Thursday, January 21, 2010

Cabinet Shuffled. So what? Now what?

Well, there you go. We're 2+ days and change removed from the shuffle and there are really only two questions for me:

First question: so what? There were no major changes as the big guys all stayed put (though McKay lost some Atlantic clout). In addition, the Raitt move was expected. Day moving to TBS was somewhat of a surprise (more on that in the now what), but not earth-shattering.

However, for the reasons laid out in a previous post, it all amounts to little. Yes, it's great that Ambrose has shown hard work and a head-down attitude can lead to redemption, but ultimately decisions and communications are run so forcefully from PMO that it really doesn't make a difference who has moved where. The boss is the boss is the boss.

Second question: now what? Media has been all over the Day move, characterizing it as an important message from Harper about the move to austerity and fiscal restraint.

As this blog and others have noted, the Harper government had tax cut/spent themselves into deficit before the economic crisis took hold. In fact, public spending under Harper increased more than it did during the Chretien-Martin years. Stimulus compounded the problem (albeit it exponentially) - it didn't create it.

OK, but the spinners remind me that Day was the man who presided over fiscally conservative Alberta. Again, as others have pointed out that this doesn't quite ring true. Dinning tightened spending, Day spent. A lot. Oil prices were rising so as Treasurer he could afford to. Yes, he did introduce a flat-tax. Don't get me started on flat-taxes..

It is also timely to remember that some form of expenditure review has been underway at TBS for some time. John McCallum - yes that one - was tasked with finding $12 billion in savings. Not sure how far he got.

The problem is, once you rule out tax increases or cuts in social spending and defence, there's not much left. Sure, there are niche program cuts. But in the grand scheme of things, these are akin to what's behind the cushions and the occasional $20 bill you find in your winter coat in November.

Where is the dialogue on the upcoming discussion with the provinces on health care spending? Demographics will loom large in any discussion on health care and other benefit programs. Can you manage the budget deficit if these are off the table and there are no tax increases?

Important questions, but few answers.

We have a budget in about 5 weeks. What will be the focus? Will there be a longer-term vision, with clear year-over-year targets? I can tell you that if the focus of a deficit reduction plan is the "return to growth and therefore a return to tax revenue" story, I will be upset. Mind you, not surprised. Just upset.

Now is the time for serious thinking about what Canada needs in order to succeed and compete in the 21st century. The question touches at social and economic policy, and increasingly they need to considered in tandem.

Is this government prepared to do so? Is this opposition?

You tell me.

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