Well, there’s your problem

By Aaron Wherry - Tuesday, November 22, 2011 at 12:45 PM - 0 Comments

The fall report of the auditor general is here.

The concerns expressed there include defence procurement, tobacco farming compensation, drug safety, visa processing and assessing the results of the government’s economic stimulus.

Stephen Harper lectures the world

By Aaron Wherry - Thursday, October 13, 2011 at 2:50 PM - 13 Comments

The Prime Minister calls on Europe and the G20 to get their respective and collective houses in order.

Events in the summer of 2011 have made it clear that global economic challenges are by no means behind us. What started as a sovereign debt crisis in smaller countries in Europe has now spread, causing extreme stress in the European financial sector and threatening global growth. Unfortunately, this time, the policy response to our shared challenges has not been as strong and co-ordinated as it needs to be. This slow response has resulted in missed opportunities, with each missed opportunity increasing the cost and difficulty of resolving the crisis.

We cannot afford any more missed opportunities.

Last month, Scott Clark and Peter DeVries noted that Mr. Harper was among those leaders calling on “surplus” countries “to increase their expansion of domestic demand” and thus wondered whether the Prime Minister was willing to participate in a global stimulus package (to the tune of $41 billion).

So what does Jim Flaherty do now about the economy?

By John Geddes - Monday, October 10, 2011 at 10:50 AM - 2 Comments

Chris Wattie/Reuters

Economic necessity made Jim Flaherty a big-spending finance minister, but he takes pains not to talk like one. Back in August—with the Greek debt crisis escalating and U.S. political gridlock on budget policy frightening investors everywhere—Flaherty was pressed by NDP finance critic Peggy Nash to consider pumping some federal cash into the vulnerable Canadian economy. “That actually is the problem—too much spending,” he told her at the House finance committee. “It’s exactly what we should not do.”

A few weeks later, heading to Marseille, France, for an anxious meeting of the G7 finance ministers, Flaherty was again asked about proposals for governments to ease off on deficit reduction. In the face of a deteriorating global economic outlook, the classic policy response would be an injection of stimulus. But Flaherty recoiled at the notion. “We want to stay the course,” he said.

The steady-as-she-goes message, though, didn’t stop unease from deepening. That prompted Flaherty, Prime Minister Stephen Harper and Bank of Canada governor Mark Carney to hold a rare photo op meeting to show they were on the case. And Flaherty noticeably softened his previously hard-edged anti-stimulus, pro-deficit-cutting rhetoric. “If we get a shock from outside our country,” he told reporters recently, “we’ll have to be responsive, and we’ll be flexible and pragmatic.” The substantial wiggle room implicit in those words served as a reminder of how abruptly Flaherty shifted, in late 2008 and early 2009, from predicting no recession and no deficits, to having to acknowledge a punishing recession and preside over unprecedented deficit spending to combat it.

Continue…

Less worse off

By Aaron Wherry - Tuesday, September 27, 2011 at 10:55 AM - 13 Comments

Stephen Gordon considers how much credit the government can take for our relatively good economic situation.

What of the role of the federal government? The proper way to evaluate policy is to consider the counterfactual: what would have happened if the federal government had behaved differently? I can think of many ways that the government could have made things much worse — the spending cuts that were its initial reaction were certainly ill-conceived. But since that austerity program was abandoned, it’s hard to point to a serious error that significantly deepened and/or prolonged the recession.

So the Conservatives cannot claim all the credit for those cross-country differences: Canada was luckier than the United States and the other G7 countries. The best it can say is that it didn’t make any serious mistakes that made the recession significantly worse.

Stimulus vs Austerity 2.0

By Jason Kirby - Thursday, April 28, 2011 at 2:56 PM - 9 Comments

Economic arguments are, by their nature, complex and abstract. Few more so than the question of whether massive government spending helps or hurts the economy. That’s why there’s been so much attention paid to the divergent paths the U.S. and U.K. took after the Great Recession. Under Prime Minister David Cameron the U.K. pursued hard-nosed austerity to tackle the country’s deficits, while the U.S. resisted all such moves and instead opted for more stimulus.  Here we had a massive lab experiment pitting two economic theories against each other, playing out in real time on the world stage. Back in January Maclean’s delved into the battle in our story Which Country is Right.

