Canada West Foundation Blog

by: Robert Roach, Senior Researcher and the Director of The West in Canada Project

Majorities are not evil
Majority governments are the norm in Canada, so it is a bit odd to hear a large number of commentators acting like a Tory majority is some sort of evil aberration out of Tolkien’s Land of Mordor. It is true that the Harper government will be able to pursue its agenda without the restrictions of a minority Parliament, but this is exactly the same as it was for Trudeau, Mulroney, and Chretien. We are back to business as usual and not—as some seem to think—out on a crazy limb that will break and send the country into freefall.

In addition, majority governments like to win more than one majority. Hence, while they can pursue their vision for the country without constant fear of a non-confidence vote, they tend to keep one eye on the next election cycle. In other words, radical policies that will alienate large chunks of voters remain unappealing regardless of majority status.

Regional fault lines remain
From a regional perspective, the outcome of the election is very interesting. You barely need two hands to count the Conservative seats in Quebec whereas the NDP have become the de facto representatives of Quebec in the House. This is a new dynamic. In some ways, Quebec has become like Alberta in that it has chosen to side with the opposition rather than the government. Not that long ago, it was Alberta MPs who had only a small presence on the government side of the House.

On the bright side, a Harper majority likely means that the federal government will do as much as it can to advance Senate reform (full reform still requires the provinces to get on board). This is good for the country, good for Quebec and good for the West. A properly designed Senate has the potential to ensure that regional representation does not depend on which party forms the government in the House. Maybe, just maybe, Canada will finally start to fix this broken part of our political system. Maybe.

The Rise of the NDP
Given the nature of the Canadian system, the Official Opposition in a majority Parliament is largely irrelevant in terms of policy. They have an important job to do trying to keep the government’s feet over the coals, but they can’t block government legislation. In this sense, it matters little which party forms the opposition. However, the rise of the NDP is important for several reasons: 1) it is the first time in Canadian history that the Liberal party finds itself in the third party position and it remains to be seen if it can recover; 2) the fuzzy mandate that Layton has from Quebec voters will be a factor but it is impossible to say how this will play out; and 3) the ideological differences between the Tories and the NDPs are relatively clear and will present Canadians with a black and white set of alternatives to watch over the next four years.

The West is Still In
This election shows that a party with a leader from the West and a strong base of support in the region can, by also appealing to Ontario voters, form a majority government. Regardless of your political stripes, the Harper government is not a bad thing from a regional perspective. A government with a strong western base will have a natural connection to the region’s needs and unique circumstances. Because they are governing a nation rather than a region, these needs will not always take precedence, but they should be at least understood and given a fair hearing. This does not mean that governments without a strong western base can’t do this, but in reality, it is much more likely when they do.

The big news from yesterday’s budget includes the $49.2 billion deficit and the plan to reduce the red ink to just under $2 billion by 2014/15.

There are lots of other announcements and dollar figures in the budget document entitled “Leading the Way on Jobs and Growth.”

I stumbled across more than a few items, however, that don’t seem particularly “budgety.” For example, there is a short section on “modernizing Canada’s currency” on page 117 (the budget document is a whopping 451 pages). The section notes that new “bank notes will have increased security features and will be printed on a polymer material, which lasts significantly longer than the current cotton-based paper, thereby reducing production costs and the impact on the environment.” This sounds great, but does it belong in the budget document? There isn’t even a dollar amount attached to how much this will cost or save.

On the next page, there is a short section announcing a federal framework for credit unions that includes the following statement: “To promote the continued growth and competitiveness of the sector and enhance financial stability, the Government will introduce a legislative framework to enable credit unions to incorporate and continue their operations as federal entities.” As with the new bank notes, what does this have to do with how much money the government is taking in and spending?

We have bigger fish to fry than reducing the girth of the federal budget document, but in the name of doing more with less, maybe next time around the budget document will be leaner.

Posted By: Robert Roach

In yesterday’s Throne Speech, the Harper Government announced that it “will lead by example, introducing legislation to freeze the salaries of the Prime Minister, Ministers, Members of Parliament and Senators” and that it “will freeze departmental operating budgets, that is, the total amount spent on salaries, administration and overhead.”

Freezing departmental operating budgets will likely result in a freeze on staff salaries unless layoffs take place or overhead cost savings are found.

What example exactly does this set? That stagnant wages should be the norm in Canada after the recession? That monetary rewards for hard work are a thing of the past? That if office space costs increase, someone will have to take a pay cut or lose their job? That inflation doesn’t affect government employees?

I am all for weeding out wasteful government spending. If taxpayers are footing the bill for wild weekends in Vegas or for “Canada” to be printed on ping pong balls or something equally questionable, yes, let’s put a stop to that. If we can find ways to deliver services at lower cost without compromising quality, we should do it. If Canadians want less government overall, that is a valid debate.

But I am less certain that freezing the salaries of elected officials and government staff makes sense. Money isn’t everything, but it is something! If we want to attract and retain high quality elected officials and government staff, it doesn’t make sense to use their wages as a symbolic gesture of fiscal restraint.

In 2007, the Canada West Foundation did a study that compared public and private sector salaries called You Get What You Pay For.  The study argues that top quality personnel come at a price. If Canadians want good public policy and public institutions that operate in the best interest of society, we need professional, well trained and highly motivated public servants and elected officials.

For the public service to attract and retain high quality people, pay packages must be at least somewhat competitive with the private sector. But public sector pay is no where near competitive. At the time of the study, the lowest paid CEO of Canada’s five major banks earned 24 times more than the federal Deputy Minister of Finance, one of Canada’s top civil servants. The highest paid bank CEO made 86 times more.

