Budget ’09: This ain’t Right

Solberg: “I know government needed to escape to fight another day. But I’m worried that the price may have been too high.”


How’s this for a Conservative nightmare? Billions to new regional-development programs, failing industries, employment insurance, social housing, and, ahem, the arts? Millions for a train to nowhere in northern Manitoba? Another $12 million for Quebec cruise ships? In B.C. and Alberta, mayors and premiers also went home happy. In fact, in western Canada, some of the loudest complaints about Stephen Harper’s budget are coming from within the fold. “The Conservatives escaped to fight another day, but what are they fighting for?” former Tory Cabinet minister Monte Solberg wondered yesterday in Vancouver. The Conservative stalwart, who likened Harper’s “dripping red” budget to a “terrible phantasm,” unleashed to “torment” conservatives, worries that Harper has “sacrificed balanced budgets on the alter of political expediency.”

The right-leaning Fraser Institute is also unimpressed. “Irresponsible,” concluded Vancouver-based senior economist Niels Veldhuis, slamming the budget’s “special-interest spending” and “activist economic development policy.” Worse, Veldhuis likened the document to the 2005 Liberal budget: “the attempt, by Paul Martin, to satisfy everyone that, in the end, satisfied no one.” (Indeed, he said, the only difference between it and Harper’s new budget is that Harper’s comes with a “huge deficit.”) “This is not an economic budget,” says Veldhuis. “This is a political budget.”

“I know government needed to escape to fight another day, says Solberg. “But I’m worried that the price may have been too high.” He gives the Tory base six weeks before the sheen of the stimulus package—the across-the-board tax cut and support for home renos—wears off. “There’s no question this was a rush job,” says Solberg. “And there’s no question that taxpayers will pay the bill.” Some of his former colleagues in the house “certainly” feel the same way, he says.

Solberg admits the big-spending, return-to-deficit budget was no doubt painful for Harper. “He’s instinctively conservative: this wasn’t easy for him.” Now an armchair quarterback, Solberg commends the prime-minister’s “charm offensive,” complete with props—“rolled shirtsleeves,” for example—and for trotting his ministers across the country to sell the budget to Canadians. But there’s a bigger question than whether or not Canadians buy it, he says: Will it work? “Adding $20 to $30-billion in spending to a $1.6-trillion economy? I’m not sure it’s going to make a big difference. A lot of this won’t roll out until the third or fourth quarter of 2009, or even next year, when we’re projected to be in recovery.”


Budget ’09: This ain’t Right

  1. Wow at first as a Conservcative at first I was disheartened but the more I look at some of the responses and who is making them the more confident I am that we must be on the right track. Hmmmm! – personally I think that the article in the Embassy mag had it right :In November, Canada and other G20 countries agreed to do what they could to stimulate their economies. When “incremental funds from other orders of government” are added to the package, the document says, “Budget 2009 will provide or 1.9 per cent of GDP, in support of the Canadian economy in 2009 alone.” Canada’s stimulus package is considerably larger than European and Japanese packages, which come in at around one per cent of GDP per year, but is considerably smaller than the nearly three per cent of GDP spent on stimulus in the United States.

  2. Wait, so is Monte Solberg now leading an anti-Harper wing in the Tory party, or has he been sent to reassure fiscal conservatives that it’s all a game? Either way, that’s some pretty energetic criticism of your own party’s budget.

    • The “energetic criticism” is oh-so-richly deserved. Please remember that many people joined or supported the Conservative Party of Canada because they were, well, what’s the word, conservative. When your own party abandons its principles and damages the country’s future in the process, how quiet can you expect to be?

      I suspect we haven’t seen the last of this internal head-shaking.

      • I’m sure you’re right; it’s just so unusual to see any dissent on the Tory side that Solberg’s very public comments rather amaze me. Will this budget expose caucus fault lines?

        • Will this budget expose caucus fault lines? One can only hope. This abomination deserves some kind of punishment.