How’s the experiment going? The results so far are inconclusive. Both sides have claimed some measure of victory. Just as critics predicted, cuts to government spending in the U.K. have kept a lid on economic growth, with GDP stagnant for the past six months. Writing on his New York Times blog economist and arch-Keynesian Paul Krugman has hammered away at the notion that spending cuts would awaken the so-called confidence fairy and lead to an investment boom. But at the same time U.S. economic growth slowed dramatically in the first quarter, despite the continued steroid infusion from fiscal stimulus and the Federal Reserve’s quantitative easing strategy. Worse still, rating agency Standard & Poor’s fired a shot across the bow when it downgraded the outlook for Uncle Sam’s debt from stable to negative for the first time in 70 years.

The experiment continues.

In the meantime, EconStories is back with Round 2 of their video battle between economists John Maynard Keynes and F. A. Hayek. In their first video, Fear the Boom and Bust, the two rap battle over their economic theories. Now they’ve been summoned from history again to appear before a Congressional committee. Watch and learn…

Your tax dollars at work (II)

By Aaron Wherry - Thursday, February 24, 2011 at 5:11 PM - 24 Comments

Kady O’Malley has the most comprehensive round-up of today’s parade. Some select highlights.

Did you know Ponoka has an aquaplex? Well, now you do – and it has new tiles, and all sorts of other fancies, thanks to the CEA!P … A return appearance at the Mirror Jolly Seniors Social Club that was the backdrop for a previous CEA!P appreciation event by Calkins! … Given the dearth of alternate scenarios, this appears to be a ministerial tour of the CEA!P-renovated locker rooms at the Crowfoot YMCA … Almost certainly a “celebration” of the Horseshoe Bay Underpass resurfacing.

Your tax dollars at work

By Aaron Wherry - Thursday, February 24, 2011 at 9:57 AM - 55 Comments

The Conservatives embark on a cross-country parade of self promotion.

More than 70 Conservative MPs, ministers, and senators will fan out across the country Thursday to push the virtues of their so-called Economic Action Plan. It’s all part of an unprecedented, highly co-ordinated public relations campaign organized by officials in Prime Minister Stephen Harper’s government who believe that Canadians don’t give a whit about the latest political scandal in Ottawa but that they do care about job growth and the economy.

'Strategic brand building'

By Aaron Wherry - Thursday, January 6, 2011 at 9:30 AM - 17 Comments

The Canadian Press details the struggle to sell the stimulus.

The Economic Action Plan website, touting the Conservative’s big-spending budget of January 2009, was criticized from the outset for its highly partisan appearance. Despite earlier vehement denials by the Prime Minister’s Office, the nature of the exercise was explained this week as “strategic brand building” by Mr. Harper’s freshly departed former chief of staff …

Documents obtained under Access to Information show the Privy Council Office – the bureaucratic arm that serves the Prime Minister’s Office – spent four months in 2009 trying to convince Treasury Board to give it numerous exemptions to the new rules. But it never succeeded in convincing the gatekeepers of the online standards of its case.

Promises, guarantees and projections

By Aaron Wherry - Tuesday, October 12, 2010 at 1:51 PM - 0 Comments

Stephen Harper, October 14, 2008. Our election platform is not full of grandiose, costly promises. It’s a prudent approach. We can afford it. We’ll never go back into deficit.

Jim Flaherty, November 27, 2008. No government at any level can guarantee the future. In fact, given so much uncertainty, no one could unconditionally guarantee the fiscal projections contained in today’s statement … Today’s statement lays out a plan that keeps our budget balanced for now. However, in the weeks ahead we will determine the extent to which we will inject additional stimulus to our economy, joining the efforts of our international partners.

Jim Flaherty, January 27, 2009. Our government projects a budget deficit of $34 billion for the next fiscal year; and $30 billion the year after that … By 2011 we project the deficit will fall to $13 billion; by 2012 it will fall to $7.3 billion. By 2013 we project a return to surplus, and for that year, a surplus of $700 million.

Jim Flaherty, today. By winding down the Action Plan as the economy recovers and implementing the savings measures announced in Budget 2010, the deficit is projected to decline from $55.6 billion in 2009–10 to $29.8 billion in 2011–12, and to a small deficit of $1.7 billion in 2014–15. By 2015–16, the federal budget is projected to record a small surplus of $2.6 billion.

