ITQ heads to NDP caucus headquarters this morning for a pre-budget economic wonkfest, featuring the fiscally progressive stylings of various “high profile Canadian economists” – TD Financial’s Don Drummond, Lucie Lamarche from the University of Ottawa, pension specialist Bob Baldwin, and – of course – Mike McCracken from Infometrica.
C’mon, after all the griping we did about the closed-door consultations by the government, we couldn’t very well not show up, could we?
Well, after an initial misadventure in lost-gettingness that was only ended by a last-minute rescue by NDP communications, I’ve made it inside the caucus room, and it didn’t even require a misdirected email to get here. Pretty much the entire caucus is here already, as is Jack Layton, as well as a good number of party officials, Hill staffers and – I’m surprised by how many of this last group – members of the media. Well, camera crews, at least. We’ll see how many stick it out for the duration. Full disclosure: If they spend more than three minutes on full accrual accounting, I may be the first to crack.
StofferWatch: The NDP’s very own maverick is here and holding court with his colleagues at the back of the room – oh wait, he just scurried to his seat. There is absolutely no indication that he’s in trouble with the muckety-mucks. Make of that what you will.
And – it’s on! Judy Wasylecia-Leis introduces the panelists – who I can’t actually see, since I’m at the very back of the room – and tells us that this morning’s confab will go straight through til noon, so grab a coffee and get comfy. She then hands the mic over to Thomas Mulcair – who I’ve already buttonholed about the PBO’s latest salvo over the muffin tray – who gives a brief overview of the economists nervously staring at the crowd from behind their respective nameplates, and we’re off.
Don Drummond is up first, and he has – well, let’s call it a somewhat muted optimism on the Canadian economy, at least in the short term: things are likely to get worse seems to be the upshot, based on what we’ve seen so far. He does want to stress the importance of looking at nominal output versus real output when putting togethe a budget, because that applies to income and other factors of prime importance to governments. Also, the first rule of budget-making: never ever book asset sales until they go through, which elicits somewhat bitter laughter from the crowd.
Can I just describe the backdrop before getting back to all the nitty gritty economic projecting? The background is a mossy green, with a tiny, almost ethereally lit yellow outline of Canada at the top, over the words “Economic Panel – New Democratic Caucus Retreat”, and in the lower right corner, the Jack Layton wordmark, with the only splash of orange the maple leaf between the English and French translacronyms for NDP. (In French, it’s NPD!)
Okay, back to Don Drummond, who says that the budget does present opportunities – really! Even given the general allround crappiness of the numbers coming from even the most rosy-eyed private or public sector analysts – including investment in infrastructure, although that could turn out to be a disaster if the sole determining factor is how fast a project can get off the ground. Let’s not do what Japan did seems to be the gist of his advice – and he suggests that the perfect place to start might be refurbishing publicly owned buildings, which could be greenified.
Also, temporary tax cuts are a terrible, horrible no good very bad idea. In case you wondered.
Drummond elaborates more on tax cuts, and the incredible fiscal shortsightedness of thereof, at least without ensuring that lower and middle income Canadians will benefit, and not actually end up with less money.
Employment insurance “desperately has to be changed” – he’s not sure how it got so very broken, but it did. It is, in fact, “insane” – the rate was set using an economic forecast from last spring, based on all sorts of lovely numbers that are now utterly fantastical, which means the rate will go up even though the economy is sliding into the mire. Well, that doesn’t sound good at all, does it? I hope someone told the Finance minister.
Drummond closes with a few facts on auto sales, particularly energy efficient vehicles, and notes that there is still no incentive for people to fork over cash for greener cars – which is an opportunity, and, as David Plouffe said, never let a good crisis go to waste. He also takes on a few of the most commonly reported myths about welfare, which is a) provincial and b) not actually as much of a “trap” as those opposed to extending EI might suggest.
Enthusiastic applause from the caucus, and thanks from Mulcair for his “informative analysis.”
After what was apparently a charming, slightly self deprecatory introduction that I missed entirely because I was fiddling with the translator thingy, Lucy Lamarche promises to use her limited time to explain how employment insurance “wears two hats” in Canada. She’s one of those people who believes in social protection, she says – but she thinks it needs major reform, particularly the concept of exclusion.