Canada has always been well served by its public service but an aging workforce and large numbers of retirements are posing significant challenges. Before we applaud salary freezes of any kind, we should carefully consider how we will attract and retain the best and brightest to lead the public sector and effectively protect the public interest of Canadians.

Posted By: Robert Roach

In a recent column by L. Ian MacDonald (Calgary Herald, Feb. 9, 2010), Stephen Harper is criticized for not doing anything big. Mac-Donald argues that “while [Harper] has done a good job of running the country, he hasn’t yet done much to change it.”

The problem with this analysis is twofold. First, it assumes that the Prime Minister wants to do something big. Second, it fails to see that not initiating huge changes is itself a major change of direction for the federal government.

Harper’s ideological bent is conservative. Conservatives are suspicious of big government projects on the grounds that they grow the state at the expense of personal freedom and tend to have all sorts of negative unintended consequences. For a true blue conservative, running the country is not about changing it, but making sure that there is “peace, order and good government.” It’s up to Canadians to change their country, not the Prime Minister.

There is little doubt that Harper has had to compromise some of his conservative beliefs to win two elections and hold onto two minority governments. I don’t even want to think about the stomach ache he probably had while overseeing the use of taxpayer dollars to bail out auto companies.

And while the idea of a secret agenda has always been nonsense, this doesn’t mean that the Prime Minister doesn’t have a different vision for the federal government than his predecessors.

Harper is a fan of small (or at least smaller) government. He used to rail against politicians who went to Ottawa to impose their big ideas while spending truckloads of tax dollars doing it. It should not, therefore, be a surprise that he has not proposed a lot of big ideas.

Harper wants to be “transformational” (to borrow MacDonald’s word), but not by leaving a legacy of major federal initiatives. He wants to transform the approach of the federal government from a “let’s create a new program” to “let’s see if we can get by without a new program, let the provinces look after their areas of jurisdiction, and generally be less, not more, present in the lives of Canadians.”

This boggles the minds of those who want, or are used to, the idea of an interventionist federal government. Harper appears to have no vision because “vision” is typically associated with more government. Harper’s vision is less government.

Whether you agree with this or not, it’s “transformational” — if it can outlast Harper. Unlike some of the accomplishments of previous PMs, Harper is not leaving behind a lot of programs that will be hard to dump when he is gone. Cracking down on crime, good relations with the United States and a predilection toward less rather than more government are simply not as durable as Medicare or the Canada Pension Plan.

There is at least one major exception to this: the GST cut. Harper and every economist worth their salt know that cutting a consumption tax is not as good in economic terms as cutting income or corporate taxes. But, as Maclean’s columnist Paul Wells has noticed, Harper’s goal was not good economics but good conservative politics. “Harper’s GST cuts were designed to deprive future governments of an income source” (Maclean’s, May 26, 2008).

The two percentage points shaved off the GST mean that every time someone spends a dollar on something, two cents less goes to Ottawa to fund more ambitious government programs.

This looks less smart in the wake of the recession and the deficits that will follow it, but it still makes a great deal of sense if your goal is to rein in government rather than unleash it. It is important to note that the federal government is not withering away under Harper’s leadership — it remains a massive operation with a huge influence on the lives of Canadians. The difference is one of degree, albeit an important degree.

It remains to be seen if Harper’s vision for the federal government can stand a third electoral test. Canadians like social programs and we are generally not shy about asking our governments to do more (even if we ask for less in the next breath). O Canada, indeed.

Posted By: Robert Roach

Two recent cabinet shuffles indicate that the post-recession era in Alberta and Ottawa will be marked by considerable government belt-tightening.

Morton and Day on the job
Alberta Premier Ed Stelmach made the captain of the hard right wing of the Tory party, Ted Morton, his new Finance Minister. A few days later, Prime Minister Harper appointed former Alberta Finance Minister Stockwell Day to the post of Treasury Board President. These two Albertans will be in the spotlight as they seek ways to restrain public spending.

Morton brings two things to the post that his predecessor Iris Evans did not: 1) a strong and open ideological bent toward smaller government and fiscal restraint; and 2) a mandate to rein-in spending. Morton wasted no time in announcing that the spending “buffet” in Alberta was going to be shut down.

In less dramatic fashion, Day will be launching a spending review process that will “map out” cuts that will take place over several years. Day was understating things when he said that “it’s not going to be easy.”

Read my lips: no new taxes
Day’s boss, the PM, has made it clear that he wants the books balanced without raising taxes. However, if the economy grows slowly, the gap between cash in and cash out may be in the range of $20 billion. Even fiscal hawks will have trouble coming up with enough politically acceptable cuts to close a gap that big. If economic growth is stronger than some expect, Day may be able to pull it off.

Boom and bust
In Alberta, things are, as usual, a bit odd. Until the recession hit, the province was rolling in cash and a whole lot of Albertans were demanding more spending to keep up with the booming economy and to address shortfalls that some say went back to the fiscal restraint that dominated Alberta politics for a short time in the early 1990s. Fast forward to the present, and Albertans, or at least some very vocal ones, are demanding the heads of the big spenders. Boom and bust, indeed.

Morton’s task will be made easier by relatively low oil and gas revenues, but it will get harder if they spike and the province is once again flush with cash.

For the foreseeable future at least, two high profile Albertans will be actively looking for ways to reduce spending at both the national level and in the country’s richest province.

Morton and day are unlikely to be getting a lot of Christmas cards in 2010!

Robert Roach is the Director of the Canada West Foundation’s The West in Canada Project. Canada West Foundation is the only think tank dedicated to being the objective, nonpartisan voice for issues of vital concern to Western Canadians.

Posted By: Robert Roach