A change will do you good....

Several weeks ago this blog and others commented that Mr. Ignatieff may need to make changes in his office. Politics Watcher wrote the following:

"If this requires staffing changes or an office re-org, do it. Show us you mean business by taking the tough decisions. The question people will otherwise ask is how can you run Canada is you can't manage your party."

Well, that was on October 1. The following was issued this evening:

http://www.liberal.ca/en/newsroom/media-releases/16785_statement-from-michael-ignatieff-announcing-leaders-office-reorganization

So, Davey out and Donolo in. Others may be following Davey out the door they entered with him - time will tell. All to say, we will get more information tomorrow and over the coming days, but it appears that the party's troubles since that fateful day in Sudbury have brought matters to a head.

So what next? A few things for them to consider:

• find 3-4 key messages and stick to them
• define yourselves and what your government would look like and stand for - develop an agenda and sell it
• stop counting on the country "not warming to Harper" - you need to be seen as more than the default

There will be no election until at least the Spring. That gives Mr. Donolo and co. a good 6 months to get the office of the Leader of the Opposition moving smoothly. This is not a lot of time, as one can expect that the Government may want to prompt an election before the Opposition can sort itself out.

Focus and discipline are needed right now if there is to be change in the polls. Will we see it? Let me know...

Dollars and Sense

So according to the recent reports, those Canada's Economic Action Plan ads should include an asterisk or some fine print suggesting that little red ridings need not apply. If you go by these reports, those who vote Tory blue get to host one MP, several staffers and one...large...novelty..cheque. Those ridings which don't, get less. Or nothing.

The Opposition calls this Duplessis-style politics. It's seen by them as a throw-back to the days when politicians reminded voters what a vote really means. Let's just say things were a touch more transactional back then.

Others see this as less about old-style politics and more of, you know, just politics. Honestly, I don't know if it is funny or sad that some people have a "well duh?" reaction.

So which is it? For me, politics will always have an element of payback and reward. Where things cross the line is when people treat or are seen to be using the country's money for overtly partisan purposes.

So, since the well-staffed statistics department here at politicswatcher assures me we now have readers and comments, I put the questions out to you.

• Is this the way things are in politics?
• Is this the way things should be in politics?
• Will any of this matter when it comes time to vote?

Tell me what you think...

You get this, I get that. The division of powers...

The recent move by the federal government to seek the views of the Supreme Court on the whether the feds have the constitutional authority to establish a national securities regulator brought back memories.

Or were they nightmares? I am not sure, all I know is that the issue of the division of powers popped back into my consciousness.

You see, in another life I spent some time working on the unity file and the question of who has the power to do what was...sadly...a daily issue to consider. For those unfamiliar, a very brief overview.

The Constitution sets out the powers of the federal and the provincial governments. The intent at the time was to have a strong central government - the Fathers of Confederation had just witnessed what state power had led to in the U.S. and wanted to avoid that in Canada.

The juicy stuff (circa 1867) therefore went to the feds. The feds also got much more ability to tax and spend. The provinces' lot included things which meant less at that time, but which have grown in importance (and cost) since. Think health care and education.

So, in may instances one has the cash and the other the power.

Over the years some interesting (yes, I can be a geek) battles have been fought as to whether one is encroaching on the powers of the other. This has been amplified by two things.

First, the Constitution could not truly anticipate the world as it evolved so as new areas emerged it was not always clear who had responsibility (in fairness, the feds have the default but that is a world of grey).

Second, the Quebec issue. Understandably, no province has guarded its areas of responsibility quite like Quebec, regardless of which party was leading the province.

See, the feds have liked to initiate programs in areas of provincial jurisdiction. The provinces - often led by Quebec - have lobbied for the money to do their own thing.

Meech Lake was a notable effort to deal with this issue. Under the Accord, the federal government would allow a province to opt out of a federal program in an area of provincial jurisdiction with compensation if they introduced something comparable which met national standards.

What are national standards? Who knows. And that's why I brought this topic up tonight (along with a side conversation with one of my 3..count them 3 comment-providers on this site. Yes, we are growing here at politics.watcher!).

A federal system will naturally have a quilt-like approach to policy. At its best, this system can allow provinces to develop programs which fit the needs of their often unique populations.

If these work well, there is an opportunity for other provinces to follow suit and the result can be a national program.

