy, not the government.

The Board of Internal Economy is presently composed of three Conservatives, two New Democrats and a Liberal. Its meetings are conducted in camera.

Paying the bills

By Aaron Wherry - Tuesday, January 10, 2012 at 2:34 PM - 0 Comments

Scott Clark and Peter DeVries consider the Harper government’s health funding proposal.

The decision to tie the growth in the CHT to the growth in nominal GDP – a rate of growth that will be less than the current 6 per cent per year – clearly indicates that the federal government recognizes that it is facing a “structural deficit”  that needs to be confronted now. The Parliamentary Budget Office (PBO), international organizations and we have argued that the federal government is facing a small structural deficit now but that it will increase rapidly after 2015 due to demographic pressures on potential economic growth and health related spending.  To date, the Minister of Finance has denied the existence of a structural deficit and has publicly ignored any discussion of the demographic pressures. This is the first indication that he has seen the numbers and is worried, although it is doubtful he will admit this in public and/or release any internal research done on this subject.

The crunch approaches

By Aaron Wherry - Tuesday, November 15, 2011 at 10:00 AM - 0 Comments

Government spending has increased and the future looks expensive.

In figures for government budgeting for the fiscal year to date, the PBO shows health care allocations up by $1.6 billion. That transfer will continue to increase at a six-per-cent clip every year for at least the next four years if the government sticks to its election promises.

Servicing charges on the public debt have also jumped $1.4 billion from the same period a year earlier because higher deficits are more than offsetting the benefits of low interest rates. Those costs, too, will continue to grow as long as the government keeps adding to its debt. And old-age security payments rose $1.1 billion from last year — partly because of a growing number of beneficiaries and partly because the benefit has been enriched.

Kevin Page questions the government’s fiscal plans going forward. Of course, the Conservatives are openly dismissive of Mr. Page at this point.

On health care, the government has apparently considered a transfer formula based on age.

Not as advertised

By Aaron Wherry - Monday, November 14, 2011 at 9:34 AM - 0 Comments

The Harper government’s ability to announce impressive-sounding numbers apparently exceeds its ability to use those impressive-sounding numbers.

The Green Infrastructure fund provides a good illustration of funds getting backlogged despite Canadians being told they would get it. The fund was announced in the 2009 budget as an initiative that would support projects such as sustainable energy.  It was supposed to push $200 million out the door every year for five years. In two years though, it has spent $50 million. 

By the end of this year, the program is expected to use $104 million, not the $600 million planned, according to the government’s books. In an email, a spokeswoman for Infrastructure said it is “normal for there to be smaller expenditures in the early years” of larger-scale projects. She didn’t respond to a follow-up, however, asking why the forecasting doesn’t reflect that. 

‘Prudent planning’

By Aaron Wherry - Thursday, November 10, 2011 at 8:30 AM - 0 Comments

Scott Clark and Peter DeVries find the Finance Minister’s budget update to be “lacking in transparency, accountability, and a realistic assessment of economic and fiscal prospects and risks.” And they suggest Mr. Flaherty start planning like Paul Martin did.

Mr. Martin’s lesson was simple. Once you have chosen the policy actions you believe are required, and given the economic assumptions, choose “risk adjustments” or “allowance for prudence” that will virtually guarantee you will not miss the target. Such a situation is “win-win” for the government. If the economy turns out better then you get credit. If the economy performs as bad as assumed you also get credit for your “prudent planning” …

Mr. Flaherty wants to now claim that he will eliminate the deficit in 2015-16. This is a mistake because the risks and evidence are stacked against this happening. It is virtually certain that he will have to revise his planning assumptions before or in the 2012 budget. It will be even more embarrassing if he has to revise it immediately after the budget.

Please hold

By Aaron Wherry - Tuesday, November 8, 2011 at 6:28 PM - 0 Comments

The Canadian Press notes that the Conservative promise of income splitting for two-parent families will be delayed another year by the government’s retreat from April’s pledge of a balanced budget in 2014-2015.