  3. From the this-is-why-I-will-never-be-PM department:

    My fellow Canadians. This is going to hurt. The developed world is in economic trouble, and we will be hit by it, too. People, businesses and governments in so many developed nations have borrowed so much to create a fantasy of wealth. Not real wealth. Fantasy wealth. Just like the Nortel bubble, that fantasy is about to burst. People, businesses and governments are about to discover that economic cycles are called cycles for a reason. Any rational look at the state of the world tells us it’s time for the downturn. Sadly, so many developed nations’ governments have decided that the only way to lessen the pain of all this insane borrowing is to borrow a whole lot more, a whole lot faster. Canadians understand that you don’t cure insanity with still more of the same insanity. You don’t bring a gasoline truck to a refinery fire.

    I believe that most Canadians are justifiably proud of the efforts they have contributed under many recent Canadian Governments — Progressive Conservative, Liberal and Conservative — to finally turn around the harmful excesses of earlier decades. First by slowing the growth of the deficit that was spiralling out of control, then by getting non-interest expenses to be less than our revenues, then by getting all expenses to be less than our revenues. For the last [Y1] years we have been able to see a slow but steady decline in our insane level of federal debt. Prime Minister Chretien and Finance Minister Paul Martin were presented with no other choice give the dangerous debt load the country faced, but they deserve immense credit for making the right and tough decisions at the time, for the good of the country and its future prosperity.

    Today Canada is in the most enviable position in the G7, G8, and G20. Because Canadians have sacrificed to get there. Paying off the last generation’s bills has not been easy, and it has not been fair. But it had to be done. And we should all be very proud that, over the last [Y2] years, our debt has fallen from [D1] billion to [D2] billion dollars, meaning from [P1] per cent of our Gross Domestic Product to [P2] percent of GDP.

    This has been a tremendous achievement. The pace of this improvement will have to slow down, however, and will likely reverse slightly over a year or two.

    Our tax revenues will naturally go down in the next fiscal year, and probably the one after that. There will be less economic output, so less tax will be collected. Our automatic social support expenses will naturally go up in the next fiscal year, and probably the one after that. Canada has an extremely generous collection of social supports to lend a hand to those who most need it: from social housing to welfare to employment insurance to public support for health and education. Canadians who need help through these tough times will not be abandoned.

    Already Canadian taxpayers have helped shore up the banking system to prevent a catastrophe that developed internationally. You will be pleased to know that our banks are actually extremely healthy, and with this extra support from government, primarily in loans that we expect to be fully repaid, our banks should weather this storm very well. Your chequing accounts, investments and mortgages are in good shape.

    We have heard so many calls for a massive so-called stimulus package to get money out the door as fast as possible, to help artificially re-inflate an economy that had grown too big to begin with. My friends, we still have a massive debt load. We do not have money to just throw out the door as fast as possible. Besides, the faster you try to spend a lot of money, the more likely you’ll spend it on regrettable and wasteful projects. This we will not do. When you borrow to spend, you are stealing wealth and prosperity from future generations; this is what we saw in the seventies and eighties, and we are still paying for those mistakes. We will not pass on more mistakes to our next generation. This government will not force yet another generation’s mistakes onto the next.

    We will have small deficits anyways, because the balance between tax revenues and social supports will wobble to the wrong side for a while. People will be out of work. People will spend less because of uncertainty. It’s going to hurt. Get prepared. If you have a job you’re likely to keep, good for you; keep working and contributing the taxes this country needs to function. We will do our best to trim waste and inefficiency in government, to be worthy of your contribution. If you will lose your job, support is available, invest the energy necessary to find work in the same field or to retrain in another field that may show promise and that interests you. Good luck.

    When the economy begins to recover — and that’s the thing about economic cycles, it will recover — Canada will be in the best possible shape to continue to modestly chip away at our load of debt. We must continue to find ways for government to do its best in providing services that only government can, to find ways to stay out of the way when it is not the best supplier of services, and to take as little out of the pockets of honest taxpayers as possible.

    Canadians have always risen to challenges before. This economic uncertainty is yet another challenge. We will not hide from its burdens by shifting them to our children. We will deal with them head-on, now.

    Thank you, and Good Night.

    • Well said/written (???) myl. I have been wondering for years why not one Con pol is capable of saying something similar to what you just expressed. It expresses conservative values which helps bring the centre more to the right and it makes people think about what they believe. The facts of life are conservative and we just need to get more people to realize it.

      • Yes it was well said. It’s the balanced sort of statement that a leader should make. Surely it expressed Liberal values, every bit as much as conservative ones. The facts of life are neither wholly con or lib.