Quebeckers, Lamarche tells us, came up with the brilliant idea of *social infrastructure*, which benefits female workers far more than the traditional groundshoveling concept of infrastructure. About 30% of women get benefits from EI, and they’re at a point where they’re almost exhausting their benefits. Women are more likely to be on the fringes of a plan like EI than men – not sure why that’s the case, but I’m sure she goes into it in detail in her research – and the only way to help them is to look beyond “classic” infrastructure.
Something I didn’t know (or, if I did, have forgotten it entirely): Women who aren’t eligible for EI are also ineligible for the “next phase” of assistance: training programs. Wait, why is that the case? That doesn’t seem to make sense at all — surely the system can handle two sets of requirements for eligibility, can’t it?
To bring this down to its simplest terms – to the enormous appreciation, by the way, of all livebloggers struggling to follow her presentation, Lamarche really wants the idea of “social infrastructure” to be part of the “spin” on the upcoming budget.
Okay, I take back my prediction that my fellow reporters would be fleeing in droves by the half hour mark – there are actually more of us here now than when we started. I wonder if anyone is covering it live, or if CPAC is still running highlights from last fall’s total collapse of Parliament.
Back in the seventies – oh, how many delightfully NSFW anecdotes begin with those words, although not, unfortunately, this one – anyway, back in the seventies, the government found that spending unemployment money solely on benefits doesn’t make sense; it’s just as important, if not more, to invest in skills development and training. Anyway, that led to the unions accusing the government of misappropriating the funds – well, not directly, but it was part of the problem – because there was such a marked shortfall between revenue and spending, and the government still needs to come out with answers on where that money went.
Lamarche wraps up, which means we’ve hit the halfway point as far as formal presentations. Next on the speaking list: Bob Baldwin, an expert on pensions and aging populations, who says he’s not here to make suggestions, but to identify issues. He also has overhead slides – way to raise the bar for the next guy, Bob – which have now been transposed onto the big green backdrop. Of which I should note the tiny Jackmark is apparently part of the template, which means that it is now gracing Baldwin’s bullet points.
Somehow, Baldwin’s last bullet – on the first page, that is; we’re not that lucky – which tells us that “the late 20th century had favourable economic and financial circumstances” leaves me feeling a little bit maudlin. Sometimes the past tense stings. “We have moved into a different economic environment,” points out Baldwin. Way to twist the knife, professor.
A “decreasing percentage of Canadians” are partaking in workplace pensions – more people working in temporary jobs or for wee tiny companies that don’t offer pension plans – as well as hybrids – no, not the car, or Manimal (who one hopes had the foresight to sign onto a goldplated pension plan) as well as “financing problems”.
I wonder if “financing problems” refers to corporate shell-gaming with workers’ savings, AKA But The Pension Plan Was Just Sitting There (tm Doonesbury, of course). Yes, yes, I’m paying attention to the speaker. I promise. Sometimes my mind just wanders.
New slide! “Declining coverage” – that doesn’t sound very cheerful either, although apparently, it’s an “opportune moment” to “enter the debate”. The debate about pension reform, that is. Don’t all leap out of your chairs at once!
Also, some people will tell you that the status quo is fine, but it’s not.
You know what’s a good idea when you’re giving a lecture on pensions to a bunch of somewhat easily distractable journalists and politicians? Not using acronyms that are only household names in households that include yourself and six other experts in the field. I’m just saying.
Some people – presumably not the same people as above – might suggest raising pension benefits, but that could have a detrimental effect on elderly people who already face high tax rates.
Okay, onto defined benefit regulation. Tally ho!
There are two important sources of risk that aren’t recognized in a private fund – where and what the assets are, and the creditworthiness of the plan sponsor. Hmm. Those seem like bad things to ignore, and Baldwin predicts that this might change, as governments will find it difficult not to take such factors under consideration when facing pleas for assistance.
And now, the man we’ve all – or at least those who were left baffled by the original title of this post – been waiting for – Mike McCracken! Mulcair breezes through the bio of a man who needs no introduction, at least in front of this crowd – who then leaps straight into his closing remarks, who starts by laying out some of the concerns that he would have had even without the economic spasming – social programs, nuclear power plants, income distribution, climate change. When you “think context”, at least from a budget-making perspective, you don’t want to forget about the more long-term concerns even if the focus is recovery from recession.