The National Child Tax Benefit introduced by the Liberals in the late 1990s is an example. It was built off a Saskatchewan program. The Cullen-Couture agreement in Quebec dealing with immigration is another which has served as a model for other provinces.

Unfortunately, the other side of this coin is an inconsistent approach to the things people care most about. Things like, for example, health and education. At some point, the more centralist-minded person will ask why isn't there a national approach to health care in terms of coverage, service levels, etc. Why are children taught different things differently as you move through the country.

Since Meech, governments have tried things like tax point transfers to get the provinces greater financial autonomy. Success has been mixed.

For me, the watering down of a national standard is a greater concern than the potential over-stepping of a level of government's jurisdiction. A national securities regulator makes sense. A truly national approach to health care makes sense. At some point, we need to think of Canada as being more than the sum of its parts.

Thoughts?

The $15 billion swing...

On Friday (of course on a Friday), the Department of Finance released Canada's Annual Financial Report for the 2008-2009 fiscal year. Basically, how we did from April 1, 2008 through to March 31, 2009.

In case you were wondering, we did poorly.

At the beginning of the fiscal year, Canada had a budgetary surplus of $9.6 billion. 12 months later, we had a deficit of $5.8 billion. Yes, that's right. National finances suffered a $15.4 billion swing. In the wrong direction.

Now, I don't know about you but if I my household finances suffered a swing of similar proportions, there would be a heck of a conversation looming...

Being a Department of Finance document, there were lots of other statistics - the vast majority of which I won't bore you with (geeks go here: http://www.fin.gc.ca/afr-rfa/2009/afr-rfa09-eng.pdf).

Now, for those concerned about the national debt (i.e. 1 of the 2 people who have commented here), we are still sitting at a comfortable 29% debt-to-GDP ratio. This is one of the numbers I suspect will get bandied about as the government is challenged on the deficit.

It gets at the ability of a country to serve its debt, and by all measures Canada is in good shape (and for that matter in much better shape than other G7 countries). Expect the government to play this up.

But let's go back to our question of the deficit and more importantly how it can be eliminated. As noted in previous blogs, it is unlikely that economic growth will take care of things for the government. Most economists expect this deficit to grow over the next few years until it approaches the $50 billion level. If we believe this needs to be addressed, what's the solution?

I'll put some thoughts down:

• As mentioned in earlier posts, increase the GST. It is consumption oriented and the previous cuts only favoured those who spend more on luxury items. Increase the tax and make sure to carve out those items which are not luxury (key foodstuffs, baby items, books - most of this is already done, but address any remaining items).

• Continue to increase consumption taxes for cigarettes and alcohol.

• Review federal assets, including foreign real estate holdings, to identify savings through divestiture.

Will any of this do the trick? Not any one item. The biggest bang will come from the GST, but I would worry about two things. First, the courage of any government to move on a tax increase. Second, the fact that for all of the spending cuts or revenue increases a government can get in place, there will be a long line of other financial asks waiting in the wings.

What I am trying to say is that the politician who tells you no tax increases is likely wrong. The politician who says no cuts to programs is also wrong. For Canada to get out of this hole the government (whoever is in charge) will need to raise taxes. They will need to cut spending (if only to make room for spending in new areas). It won't be fun, but it will be interesting...

Thoughts?

Comments! We have comments (...and the cheque is in the mail)

The Habs played (and lost) their home opener tonight. This sporting event has, sadly, occupied my attention this evening so there will not be much of a post tonight.

I would like to take a moment to acknowledge the fact that we have our first posts on this blog. This may be small to many of you mega-bloggers out there, but for a fledgling blogger like me it is certainly welcome. Thanks!

Now, about those cheques...

Is this an issue we should care about? I am not sure I care so much about the cheques and photos. For me, it is the hypocrisy. Had this been the fall of 2005, we would have had these cheques featuring heavily in the "Stand Up for Canada" ads.

Yes, every government rallies against such things. And yes, once a party gets in their views seems to change. That's the game, right?

This mentality is reflected in recent discussions on Kevin Page. Following on last night's post, the same Conservatives who called for an independent Parliamentary Budget Officer are now essentially cutting the office off. There is so much evidence about how perspective changes once you are on the inside - so much so that we should not be surprised.

These are not, on their own, issues which sway large numbers of voters. But they are issues which we should note and consider as we look at the parties and the options they present to us.

Wanted (or not?): One independent Parliamentary Budget Officer

As part of this discussion on deficits, I would welcome your views on the Parliamentary Budget Officer. We have one. He's cash-strapped. Some would argue it's because his message is not welcome. Others don't like his style.