One day we'll thank Jim Flaherty for all these signs

By Aaron Wherry - Monday, September 27, 2010 at 12:07 PM - 0 Comments

Of the sectors thriving under the government’s stewardship, perhaps none has fared as well as the news conference staging industry.

The contract — which requires recipient groups to submit photos of their Economic Action Plan signs — says eligible expenses for signage include maximum costs of $2,250 for a small sign and $4,250 for a large sign. Another $2,500 can be charged for a “permanent plaque.”

The club can expense rental fees on chairs, flagpoles, a public-address system and a stage, and can charge Ottawa for light refreshments and snacks (no booze), printing and mailing of invitations, and media kits.

The government released its latest economic progress report this morning. To mark the occasion, the Prime Minister staged a cabinet meeting.

Never let a crisis go to waste

By Aaron Wherry - Wednesday, September 8, 2010 at 7:55 PM - 0 Comments

In a follow-up to yesterday’s report, CP’s Bruce Cheadle details at even further depth the government’s concerns and demands for signage.

“Although progress in the installation of signage had been slowed due to seasonal limitations, departments and agencies managed to increase the number of signs erected from 58 per cent to 65 per cent of the total number of signs to be installed,” Wayne Wouters, the powerful clerk of the Privy Council, wrote in a March 8, 2010, memorandum to the prime minister.

The “Update on Signage” memo, marked “Secret” and obtained by The Canadian Press under Access to Information, goes on to list the total number of signs — 5,275 — installed to that date. It cites 3,840 more that “have been ordered or are in production.”

“Departments have been using alternative methods for signage installation in order to sustain visibility by placing signs in windows, on buildings or employing other temporary measures,” Wouters wrote of the winter conditions.

The quintessential political story of our time

By Aaron Wherry - Tuesday, September 7, 2010 at 11:47 AM - 0 Comments

Surely everything you could need to know about this era is contained in this story.

Civil servants across Canada were ordered by the Harper government to document every single sign posted anywhere promoting the federal economic stimulus plan, The Canadian Press has learned…

Eighteen departments and agencies are involved, including the country’s over-stretched food inspection agency, fisheries and oceans officials, health, public safety and environment workers and Parks Canada employees. The signage database, at the request of PCO, includes the total number of projects that require an “Economic Action Plan” sign, the number of signs already installed, the number of signs remaining to be installed and the number of signs ordered.

Ottawa’s stimulus fiasco

By Jason Kirby with Josh Dehaas, Philippe Gohier and Jane Switzer - Tuesday, July 27, 2010 at 9:51 AM - 0 Comments

Mathieu Belanger/Reuters

The village of Klemtu, in northern B.C., hardly stands out among Canada’s ports. With a population of 450, the Aboriginal village doesn’t get many visitors to its makeshift dock. Even so, politicians in Ottawa and Victoria have come to see Klemtu as a key hub in their effort to stimulate the economy. Starting next month, work will begin on a new ferry terminal at a rocky outcrop two kilometres north of the village. The total cost to B.C. and Canadian taxpayers: $25 million. Granted, that’s only one-quarter of what BC Ferries paid in the late 1990s to build the Duke Point terminal in the city of Nanaimo, but that facility came complete with a stretch of four-lane highway and it serves more than one million passengers a year. Klemtu will be used “at most for a few hours once per week,” according to an environmental assessment of the project. Perhaps fittingly, tiny Klemtu sits on the shores of a place called Swindle Island.

Continue…

Spending and saving: they're different no matter what the G20 says

By John Geddes - Saturday, June 26, 2010 at 6:54 PM - 19 Comments

The most interesting factor in these back-to-back G8 and G20 summits is the widely debated tension between the push from Washington to keep pumping up the world economy with government spending and the pull from European capitals to begin reining in deficits.

This polarization of the economic debate threatens the tenet held most dear by the mandarins who lay the groundwork for summits of this sort: let there be no messy, public disagreements, certainly not on the fundamentals.

And so it’s not surprising that efforts are well underway to manage, massage, and if need be, mangle the summit language to prevent the clear divergence from being evident in the way the G20 leaders talk about their talks here in Toronto.

