Brace yourself, 2012 is coming...

In a couple of days time, 2011 will be done and dusted. A year that saw multiple elections will have passed and the #cdnpoli world (thank-you twitter!) will turn its attention towards 2012.

The coming year offers much for politics watchers across Canada. There is the NDP leadership race, the Liberal reinvention project, the advent of a new political party in Quebec, and more provincial elections (definitely in Alberta, possibly in Quebec).

For this politics watcher, however, the things to watch in 2012 will be on the policy front.

By the time MPs return, the Conservative majority will have seen or be very close to seeing its "bread and butter" pieces of legislation come into law. The gun registry will be scrapped, the crime bill passed, and the wheat board could well be on its was to being dismantled (depending on court challenges).

With these base issues addressed, the government will more meaningfully turn its attention towards the deficit; a focus which will tell us much about how the Prime Minister sees the role of government. Already we have seen glimpses of how Mr. Harper sees the future for this federation.

First, on the health care file (Paul Wells penned a nice piece on this recently), the offer tabled with the provinces to replace the soon-to-expire health accord shows a Prime Minister who sees little role for the federal government in health care (an area of provincial jurisdiction).

His position is that the provinces should be given reasonable and predictable means to deal with what is their responsibility. National standards or federal expectations as to how the money should be spent do not fit within his vision.

Second, in the area of tax policy the Prime Minister's focus on tax reduction (GST, personal, corporate) appears designed to limit the long-term ability of the federal government to act as an agent of change. The government that chooses to do so in the future must either cut spending in other areas, or raise taxes. It is akin to being painted into a fiscal corner.

So what does this tell us about 2012? In a March 2010 post I wrote the following:

"Maybe, just maybe, the crisis presented the government with an opportunity. An opportunity to get back to its core values and roots. A real chance to enact a change in the role of government."

This is where we stand today.

A world in economic turmoil, a structural deficit at home, and a government with the Parliamentary means to effect the changes they want. Freed from the shackles of a minority Parliament, the Conservative majority is now in a position to implement its vision for Canada. And whenever questioned, the government can now point to developments taking place in Europe and the U.S. as the justification for its actions.

Cue Budget 2012.

The next federal budget will be tabled in the coming months. In the run-up to this budget we have had the public Finance Committee pre-budget consultations and the not-so-public spending review occurring across government, which is being vetted by a a Cabinet committee.

The fruit of these exercises, and in particular the latter, will help frame a budget that will take another step along the road towards redefining the relationship between the Government of Canada and us.

Shouldn't we be talking about it?

***

Many have said that 2011 was the year that Mr. Harper got what he wanted. A majority was secured and the Liberals were knocked down to a level from which many feel they will not be able to climb.

My sense is that these accomplishments are seen by Mr. Harper as means to an end. I don't think these are the reasons that he has gotten out of bed each morning. What these accomplishments do is position him to redefine the role of the federal government in the lives of Canadians.

This is topic which can allow for many positions and varying points of argument. It is a great topic in that it strikes at a core question for any country - what do we expect of the governments we elect?

Yet it is a conversation we are not having. At best we play at the margins, or debate specific issues and not the broader policy thrust and how the pieces fit together. We need to do better in 2012.

Role Call

There has been a lot of discussion in recent weeks about Stephen Harper's obsession with the Liberal Party of Canada; about his desire to see it marginalized. I think there is more to this notion than something purely adversarial.

While I agree that Mr. Harper exhibits an unhealthy obsession with his perceived enemies and strong tendency to tilt at windmills, I don't believe the destruction of the Liberals is his primary goal. From my perspective, his goal to re-cast the role of government in the eyes of Canadians.

He now has his chance.

Whether we like it or not, Canada is about the embark on a debate on the role of government. The combination of a Conservative majority and the fiscal health of the government has provided a unique platform for the Harper government to move forward on what has been the long-standing pre-occupation of the Prime Minister.

Never Let A Crisis Go To Waste

In a posting last year I wrote about how the steps the government took in 2009 at the height of the economic crisis and the ensuing fiscal challenge Canada faced would provide the Conservatives with an opportunity to get back to where they once belonged.

(http://politicswatcher.blogspot.com/2010_03_01_archive.html)

The deficit grew exponentially and the means/will of the government to re-establish equilibrium through the tax system was minimal. Tax increases were swiftly ruled off the table, and in fact cuts such as those to the GST had the effect of pushing the government into deficit before the economic crisis.

This left reductions in government spending as the principal means of balancing the budget. But such reductions are a delicate thing to manage when you have a minority government. Things have now changed.

There is Strength in Numbers

For all of his ideas, views and tactics, Mr. Harper never truly had the means to do what he has wanted to do. Yes, he has benefitted from a divided and weak opposition which has enabled him to reduce the GST and pass the corporate tax cuts. Consider this step one.

Thanks to the acquiescence of a weak opposition the government's ability to be activist is now more limited. It would take either a tax increase (e.g. to the GST) or a roll-back of corporate tax cuts to deliver to the government the surpluses it needs to be more active in the lives of Canadians without going into deficit.

Put another way, Mr. Harper has used tax cuts to tie his hands and those of anyone who follows him.

However, lowering taxes is one thing. The ability to reduce government spending is something altogether different. This brings us to today.

Unlike 2010, Mr. Harper now has the majority he needs (House and Senate) to get Parliamentary approval for his budgets. He is no longer dependent on the NDP, Liberals or the Bloc.

So where does that leave us?

1. The government has a deficit that the economy cannot simply grow out from.
2. The government has consciously and deliberately limited its own ability to use the tax system to raise funds.
3. The Conservatives now have comfortable majorities in the House and the Senate, with no federal election on the cards for four years.

Mr. Harper now has the means to get back to where he once belonged - to where he was when he was a Reform MP, and where he was as the President of the National Citizens' Coalition. Flowing from the points above, the only way the government can bring the books back into balance is to limit spending.

Transfers to Canadians are off the table, as are apparently transfers to provinces. What does this leave? Which government programs and activities are on the table now as possible candidates for cuts or elimination?

The Role of Government

I don't think Mr. Harper maintains a strict "wage war and sell stamps" view of the federal government. However, I don't think he is far from that view. My sense is that he is a strong believer in the division of powers, and as such favours actions which enable the provinces to be more active.

While I can understand the logic behind such a viewpoint, I struggle with the impact this could have on our sense of nation.

My personal view is that federal government has a unique and important role to play by thinking of the whole; by seeing Canada as the sum of its parts. The provinces are not burdened by this responsibility, and therefore will understandably act in their own interests.

However, the federal government needs to be more than just a side of the ledger in the division of powers; it is the Government of Canada and needs to act as such. When the current government considers its role and the role of government, my hope is that they move beyond an "us" and "them" mentality, and towards a role more rooted in partnership and co-operation.

***

Opportunity is a funny thing. To be truly realized, it requires not just an idea or notion, but also the means to act. Stephen Harper now has both in his possession. What will he do?

Will he be guided by ideology, or he will he be guided by a broader sense of Canada and how we work best when we leverage the sum of our parts?