Thomas Walkom
National Affairs Columnist
There is a curious disjunction between the rhetoric and reality of Prime Minister Stephen Harper’s economic policy. Call it the contradiction of Harpernomics.
On the one hand, the language is moderate and soothing: Keep a firm hand on the tiller; avoid sudden movements; given that the world is a scary and unsettled place, prudence is best.
When Finance Minister Jim Flaherty tabled his budget this week, he used precisely these kinds of calming words.
Sure, we’ll be doing a bit of cutting here and there, he said. But don’t sweat it. We’re only talking about trimming up to $4 billion a year from $80 billion worth of direct program spending. That’s just 5 per cent. Chill out.
Yet the reality of his plan is quite different.
First, he’s not planning to cut just $4 billion. He’s planning to cut up to $4 billion every year for four years. As his budget document points out, the cumulative total of these as-yet-unspecified cuts is $11 billion.
But that’s on top of the cuts that the government announced in past budgets but that have not yet kicked in. The cumulative total of these, according to Flaherty’s own figures, is at least $9.7 billion.
Add the two together and you get more than $20 billion in planned cutbacks between now and 2015. That’s not 5 per cent of federal direct program spending. It’s closer to 25 per cent.
Which is radical surgery.
So what gives?
The most obvious explanation is that the government is being dishonest. And I’m sure that’s part of what’s happening.
The Conservatives may have won their coveted parliamentary majority, but they know the new electoral coalition they have forged is fragile. Sounding too gleeful about dismantling government might spook more moderate voters.
But there also seems to be genuine confusion at the heart of government about how best to handle a global slowdown that truly does threaten this country.
We saw that in the fall of 2008. Then Harper was talking publicly about the need for governments to spend heavily in order to weather the recession. Yet at the same time, Flaherty was releasing a mini-budget that did the precise opposite.
That confusion continues.
If the government’s own forecasts are correct, it needs to do very little to bring its budgetary deficit under control. Thanks largely to the global oil boom, the economy in Canada’s west is booming. Ottawa is accumulating tax revenues.
By the government’s own figures, the deficit will be eliminated by 2015, even without the latest $11 billion round of spending cutbacks. These newest cuts will merely produce Harper’s coveted balanced budget a year earlier.
Indeed, given global instability, the most prudent course of action for a conservative-minded government would be to avoid radical fiscal action of any kind to preserve those jobs that do exist.
Instead, Harper and his finance minister are taking a gamble. Taking a leaf from the Jean Chrétien Liberals, the Conservatives are using the deficit as an excuse to continue dismantling the parts of government they’ve already signalled they don’t like — such as health and safety regulation, veterans’ disability pensions and job training.
This would move Canada in the direction Harper wants it to go. But I suspect the Prime Minister knows his cuts could also threaten jobs and income should the world economy take another turn for the worse.
In that sense, the government’s careful rhetoric is more appropriate than its actions. This is a time for caution. It’s not a time for massive spending cuts, no matter how ideologically attractive the right might find them.
National Affairs Columnist
There is a curious disjunction between the rhetoric and reality of Prime Minister Stephen Harper’s economic policy. Call it the contradiction of Harpernomics.
On the one hand, the language is moderate and soothing: Keep a firm hand on the tiller; avoid sudden movements; given that the world is a scary and unsettled place, prudence is best.
When Finance Minister Jim Flaherty tabled his budget this week, he used precisely these kinds of calming words.
Sure, we’ll be doing a bit of cutting here and there, he said. But don’t sweat it. We’re only talking about trimming up to $4 billion a year from $80 billion worth of direct program spending. That’s just 5 per cent. Chill out.
Yet the reality of his plan is quite different.
First, he’s not planning to cut just $4 billion. He’s planning to cut up to $4 billion every year for four years. As his budget document points out, the cumulative total of these as-yet-unspecified cuts is $11 billion.
But that’s on top of the cuts that the government announced in past budgets but that have not yet kicked in. The cumulative total of these, according to Flaherty’s own figures, is at least $9.7 billion.
Add the two together and you get more than $20 billion in planned cutbacks between now and 2015. That’s not 5 per cent of federal direct program spending. It’s closer to 25 per cent.
Which is radical surgery.
So what gives?
The most obvious explanation is that the government is being dishonest. And I’m sure that’s part of what’s happening.
The Conservatives may have won their coveted parliamentary majority, but they know the new electoral coalition they have forged is fragile. Sounding too gleeful about dismantling government might spook more moderate voters.
But there also seems to be genuine confusion at the heart of government about how best to handle a global slowdown that truly does threaten this country.
We saw that in the fall of 2008. Then Harper was talking publicly about the need for governments to spend heavily in order to weather the recession. Yet at the same time, Flaherty was releasing a mini-budget that did the precise opposite.
That confusion continues.
If the government’s own forecasts are correct, it needs to do very little to bring its budgetary deficit under control. Thanks largely to the global oil boom, the economy in Canada’s west is booming. Ottawa is accumulating tax revenues.
By the government’s own figures, the deficit will be eliminated by 2015, even without the latest $11 billion round of spending cutbacks. These newest cuts will merely produce Harper’s coveted balanced budget a year earlier.
Indeed, given global instability, the most prudent course of action for a conservative-minded government would be to avoid radical fiscal action of any kind to preserve those jobs that do exist.
Instead, Harper and his finance minister are taking a gamble. Taking a leaf from the Jean Chrétien Liberals, the Conservatives are using the deficit as an excuse to continue dismantling the parts of government they’ve already signalled they don’t like — such as health and safety regulation, veterans’ disability pensions and job training.
This would move Canada in the direction Harper wants it to go. But I suspect the Prime Minister knows his cuts could also threaten jobs and income should the world economy take another turn for the worse.
In that sense, the government’s careful rhetoric is more appropriate than its actions. This is a time for caution. It’s not a time for massive spending cuts, no matter how ideologically attractive the right might find them.