Give me your views. Does need Canada need a fully independent Parliamentary Budget Officer? What role should this officer play?

Thoughts?

Uh, we seem to have lost several billion dollars. Has anyone seen them?

Yes, we have a deficit. And yes, it's big and growing. So what should we do?

In answering, I think it is important to consider how we arrived at the current state of affairs. Without question the economic stimulus introduced though Budget 2009 (or Canada's Economic Action Plan if you prefer the marketing approach to government policy) accounts for a lot of the deficit.

But what else? Well, increased government spending pre-economic crisis ranks right up there. Over the past several years, under both Conservative and Liberal governments, federal expenditures have steadily risen.

For a time, this was ok as the economy and government revenues (through taxes) were growing more quickly. The GST alone was bringing in billions each year. Eliminate the deficit - sure! Need a Canada Foundation for Innovation? No problem! Pay down debt? Bingo!

Things were so good, in fact, that in 2006 the decision was made to reduce that cash cow of cash cows. The cuts the Conservatives made to the GST (in two phases) took billions out of the government's coffers.

Ok, fine. So what about spending? Did government adjust for this loss in revenue? In a word, no. Corporate and personal taxes were lowered, thereby reducing revenues further. And overall program spending rose (defence was a big leader), further chipping away at the remaining surplus.

The result was that Canada was close to or more likely in deficit this time last year. Pre-crisis. The ensuing stimulus measures, combined with a sharp reduction in government tax revenue as the economy faltered, then took things to the levels we see today.

I raise this because knowing how we got there should help us figure out how we get out. It's like when you lose your keys. The first thing someone says is, "Well, where did you last see them? Retrace your steps."

In our case, we have "lost" billions. Retracing our steps leads us, from my perspective, to this conclusion. Spending must be lowered and selected taxes must go up.

Ok, that was the easy part. Now for the challenge. What spending gets cut? What tax gets raised?

For me, returning the GST to pre-2006 levels - while not a political winner - may be the route to go. I would not be surprised if at some point the Liberals float this one to see how it plays.

On spending, the winding down of the stimulus measures will help. However, there are big ticket items out there including a new spending accord with the provinces on health care. You think saving GM and Chrysler were expensive, try health care on for size.

Then you have the Liberals, who having moved away from the green shift are now looking to invest heavily in a green economy. That can't be done on the cheap.

I raise this because for every expense that is cut, there are 5 new unfunded ideas lining up and needing money to get them going. That isn't to say they aren't good ideas or the right things to do. It's just that they are expensive and money will be tight.

This is the challenge facing anyone who wants to be PM and form a government. Still want the job, Mr. Ignatieff?

And in this corner, coming in at tens of billions dollars, we have the deficit....

The deficit will be HUGE. I don't mean big when compared to recent years. I mean big when compared to some of those beasts we learned to despise in the mid- to late-90s. Put another way, we have not slipped into the red...we have plunged into it.

Over the next day or so, I want to talk about this change in our financial situation. Some points to consider:

• How did this occur? Is it all because of the stimulus measures (i.e. Canada's Economic Action Plan), or did things like pre-crisis government spending and tax cuts contribute to this?
• How bad is the situation?
• How can we get out of it?

This last bullet is important to me. The plan to eliminate the deficit will ultimately reflect views on the role of government. For many economists, expecting pure economic growth (and resulting tax revenues) to put Canada back in the black is not reasonable. If they are right, it comes down to choices.

• Should government spend less? If so, where?
• Should government tax more? If so, where?

Our political leaders do not really want to discuss either option, for fear of attack and a drop in support. Why alienate voters now?

Well, this voter would prefer to know heading into an election what the plan is and we will get there.

What about you? Views, thoughts? Let me know...

The issues are coming! The issues are coming!

Well, Thanksgiving weekend is just about over. If you were like me, you probably ate more than you should and are now wondering whether you should be taking a walk. I opted instead to post on this blog. Sad. I know.

With Parliament now on a break week, we won't have our usual 5 days of Ottawa-based theatre. Oh how to fill that void...

For those of you who have followed this blog (or more likely wound up here by accident), you will have noted my ongoing concern with the lack of real discussion among our leaders about the issues Canada will face over the next few years. Sure, the issues get lip-service but really that is about all.

