Entries from June 2005 ↓

The local Caledon magazine, which carries a column I write, came out with its summer edition today. My piece this time (as blogged here a few days ago) was about motorcycles. I am a controversial guy locally, since one of my businesses welcomes these geriatic bikers with their own parking lot.
Anyway, my staff was rolling in the aisles this morning at the illustration the editor used to depict me:

Here’s an interesting question I got on the doorstep yesterday afternoon: “Sure, we know the Liberals are corrupt, but the economy’s good, so why should we take a chance on you guys?” But here’s another good question: Why’s the economy humming right now, with low inflation, cheap interest rates and balanced budgets?

Obviously, those benefits did not materialize overnight. It takes years, sometimes decades, to correct economic problems once they have been allowed to take root. When Conservatives came to power in the 1980s, after almost two decades of Liberal governments, the country had a serious inflation problem, thanks to a string of deficit-laden budgets, which led to runaway interest rates and 20 % mortgages. The economy was a total mess.

However, between 1984 and 1993 a lot of strong – if unpopular – decisions were taken. Federal spending was slashed. The federal bureaucracy was seriously trimmed. Subsidies to money-losing outfits like Via Rail were ended. Free trade was adopted to increase exports and jobs. And, yes, the hated GST was established to raise serious amounts of money to balance the books and pay down debt.

All of that belt-tightening probably played a role in the Conservatives (and me) going down to defeat in 1993, but it also paved the way for the big economic payoff that was about to come. Reduced government spending meant less economic stimulus and lower inflation. Balanced budgets meant no more big government bonds that put pressure on the money market. Interest rates started to drop like a stone. Houses became more affordable. Small businesses expanded thanks to cheap financing.

As Finance Minister, Paul Martin carried on exactly where Mike Wilson had left off – which led us to a string of budget surpluses totaling about $60 billion so far. And thank goodness that, as prime minister, Jean Chretien never fulfilled his winning 1993 election promises of scrapping both the GST and Free Trade!

The problem now, as I see it, is that Martin is a far less effective or disciplined prime minister than he was a finance minister. His deal with the NDP to form a coalition government and pass a budget this year that increased spending drastically has economists warning this is the end of those rock-bottom interest rates. The consequences for the real estate market, where prices are currently at the highest point in history, could be ugly.

And business groups, like the Canadian Chamber of Commerce, and now convinced that the orgy of new government spending is going to put the federal budget back into deficit, potentially leading to a rerun of all those problems Liberals left in their way twenty years ago.

Let’s hope not. Conservatives are ready to govern and make the difficult, correct, economic decisions once again. By the way, here is a sampling of what the Tories are proposing, to help stimulate economic growth and ensure we do not fall off the budget wagon.

· Conservatives will enact balanced budget legislation to make it impossible for the government to run a deficit, unless we have a national emergency

· Conservatives will consider letting you split the income from your RRSP

· Conservatives will bring in reform of family taxes, eliminating inequities between families with one or two incomes and giving deductions for dependent kids.

· Families that chose to have a parent provide child care will receive tax incentives.

· Conservatives will keep interest rates stable and predictable.

· Conservatives will create a new watchdog over government spending. The Comptroller General will have the power to govern all departments, crown corporations and agencies.

· Conservatives will bring in a debt repayment plan , funded by the budget surplus, slashing the debt-to-GDP ratio to well under 20%. This will repay our expensive national mortgage.

· Conservatives will cut taxes. The basic personal exemption will rise, and so will the spousal exemption. Capital gains taxes will be cut, to increase the return on your investments. Business taxes will fall, to encourage job creation. Payroll taxes will fall, to increase take-home wages.

· Conservatives will let seniors split income more easily.

· Conservatives will create a tax ombudsman to ensure the Canada Revenue Agency acts with fairness.

· Conservatives will cut subsidies to businesses.

· Conservatives will work to secure more free trade agreements around the world.

· Conservatives will privatize government agencies and crown corporations that compete with private sector companies.

· Conservatives will allow more foreign ownership and competition in broadcasting, telecommunications and the airline industry.

· Conservatives will create a Registered Lifetime Savings Plan allowing you to access your savings, tax-free.

· Conservatives will continue to see revenues from gas taxes distributed to other levels of government to encourage new infrastructure.

· Conservatives will work with the provinces to achieve a national highway system, with the Trans-Canada as its gem.

· Conservatives would end mandatory retirement at age 65 and ensure people over that age no longer pay employment insurance premiums.

I just l-o-v-e door-knocking.

Normally on a Thursday night in Ottawa, the only place you will find MPs is at the newly-renovated airport, sitting around the Maple Leaf Lounge, eating nuts out of plastic packages, waiting for their flights to be called.

But these are not normal times. Instead they are dangerous. A touch desperate.

Last night the Liberals were able to pull off a deal with the New Democrats and the Bloc Quebecois, to limit debate on the hugely important budget bill to a single hour, then triggering a vote that had been anticipated for next Monday. And they won. The consequences will soon be upon us.

To Conservatives, it was another example of the Martin Liberals doing whatever it takes, with whomever necessary, to cling to power. Surprised, and with seven members absent, the Tories were unable to stop the bill, which squeaked through, 152 to 147. Immediately afterwards, Jack Layton rushed out into the foyer where all the reporters live and said, “there is an understanding developing in the House of Commons.”

There sure is. In fact, Canadians have not seen this level of back-room dealing and political horse-trading for more than an entire generation. Members of Parliament are marshaled up like so many wooden soldiers, voting rigidly along party lines enforced by the whips in a chess game where the only prize is governing.

So, we see the bizarre sight of socialist Layton and his NDP wielding ultimate financial power over Canadians, forcing poor Ralph Goodale, who still thinks he’s the minister of finance, to add almost $5 billion in social spending to his budget. We see Paul Martin, once a man respected everywhere for his fiscal prudence and economic caution – for doing the right thing – giggling like a schoolgirl when his parliamentary games mean he can avoid facing the electorate a few more months.

There is the ardent and hardened Quebec separatist leader, whose province is rightfully outraged and disgusted at years of Liberal attempts to buy them off with the sponsorship program, playing footsie with Martin. Why? So a late summer election won’t mess with the coming leadership convention for the Parti Quebecois.

There’s enough hypocrisy going around to make every voter shake his or her head in wonder.

“The budget clearly has a great amount of support across the country,” Jack Layton coos into the microphones. He ignores the fact most economists are warning us that this budget will so increase government spending it is now all but certain the Bank of Canada will raise interest rates, jacking up mortgage costs and increasing the burden on small businesses. He ignores the warnings of the business community that we are now firmly on the path back to government deficits and all that brings. But these folks – homeowners, entrepreneurs, small business operators and their middle class employees – are not Jack Layton’s constituents. We are just the mules who carry along the economy. We are the taxpayers.

But, the budget passed. It’s done. No election right now. No accountability for the Liberal-NDP coalition. Nothing but consequences.

Back to the Air Canada nuts.