    • Very well expressed, MYL. And I don’t see why it would hurt you electorally either. Our politicians have simply forgotten what honesty means, but I think Canadians would appreciate it if someone articulated the balanced budget position as directly as this. I don’t think they would punish them, even if they disagreed with them. Plus, those who disagreed with the position would have a sense of what they’d be voting against, which would help our democracy tremendously.

      No one has come out of this budget looking good; moreover, everyone looks like a borderline liar. You have Harper reversing himself 540 degrees from the FUFU; you have Ignatieff unable to agree with and unable to disagree with the budget; you have Layton concocting reasons why it’s not “enough” stimulus; and you have Duceppe reduced to the bare rhetorical minimum of “it’s not good for Quebec” (for unspecified reasons). In short, the old lying rhetoric — sorry, did I say lies? I meant spin, chuckle chuckle — on all sides has been exposed as the empty wind it’s always been. I don’t know if I agree with you about fiscal policy 100%, but I wish your candour would catch on. It would make somebody PM overnight, provided that person had some guts.

    • Great! Two votes. Thank you for your support. I could use the $3.90 per year…

    • And, over two hours later, the movement’s ranks have swelled to — crickets. Sigh. Does this mean my percentages aren’t even high enough for the $3.90? Damn that undemocratic subsidy anyways.

      • 3 votes!

        • And one yawn. The debt load is not massive.

          • Really, Sis? Glad to hear it. Please tell us all: just what would be the “right” amount of public debt every new Canadian should have on his or her head once the umbilical cord is cut? Or, if it’s tricky to come up with a dollar figure, maybe you could share with us your thoughts on the optimum portion of public tax revenues that should get sucked up by interest payments? Sounds like you feel neither figure is large enough. So, then, how high would you have us go?

            And then, the next questions: Do you have any kids? Do you love them?

    • Small government & balanced budgets were a basic tenet of the Reform party, which is only one subset of conservatism. They aren’t terribly important to PC/Tory types or neocons.

      Ideology doesn’t reduce government waste. Competence & a good operating plan do. In the last few years, we’ve only been offered ideology. Nobody’s campaigned on competence. Harper never actually had a job of any kind before becoming PM, so it’s not surprisingly that he’s acting like a kid who went to grad school on daddy’s money & thinks he knows more than people who’ve spent time in the trenches (okay, cubicles). Dion has run departments. I’m not sure what Iggy’s actually managed.

      There are certain simple things that could be done. Stop the practice of reducing a manager’s operating budget if he comes in below it in a year. Hold his budget steady, return the surplus to general revenue, and give said manager some sort of recognition or award for coming in below budget. You could reduce general operating costs a percentage point or two this way without actually giving anything up.

    • Quite possibly politically salable. At least for the first year or two until people start realizing that “on your own” doesn’t mean the poor and desparate just magically disappear, and that desparate people sometimes resort to desparate measures. The more desperate people there are, the higher the odds are that one of those desperate measures will end up affecting them individually.

      The problem with economic downturns are the feedback effects. People losing jobs make more people lose jobs, etc. Total collapse lies in that direction if the rebound is particularly bad (as this one promises to be.)

      While your perscription makes sense for individuals, individuals are not the public. Governments should spend big during economic downturns in order to cushion the blow. A softer landing means we’re able to get up sooner and begin moving forward again.

      The problem is that during the boom time, when the economy had room to spare, the Cons decided to ditch our surplus for tax savings that most people didn’t really need at the time. Jobs were plentiful, people had spare money capacity beyond their basic needs, that’s the time to cut government services (let the private market take them up) while raising taxes in order to accumulate large surpluses exactly for times such as this.

  4. NL_Expatirate: are you trying to tell us that with the oil and gas revenues soaring in NL, that they still need as much “re-distributed” tax money from the FEDS? Ontario has been hard hit by the losses of many blue collar / industrial jobs, and the corresponding reduction in taxes has caused Ontario to actually be in need of more re-distributed tax $ themselves,k as they do have the largest population of the provinces.Danny Williams, is playing the politician who caters to popular sentiment, and Fed-bashing while he’s at it. Myself, I think our federal system is a joke, expecially when we alllow a separatiste party to hold the balance of power in the house – why do we allow any of them there anyway? In what other democracy do we see those who want to split being treated as normal members of gov’t and not as traitors?