Fiscal update shows there is no new Harper

Cut-throat plan to end democratic financing features lack of financial recovery plan.

by Ish Theilheimer

OTTAWA, November 27, 2008: Speculation that Stephen Harper has changed his ideological stripes, either due to the economic crisis or a desire to be seen as a moderate, was quashed with the government's fiscal update today.

While other leaders in the G20 are committing to massive packages to restart their economies, Harper has signalled any rescue package will be superceded by ruthless politics. By announcing plans to cut off the per-vote subsidy for federal political parties, he threatens to cripple the Liberals and other opposition parties. All of them have come to rely heavily on these subsidies since they were introduced in 2003 by the Chrétien Liberals, who outlawed corporate and union political contributions. Those reforms made political financing more democratic, enabling more parties to compete viably regardless of the wealth of their supporters.

Now the Liberals, with a lame-duck leader and a big campaign debt to pay down, have an awful choice to make. Either they vote for their own death warrant by supporting the Conservative's changes to election financing, or they force an election they cannot afford and are unprepared to fight. Their only other option would be to move to form a coalition government, which seems highly unlikely given the party's leadership race and internal divisions.

The kind of cut-throat politics and budget slashing in today's statement might please Harper's core supporters. Like Harper's stands on youth crime and arts cuts, however, they send a very unwelcome message to other Canadians. Those who have held back from supporting him in the past two elections are unlikely to be swayed by today's tough talk, and those looking for leadership in the economic crisis are left wondering. Instead of stimulus, the Conservatives offer opportunitistic attacks on a weakened opponent and public servants.

Harper campaigned on leadership, Armine Yalnizyan said today on CBC Radio's The Current, but he isn't showing the kind of leadership Canadians need in times like these.

"We're hearing sobering references to the depression from him, but there's no plan," said Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives. "We keep waiting for a plan. He's Mr. Dithers Number Two. Canadians can't wait for that kind of indecision."

She said Harper's instinct to cut taxes and cut spending, which provided the thrust for today's announcement, "...is way out of step with what everyone says needs to happen right now." The need now is to massively infuse government capital into the economy and make it easier for businesses and consumers to borrow again.

Co-panelist Diane Francis of Macleans Magazine agreed, saying that Harper is catering to his right-wing rump in offering up a lean and mean financial statement. "He's got a base of people who say 'Let 'em all go bankrupt, the market will sort itself out, never mind the collateral damage to everybody else.'" Francis expects a massive stimulus package to follow soon. "He's going to announce belt-tightening on the part of government, and then we will see massive deficit spending."

Yalnizyan says Harper has set the wrong tone with the statement by siding with banks and not workers. She joined opposition critics in calling for reforms to extend unemployment insurance to cover the hundreds of thousands of layoffs expected across Canada. She recommends the government use its borrowing power to help finance new housing, guarantee municipal borrowing, restore urban roads, and invest in new projects, but she is pessimistic that will happen.

"That's anathema for Mr. Harper," she said. "He wanted to see private-public partnerships build infrastructure with private sector capital, but now there is no capital in the private sector." With lower real estate costs and low interest rates, now would be an ideal time for the government to invest in housing, she said.

Francis said she is hoping for an American-Chinese-scale "jolt" to revive the economy. She estimates that to do any good, the federal government will need to take on an annual deficit of two percent of GDP or about $30-40 billion. The provinces, says Francis, should also take on a similar amount of deficit collectively.

Yalnizyan says that if the Conservatives commit to that level of funding, it will be dwarfed by what they gave away just last year in tax cuts. "People's eyebrows raise when you say to spend two percent of the GDP," she said. "The man spent 60 billion dollars at this time last year on tax cuts, and nobody raised an eyebrow back then. That was considered pro forma. That's how they emptied the cupboard. That's why we're going to go into deficit this year."

Harper Conservative vs. Public Values Frame
  End free ride for parties / Democracy for all, regardless of wealth
  Balance budgets by cutting public services / Invest in public and human infrastructure

Posted: November 27, 2008

Harper Index (HarperIndex.ca) is a project of the Golden Lake Institute and the online publication StraightGoods.ca