Maybe it's due to a lack of ideas or perhaps a fear of alienating the voters. Whatever the reason, Canada has some big challenges ahead which are not getting the airing they deserve.

Let's do something about that.

Over the next week or so, I am going to post my thoughts on those issues which I feel our political leaders should be focusing.

1. How to address what is now a structural deficit?
2. What will government do to help prepare Canada - and in particular young Canadians - for the economy of tomorrow?
3. Demographics. We are becoming an older population. What will this mean for health care, employment and immigration?
4. The environment.

To this list I would add the so-called democratic deficit. The answers to these questions will shape Canada for a long time to come. Yet we are asking theses questions at a time when Canadians are more and more distant from the political debate. Developing the right answers will require a change in the way we engage with our politicians and the way they engage with us.

So faithful (or accidental) readers, hold on and look out. The issues are coming, the issues are coming...

Stop the downward spiral, I'm getting dizzy!

You know those times when things aren't going well? You know, when you remind yourself that tomorrow is a new day and that things will get better? More often than not, you're right and the next day is better.

Not so for the Liberals.

It is now getting to the point where it appears as if polls are being released to inflict maximum hurt and despair. Each new poll is worse than its predecessor.

Today it was EKOS (http://www.ekos.com/admin/articles/cbc-2009-10-08.pdf) and their poll is showing that the Liberals are leading...wait for it...no where. Not in Ontario. Not in Atlantic Canada. They even be back in third spot in Quebec and BC.

Yes you say, but they are still strong in the cities where so many voters live. Uh, no. With the exception of Montreal, they are trailing the Conservatives in Vancouver, Calgary, Ottawa AND Toronto.

But wait, there's more! There is no demographic they are leading in. Not by gender. Not by age.

As we know, bad news tends to beget bad news. These things have a way of feeding off of one another such that before you know it a blip is a trend, and a trend becomes a fact.

Sadly, as discussed in numerous articles, blogs and news programmes so much of this is self-inflicted. For me a big one is the wasted opportunity to define the new leadership before deciding to move into election mode. Today, in what could have been week one of an election campaign, I have little sense as to what a Liberal government would look like.

Next week is break week. There will be soul-searching and reflection. But that needs to result in something more tangible than we can do better and we will. Otherwise the Liberals will run the risk of answering the question "how low can you go?"

With enemies like these, who needs friends?

So here we are, two days to go before the Thanksgiving break week and what seems an eternity away from the heady swagger seen at that Sudbury caucus meeting. What next?

For now, it seems that everyone has settled into the new reality which, to be honest, resembles the old reality. Government governs, opposition voices discontent, government continues to maintain confidence of the House. It's the way things were before, right?

Yes and no.

Yes, the government has survived this latest scare (even if they would have relished an election) and continues to have the upper hand over its opponents. They have more money, appear better organized and are controlling the message. Kind of like the last couple of years.

However, there are differences and importantly, they are differences which favour the government. Three points to consider:

1. Outside of Quebec, the flirtation with the coalition has hurt the Liberal brand. The strength of their brand was something Liberals could count on even when things were not going well. By going down the coalition route they eroded that brand and have struggled to get it back.

2. The recent Liberal push for an election without defining a reason has left Canadians with the perception that Harper is more reasonable and in tune with their views. That is some mean feat given the challenges he has had in resonating with Canadians.

3. The Liberal troubles over the past few weeks have given the Conservatives the luxury of sitting back, watching events unfold and reaping the benefits. In the past, Canadians were put off when the government went on the offensive and lunged for the jugular with partisan fervor. Right now, Harper doesn't have to do anything so off-putting - the Liberals are doing it for him.

All of this favours the Harper government - something reflected in every poll we see, at the national level and the all-important provincial level. With the economy showing signs of improvement, an Olympic love-in on the horizon and a PM playing (literally) to the arts community, the dreaded majority word is popping up everywhere.

Unfortunately, all of this is occurring at the expense of a real debate about how we will eliminate the deficit, how we are preparing for the economy of tomorrow, and how we are going to prepare for a demographic shift which will affect everything from health care to employment, economic growth to immigration?

Big questions and few answers. But for the Harper government, no worries. The Liberals are doing his job and are making him look good. With enemies like these, who needs friends?

Thoughts?

Liberal Thanksgiving Mantra - I'm thankful there's no election...I'm thankful there's no election...

Recent polls have not been kind to the Liberals. But then, no one else has so why buck a trend.

The latest, conducted by the Strategic Counsel for the G&M and CTV, is particularly harsh.