Continue…

'This ranks right up there with the ugly'

By Aaron Wherry - Wednesday, June 16, 2010 at 10:26 AM - 21 Comments

Former cabinet minister and outgoing Conservative MP Greg Thompson busts his own side.

New Brunswick MP Greg Thompson is accusing fellow Conservative Keith Ashfield of putting politics before the needs of the people in his new position as regional minister for the province…

Thompson is incensed at an email he obtained earlier this month, written by Fred Nott, Ashfield’s chief of staff, concerning the status of an infrastructure application in St. George, part of Thompson’s New Brunswick Southwest riding. The application under the Building Canada Fund is for federal funding for a subdivision and civic infrastructure in the village of St. George. ”My opinion, put everything on hold in that riding until there is a nominated federal candidate, and preferably until after Sept. 27,” the email from Nott states.

A date for a nomination meeting to pick a Conservative candidate in New Brunswick Southwest has not been set. Sept. 27 is the date of the provincial election.

Reining in China’s real estate boom

By Jason Kirby - Thursday, April 8, 2010 at 11:30 AM - 5 Comments

Photograph by Imaginechina/ Zuma/ Keystone

In the incestuous world of Chinese state-owned enterprises, there’s clearly not much stock put in clever brand marketing. Hence names like China Aerospace Industry Corp. and China Ocean Shipping—monikers that dryly convey what they do. Or used to do. Those government-owned companies and others have plunged into the red hot Chinese real estate development market. Now a bubble of epic proportions seems to be forming, and Beijing is desperately trying to rein it in.

Earlier this month officials ordered 78 state-owned enterprises to get out of the real estate game by April. Beijing has also put new rules in place requiring hefty down payments of 50 per cent for land developers. Last week the central government went so far as to temporarily halt all sales of residential land. The moves come as speculators continue to drive property values up at double digit rates in many big cities, even as tens of thousands of homes and whole apartment buildings sit empty. Houses in Shanghai now cost 90 times more than average incomes.

The $586 billion in stimulus spending Beijing injected into the domestic economy is one reason for the bubble. But the situation has been made worse since local governments, and by extension many state-run companies, now rely heavily on property sales for revenues. In fact, many local politicians are desperate to keep the boom going.

“[Beijing] has tried using standard policies like increasing taxes on land transfers to cool down the real estate markets and it didn’t work,” says Terry Sicular, an economist at the University of Western Ontario who studies China. “Now they’re trying to restrict the amount of development. It may be effective for a short time, but it doesn’t fix the underlying problems.” And that could make an already dangerous bubble even worse. M

News flash: no free lunch after all

By Andrew Coyne - Wednesday, March 24, 2010 at 10:05 AM - 116 Comments

Fraser Institute study confirms what was already plain as day: fiscal “stimulus” had nothing to do with the recovery. Using Statistics Canada data, they find:

Of the 1.1 percentage point improvement in economic growth between the second and third quarter, government consumption and government investment each contributed only 0.1 percentage points. Business investment contributed 0.8 percentage points and was the driving force behind the improvement in economic growth.

Of the 1.0 percentage point improvement in economic growth between the third and fourth quarter, government consumption and government investment contributed nothing. Over this period, increased net exports were the primary reason for the improvement in economic growth.

This, as I say, was obvious enough already. The recovery began at the end of Q2, long before any shovels hit the ground. Fiscal stimulus, besides ineffective, was unnecessary: the extraordinary infusion of monetary stimulus by the Bank of Canada was bound to trigger a revival in total spending. With inflation expectations knocked flat, it was to be expected that this would translate into gains in real output in the short term (though with inflation already showing signs of life, the Bank will need to be quick to withdraw the liquidity it injected).

Fiscal policy’s chief impact is on the composition of demand. It does not ultimately expand it. As was more or less the consensus in the economics profession, before the “policy panic” of 2008.

So all we got for all that federal spending was a $160-billion increase in the national debt, a pile of dubious make-work projects and a fistful of photo-ops for grinning Tory MPs. Which, after all, was always the point.

It took two months of recalibrating and consulting to decide to do nothing?

By Aaron Wherry - Tuesday, February 23, 2010 at 11:47 AM - 14 Comments

For a sneak preview of this year’s budget, please consult last year’s budget.