Yes, recession. We’re in a recession. Even the Finance minister has admitted it, McCracken points out. He has a low-key ever so slightly sardonic style that is going over well with the caucus.
Not everyone, McCracken recalls, was impressed with his prescience on falling oil prices: “I was nearly driven out of Alberta on a rail,” he recalls. But it happened, and in the short term, high prices do represent a tax of sorts on Canadians, and a painful one at that. Hey, you know what nobody has mentioned so far? The carbon tax! Wasn’t Don Drummond a fan? Maybe it’ll come up during Q&A.
Then there was “asset-backed commercial paper,” he recalls, which were supposed to have banks behind them, but that turned out to be not exactly the case, which left a bit of a mess, and the credit crisis, and subprime mortgages, and all sorts of other B-plots that eventually converged into the main story arc, leading to a really depressing season finale for the great reality show that is the United States of America (although tomorrow’s season premiere is still highly anticipated).
Okay, enough with the less than cheery present, on to the potentially non-sucky future! Which could be brought on by any number of measures, most of which have nothing to do with the upcoming fiscal package, which is a good thing, according to McCracken, because they’re unlikely to be there. Wait, isn’t that a violation of the first rule of alternate history?
Tomorrow, we will see the signing of a $400 million stimulus package in the United States; exactly a week later, the federal government will unveil a far more timid plan that will probably provide only half the money needed, and will likely set off a new round of acrimony with the provinces. Somehow, I think we’ve all come to terms with the end of the end to federal-provincial bickering. Anyway, McCracken would rather talk about the new president – and really, who wouldn’t – and how his polices may affect the Canadian economy. Oilsands! Pipelines! A throwaway line about how Quebec “will sell Newfoundland’s oil to anyone” as long as they get a cut, which brings on a deep chuckle from Peter Stoffer.
The possibility that Obama will “do something” on Cuba – something other than let the CIA come up with increasingly bizarre invasion/assassination plans, that is – could give Canada the perfect opportunity to play a greater role in relations within the Americas, and honestly, government, is that not enough of a reason to find a new portfolio for Peter Kent before this turns into a total debacle?
More about interest rates, commercial paper, depreciation – which does wonders for government revenue, since it affects corporate politics – all of which suggests that there is more to be done than tweaking employment insurance.
That doesn’t mean he doesn’t have ideas on how to tweak EI, by the way, although it seems to be the usual list: reduce the hours required, increase eligibility,
Oh, here’s something different: he also thinks we should reconsider barring “voluntary quits” from collecting employment insurance, since it takes away a legitimate option for workers facing unreasonable demands. I’ve never thought about it that way, but he does sort of have a point.
Loud and long applause for McCracken, although Don Drummond looks somewhat pained after that last round. This Q&A could be interesting.
Wow, this could take a while – the lines at the microphones are starting to snake around the back of the room, although in fairness, it *is* a relatively small room. I count six MPs on the left side and three on the right side – of the *room*, that is, not the ideological spectrum within the NDP, but I’m not sure if the first one up, who happens to be Yvon Godin, will ever finish his question, so they may not get to talk.
After Godin finally wraps up his tirade on the unfairness of the current structure of the employment insurance system, Lucie Lamarche takes the path of least resistence, and replies, “We agree.” Well, that was easy.
Moving on, Peter Julian asks McCracken to share “his insight and his humour” on the plight of the forest sector – way to put pressure on the guy to be funny – a request echoed by Libby Davies, who also wants to hear from Don Drummond on what we – we being politicians and the government in this case, I think – can do better to listen to this sort of advice.
Lucie Lamarche – who has to leave early due to a conflicting appointment – thinks we need to get our heads out of the eighties when looking at the main “client groups” for EI and training: women, singles, older singles – those are oft-overlooked groups that need more support.