Overall, the Conservatives are in majority-territory (41%) while the Liberals have slipped down to Dion circa 2008 territory (28%). More worrisome is the regional breakdown, and in particular Ontario where the Conservatives are sporting a - gulp - 16 point lead. Yes, that's not a typo and I didn't mean to write Alberta. That's. In. Ontario.

Oh yeah, and women - once a huge source of votes for the Liberals - are apparently not keen on Mr. Ignatieff right now.

I wrote recently about how the NDP decision to support the government was akin to an executioner's reprieve for the Liberals. Now was the opportunity to focus, develop and get on message, profile the team and make whatever hard decisions need to be made.

Are they heeding such sage advice? I am not sure. There are still rumblings in Quebec and organizational challenges stemming from the Coderre issue. Funding may also become an issue in the fourth quarter as the dust settles from September.

An effort was made today to profile the team through the creation of new critics posts within the caucus. However, this is soooooooooooo Ottawa. Find me someone...anyone outside of Ottawa with whom this would resonate. I dare you.

All to say, the next break week cannot come soon enough for the Official Opposition. So Liberals, as you gather 'round your turkey dinners be thankful for Jack. The man who saved you from yourselves.

By-Elections - light beer for election junkies

As the Globe reported this morning, it looks like we will have to satisfy our election-watching cravings with four by-elections. It's like replacing a good session at the pub with a glass of light beer. At home.

Beggars (and bloggers) can't be choosers, I guess.

The by-elections - well at least two of them - could actually be reasonably interesting. Two are Bloc seats in Quebec and will remain so. Yawn.

The other two are in Nova Scotia and British Columbia. The former was held by Bill Casey - a former Conservative who ran last time around as an independent and has since retired from politics and is now serving as essentially Nova Scotia's GR guy in Ottawa. The latter has been held by the NDP since 2006, but is now vacant with the move of Dawn Black to provincial politics.

In both cases, two interesting things to watch.

1. How will the Liberals fare? In the Nova Scotia riding they finished fourth in 2008, while in BC they were a distant third. All to say that in good times, their prospects would not be high. And these are not good times. So they are not expecting a win, but their showing may demonstrate just how far they will have to climb if they are to seriously challenge in a general election.

2. Can the Conservatives turn recent events to their advantage and win one or both? The better bet is in Nova Scotia, as this has gone Conservative in every recent election save 1993 (PC blow out) and last time around (Conservative ran as an independent). BC will be trickier due to the debate over the harmonized sales tax, but results in 2008 were very close (fewer than 1500 votes separated the NDP and the Conservatives). In the end, both are winnable and the government's showing will help indicate whether a majority is becoming possible.

So come November crack open a beer and watch the results - provided there isn't a good hockey game on.

Sound and fury, signifying nothing

So, there it is. The confidence motion is defeated (144-117, with Jack and co. abstaining...if you care) and the government survives. Ob-la-di, ob-la-da, life goes on.

What happens next?

Well, more of the same he sadly said. Barring the unforeseen, the next domino is the budget, which could well be tabled in the midst of a recovery, post-Olympic love-in. That is several months away. Between now and then we are back with the same Parliament we have had with the same progress on the issues of today and tomorrow.

A lot of talk this evening and, I suspect, over the next several days about what happens next for the Liberals. Don Martin had some advice this morning and Chantal and co. on CBC's At Issue panel had some too.

If I were to single out one thing from all of this it would be the need for the Liberals to take this self-inflicted executioner's reprieve and use it to define themselves. Why should we vote for them? Start with answers to these questions:

• Who is Michael Ignatieff. Surely he is more than an academic who lived outside of Canada for....zzzzzzzzzzzzzzzz.

• What are the 3-4 things that Canadians can expect from a Liberal government? It can't be "we're not them". So what is it and is it relevant to Canadians? Today's deficit and tomorrow's economy - what's the plan? Ditto for health care and the environment. Focus.

• Show me your team. Get Canadians used to them. Strike that balance between controlling the message and providing profile for your team.

If this requires staffing changes or an office re-org, do it. Show us you mean business by taking the tough decisions. The question people will otherwise ask is how can you run Canada is you can't manage your party.

By the way, did anyone notice the lengthy, prominently placed "Canada's Economic Action Plan" commercials this evening during the first period of Hockey Night in Canada (eastern and western games)?

Please, do not taint my hockey with this sort of thing.