The upcoming federal budget will contain no new spending measures or tax cuts beyond what the Harper government has announced already in its plan to stimulate the economy, says a senior government official. The budget, to be tabled on March 4, will simply implement the second year of the “economic action plan,” the stimulus package unveiled in last year’s budget, the official told reporters in a briefing Monday.

The Star finds a government official who suggests there will indeed be spending cuts, but another government official—conceivably the same one cited by Canwest—speaks only to a reduction in the rate of growth of government spending. Economists, wordsmiths and fans of financial terminology can debate the difference, if any, between those two statements.

No word yet on whether the government, entering into an era of restraint, will cut down on the number of unnamed officials it employs.

Keep print alive

By Rachel Mendleson - Tuesday, December 8, 2009 at 11:22 AM - 1 Comment

To say it has been a difficult year for written media is an understatement. For publications already teetering perilously close to the edge, the global economic recession was the nudge that sent them tumbling off the cliff. In the U.S., as newspapers and magazines from Seattle to Philadelphia cut corners and closed up shop, some 90,000 print jobs were lost. Meanwhile, in Canada, the future is not looking much brighter. According to a new report released by the Cultural Human Resources Council, the recession has not been kind to creative industries, but print media, it seems, has been hit the hardest. Thanks to a sharp decline in business advertising, written media is expected to see a 6.1 per cent drop in real revenues by the end of 2009. At the same time, it is the creative sector that benefits from the least amount of public funding—which raises the question: should government be doing more to save print?

Currently, Ottawa’s investment in written media is minimal. According to the Conference Board of Canada, which put together the report, “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009,” in 2006-07 the “literary arts” received a mere 3.6 per cent of the total $3.71 billion the federal government contributed to culture. While the broadness of the category—literary arts includes everything from books to newspapers—makes it difficult to determine precisely what each sub-category receives, according to Magazines Canada CEO Mark Jamison, government is responsible for a fraction of industry revenues. Of the more than $2.2 billion in total operating revenues Canadian periodicals earned in 2007, Jamison says only $80 million came from government in the form of postal subsidies and grants. Aside from small community papers, which also get a postal subsidy, newspapers are entirely free of government intervention.

Historically, the impetus for any government money that written media receives has had more to do with the promotion of Canadian content than propping up industry. Says Jamison, “A lot of our support for content creation in Canada is a way to try and balance the overwhelming impact of American culture in Canada.” (The same is true for broadcast media: while independent producers of Canadian TV shows and films receives hundreds of millions of dollars in grants and tax credits annually, aside from the CBC, which gets $1.1 billion in taxpayer funds per year, according to Tara Rajan, vice-president of research and policy at the Canadian Association of Broadcasters, broadcasters don’t get any direct government support.)

Despite the challenges facing print, Jamison says more government funding is not the desired path to financial security. Since pre-confederation, periodicals have operated “quite independently,” he says. “We’re not as quick to pick up the phone and find out where the government money is.” John Hinds, executive director of the Canadian Newspaper Association, echoes the desire to retain a sense of autonomy. “We pride ourselves on being a free press,” he says. ‘If you start to go too much to government, that does come with strings.”

But as the recession continues to hammer print media outlets the world over, other countries are finding creative ways to negotiate this very quandary. In India, for instance, government introduced a short-term stimulus package in February involving, among other things, a rate hike for government advertisements. (The package was extended another six months in July.) In France, meanwhile, the government is spending some US$22.5 million over three years to offer 18-to 24-year-olds a free newspaper subscription of their choice in a bid to increase abysmal youth readership levels. And in Germany, the new governing coalition is promising to shore up online journalism with more stringent copyright legislation.

It’s still too early to tell the extent to which any of these tactics can help to keep print media afloat. But in Hinds’s view, the most important contribution government can make is to keep from making policy decisions that contribute to the sinking of the industry. “We want to make sure that government isn’t doing things that will make life difficult for newspapers,” he says, applauding the Ontario government’s recent decision not to impose an additional tax hike on newspaper subscriptions with the introduction of the HST. As Jamison sees it, the government’s role “is about ensuring that Canadian voices can be heard and acquired through a variety of means,” he says. “It isn’t just about saving print.”