Other campaign promises that will be similarly delayed: doubling the children’s fitness tax credit, establishing the adult fitness tax credit and doubling the tax free savings account limit.

Why so shy, Jim?

By Aaron Wherry - Tuesday, November 8, 2011 at 4:27 PM - 0 Comments

The New Democrats and Liberals are unhappy with Jim Flaherty’s decision to deliver the economic update far away from the House of Commons.

NDP House Leader Joe Comartin argued the Conservative tactic “demeans the role of Parliament and parliamentarians.” He said it follows the government’s strategy of disrespecting democracy by bringing in time allocation and closure to shut down routine debate on legislation … “I think it obviously gives the government an advantage of being able to put out whatever their messaging is, even if there are some negative parts, without having to be concerned about an immediate response in the House from the opposition parties.”

Resolutely flexible

By Aaron Wherry - Tuesday, November 8, 2011 at 3:50 PM - 0 Comments

The prepared text of the Finance Minister’s remarks is here.

Countries, just like individuals, do not stumble into prosperity. They set out a plan and stick to it, so that they are fully capable of seizing opportunity when misfortune hits, instead of merely being overwhelmed by it. 

That’s not to say, of course, that our Government believes an inflexible approach for every conceivable scenario is anything to admire.

For those of you scoring at home, six references are made to flexibility against ten references to stability.

The full economic update is available here. More from the Globe and Canadian Press.

‘Increasing the adjustment for risk’

By Aaron Wherry - Tuesday, November 8, 2011 at 3:13 PM - 0 Comments

In March, the Harper government announced that it would return the federal books to balance in the 2015-2016 fiscal year. Seventeen days later, the Conservatives changed their minds and promised instead to return to balance in 2014-2015. Seven months to the day after that, the Harper government has decided it can’t fulfill April’s promise and is going back to March’s projection (at the earliest).

Depending on how you count these things, this is either the third or fifth return-to-balance projection the government has offered in the last three years (first 2013-2014, then 2014-2015, then 2015-2016, then back to 2014-2015 and now back to 2015-2016).

Including Mr. Harper’s vow in 2008 that a government led by him would “never” go into deficit, this is the second time in three years that the Conservatives have made a balanced-budget promise during an election campaign only to abandon it after being reelected.

An opportunity to show real leadership

By Aaron Wherry - Friday, November 4, 2011 at 10:30 AM - 0 Comments

Scott Clark and Peter DeVries lay out what the Harper government should do with its fall economic update.

The current commitment to eliminate the deficit in 2014-15 would be discarded. It is neither realistic nor necessary to eliminate the deficit in 2014-15. Eliminating the deficit two or three years later would be more realistic and acceptable in the current economic environment…

A commitment to reallocate these savings from the program expenditure reviews to new initiatives to support research, investment, innovation and infrastructure in a federal-provincial partnership … A commitment to begin the difficult but necessary process of tax simplification and reform to support efficiency, economic growth and job creation. The government would commit to use the savings (which would be substantial) to lower both personal and corporate income taxes, thereby supporting economic growth and job creation.

Checking the math (II)

By Aaron Wherry - Monday, October 31, 2011 at 4:22 PM - 0 Comments

As to the NDP’s concern, the government’s position seems to be that the official opposition is completely wrong. From Gary Goodyear’s answers during QP this afternoon.

Mr. Speaker, the NDP is flat wrong again. It is quite unfortunate that whoever is helping the member did not do his or her math before the NDP members decided to go on with these tactics. The fact is that in 2007, 2008 and 2009 funds were drawn from government resources, just like we said in the budget, and then from subsequent public accounts. I would recommend that the member consult the public accounts…

Mr. Speaker, I would highly recommend the member give up his day job. The Public Accounts of Canada are certified by the Comptroller General and the Auditor General. The facts are very clear. The funds for the Perimeter Institute are consistent with the government’s commitments. The question here remains. Why has the NDP chosen to attack this world-class institution to score cheap political points, and then be flat wrong? That member should apologize to the Comptroller General of Canada for an insulting attack.