McCracken calls on governmments to avoid “clawbackitis”; on the forest industry, he points out that there is much more domestic “action” in the sector relative to the auto sector. Wait, there isn’t much trade in lumber between Canada and the US? Really? I thought softwood lumber was a major export. Huh. China, however, is a market just waiting to be exploited. “Have you ever seen a tree in China,” he asks? Rueful chuckles from the room.
Ooh! Parliamentary Budget Officer shoutout from McCracken, who calls the latest developments “a wholesale attempt” to eliminate him, just like the Economic Council of Canada was killed in the 1990s.
Don Drummond starts off by lauding a few less well-known trainway initiatives, like Pathways Education, currently underway in Regent Park, which is apparently having an astonishing effect. He then throws a bit of a grenade into established NDP philosophy by suggesting that immigration – even skilled immigration – is not, in fact, the solution to a shrinking workforce; not under the current system, at least.
On the PBO, one thing that frustrates him now is the complete shutdown at Finance when it comes to releasing *any* information, which is why we now need a budget officer.
Not even the PM or the finance minister, Drummond suggests, seem to be able to get accurate numbers from the department, as demonstrated by some of the more inexplicable tax rebates in the last budget, which targeted things like Jamaican rum and rubber-tipped arrows.
Layton pipes up for the first time this morning to ask for more details about investment in housing; Drummond agrees that there is a gap – there are thousands of families who can afford $600-$700 a month – but he’s not sure whether mortgage deductibility is the answer. He’d like to see the budget “do something” on the environmental front, since industry still needs support for conversion.
Okay, maybe it’s just me, but Baldwin’s – you remember him, the pension guy – apparent penchant for the phrase “Anglo Saxon world” is — somewhat jarring. Also, I have no idea what he means. North America? Europe?
Don Drummond jumps in to offer *his* thoughts on the pension dilemma – he thinks increasing the benefits might be worth investigating – and Judy Wasylecia-Leis warns us all that there are just ten minutes late, so keep those questions short, MPs!
Peter Stoffer nearly caused a nervous breakdown in the simultaneous interpretation booth by forgetting to turn on his microphone, but apologizes sweetly; he wants to know what can be done to keep CEO salaries in line, among other typical Stofferish concerns. Irene Mathyssen, not unexpectedly, supports Lamarche’s call for investment in “social infrastructure” and gender budgeting. Olivia Chow wants to know more about the link between infrastructure spending and job creation, and also addresses the concerns over skills-based infrastructure, which she supports – but only if it is managed in a non-political way. Jack Harris – I think that’s who it is; he didn’t introduce himself and he’s not facing the media section, so I’m going by the accent – wonders what has happened to the money the government has already spent to buy back mortgages, and Charlie Angus wants to know if this should be a “staged” infrastructure program, and Nikki Ashton asks about you.
Whew. That’s a lot for the five minutes left in the session.
The relentlessly relaxed and laconic McCracken starts things off by looking at the differences between the Canadian and American economy; he’s a bit pessimistic about the prospect of gender budgeting taking off in a big way – not right away, anyway – but points to some ways that the upcoming budget could address related issues.
It doesn’t make sense to try to balance every single project, he points out – construction will continue to be a male-dominated industry for some time – but look at areas where spending could target women, such as schools and daycare, safer streets, that sort of thing.
Don Drummond doesn’t think much of the Finance committee, it turns out – not during the last Parliament, at least, when it was mostly just an excuse for MPs to blather on and get speeches on the record, and a waste of time for witnesses.
As for social infrastructure/gender budgeting, he thinks infrastructure investments should be made based on the best possible of return, and has little use for a flat tax. Smaller projects have the advantage of being able to start more quickly, and tend to benefit social infrastructure.
As for child care, the whole give-the-money-to-parents gambit was supposed to lead to more spaces being created; it didn’t.
Okay, I’ve become totally preoccupied by the witness nameplates, which – from back here, at least – appear to be far more high end than the folded-over cardboard that they get at committees. These appear to be clear green plastic, with the names picked out in white and, once again, the Jack Layton wordmark.
Bob Baldwin gets to close the panel down, to much applause, and the caucus is dismissed, with a reminder from Wasylycia-Leis that they’re expected to be back in their seats by 1pm. Meanwhile, ITQ is headed to the Hill to check on the *other* caucus meeting currently underway, which means we have to sign off now.