Margin of error

By Andrew Coyne - Wednesday, December 2, 2009 at 3:03 PM - 27 Comments

Canada Says 97% of Government Stimulus Is Committed – Bloomberg.com

40 per cent of stimulus projects started – Globe and Mail

No steam in stimulus: only 7 per cent of infrastructure projects begun across country – Chronicle-Herald

Stimulus progress hard to pin down – Ottawa Citizen

More estimates — from the Citizen/Chronicle-Herald story:

66%: “Finance Minister Jim Flaherty is expected to announce in Winnipeg today that 8,000 of a planned 12,000 stimulus projects are under way.’”

75%: “According to the information provided the committee and obtained by the Citizen and the Halifax Chronicle-Herald, about 75 per cent of the projects have start dates that have already passed, but it is unknown how many of these building, water, sewer and road works have broken ground.”

12%: “Liberal infrastructure critic Gerard Kennedy said Tuesday that a Liberal analysis in September — based on phone calls to 1,000 projects — showed about 12 per cent had started.”

From Bloomberg:

70%: “About 70 percent of fiscal stimulus package ‘is flowing in the economy,’ the report said.”

By-election brouhaha

By Aaron Wherry - Monday, November 9, 2009 at 9:05 PM - 78 Comments

Results to come at 10pm EST, comments closed until then. (Note: Results now in and updates below.)

In the meantime, there are allegations of shenanigans in Riviere-du-Loup.

And for the numerically inclined, here is how the parties fared in these four ridings combined the last time they were contested as they are tonight—using the 2008 results for three of the four, and the 2006 result for Cumberland.

Conservative 32.6%
Bloc Quebecois 23.6%
NDP 21.2%
Liberal 17.6%
Other 5.0%

That, if you’re particularly keen to make something of this, might be the most interesting benchmark to watch.

Update, 9:46pm. Several other people to keep an eye on tonight: the Star’s Susan Delacourt, our old friend Kady O’Malley at CBC, David Akin on Twitter, Alice Funke at Pundits’ Guide and Eric at ThreeHundredEight.com.

Update 10:00pm. First returns are in. Conservative Scott Armstrong takes Cumberland quite comfortably, though not quite by the same margin as his Bill Casey did three years ago. Hochelaga is a blowout. Montmagny is tight. Continue…

A teachable moment

By Aaron Wherry - Monday, November 9, 2009 at 10:37 AM - 56 Comments

The Star explores the practice of unelected Conservative candidates turning up at government funding announcements. Not mentioned is candidate Denise Ghanam’s explanation when she appeared with Conservative MP Jeff Watson at an announcement in Essex County two months ago.

What’s the rush, I asked Watson; are Conservatives preparing in case the Liberal party decides in Sudbury today it needs to trigger an election? ”These announcements take months to prepare,” Watson said, shaking his head at my suggestion.

Then why bring a Conservative candidate from a nearby riding to a funding announcement? ”I’m still learning the ropes,” Ghanam says. “This is all about the economy.”

Cards to play, chips to use

By Aaron Wherry - Monday, November 9, 2009 at 10:29 AM - 68 Comments

Reluctant partisan Mike Duffy explains the necessity of his travel on the public dime.

“You look at Holland College in P.E.I., they got $8.5 million this year,” said Duffy. “People say why do you travel? It’s because you need cards to play and chips to use.”

Duffy builds his chips up by traveling to MP’s ridings, meeting people, giving speeches and making friends.

“So I’m going to ask the minister of science Gary Goodyear to look favourably upon Holland College. He has a zillion applications and I say, ‘gee Gary, would you take a personal interest. I think it has merit. Will you look at that and see what you can do,” said Duffy. “So when Holland College comes up they get $8.5 million. They’re going to build some new buildings, take down some substandard housing and rearrange things and do it in a way that will substantially change your impression of Charlottetown.”

Numbers, crunched.

By Andrew Potter - Saturday, November 7, 2009 at 10:43 AM - 37 Comments

Glen and Stephen have been busy.

The Citizen-Chronicle Herald analysis took all the Building Canada projects on the actionplan.gc.ca website — where they are given an exact location but no exact dollar figure — and paired them with dollar figures available from other federal government sources. The analysis then added other projects announced on the federal infrastructure site.

It was not possible to find dollar figures for all the projects without locations, or to find locations for all the projects with dollar figures, so the database of about 4,200 projects is incomplete. But it offers the only independent large-scale look at the massive infrastructure spending push.

My bold.