Harper reaches the age of major-ity

The prime minister promised major this and major that in Davos

by Paul Wells

The prime minister spoke in Davos today and promised major this and major that. A highlight of his remarks:

“But we will do more, much more. In the months to come our Government will undertake major transformations to position Canada for growth over the next generation.”

This continues a trend we’ve been following here at macleans.ca, and perhaps it’d be good to sum up the story to date.

1. The problem. I identified it in this blog post from December, on Harper passing Diefenbaker to become Canada’s 9th longest-serving prime minister. “Harper has already had an influence… Now he can start to make a difference comparable to anything Pearson and Diefenbaker made. If he wants. Harper’s (first?) coveted majority is already seven months old.”

Those sentences required no insight. They match what I was hearing, including from Conservatives, at the end of 2011: Uh, what’s the plan? As the anniversary of Harper’s May 2 majority election victory approaches, it’s still far from clear why he wanted this mandate. You see that uncertainty in this column from early November, when I asked a Conservative staffer whether a throne speech with a bold new vision would mark the New Year. ““Currently, you’re making that up,” my annoyingly anonymous source said. “But boy, would that ever be awesome. God, that would be great. Can you make it true?”

2. The windup. Harper gave year-end interviews in which he used the word “major” five times to characterize his plans. He even told CTV he’s seen “too many majority governments” fall asleep and get nothing big done. That led to this column, in which I asked what he has planned that tops repatriation, Canada-US free trade, or the Clarity Act.

3. The frame. Ten days ago Harper ostentatiously sent a letter to his caucus, laying out “tough, important choices” the government must “make with the Canadian people.” Wait, did I say “laying out.” I met “referring to.” So I asked what those choices might be.

4. The choice. Harper told his Davos audience (link above) “Canada’s choice” will be, “with clarity and urgency, to seize and to master our future, to be a model of confidence, growth, and prosperity in the 21st century.”

Like you, I’m saddened that the opposition parties will choose to oppose all those good things, or at least to pursue them in a manner that shuns clarity and urgency. But never mind. What’s clear is that Harper has been working toward this for several weeks; that he thinks it’s big; and that the agenda for the next, say, three months of government action is hinted at in that speech. The throne speech, to the extent we’re going to get one, was delivered today in Switzerland.




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Harper reaches the age of major-ity

  1.  Harper was giving his State of the Union speech to our owners.

  2. Like you, many  will be saddened that so many of the rest of us will oppose these changes. I am wondering when he will make a move that goes beyond the pale of what is acceptable to Canadians overall even members of his own party.
    Raising the Old Age Pension age will hit a lot of poor women very hard. They are our mothers and sisters, and friends and will stay in poverty two years longer. More women in their mid sixties are penniless and single than men in their mid sixties. 
    That’s a big two years. 
    Boy the Old Age Pension was the first of the socialist welfare state programs  in this country. As I recall Dief (imagine!) won a lot of votes by raiding the pension.

    • Sorry raising!!

    • European countries have been busy increasing the age of retirement. Given the increasing life spans of people and the approaching retirement of the boomers, it’s a given that one of 3 things must eventually happen in Canada:
      1) the age of retirement will increase, or
      2) taxes on workers will increase to fund ever increasing life spans of retirees, or
      3) a combination of 1 and 2.

      This *will* happen. It cannot not happen as we live longer and longer, and the ratio of  workers to retirees continues to decrease (unless perhaps productivity suddenly decides to increase at an astronomical rate).

      Note that #1 has already started to happen in a very limited sense in that relatively recent CPP changes mean that folks that start collecting CPP before 65 face a larger benefit reduction than they did before. This will just get worse.

      • Good post, Jim R.   I find it supremely ironic that the Dippers, Liberals and assorted Harper-haters who dominate these comment boards repeat this mantra that the Conservatives are “anti facts” and “anti-science”, etc. etc.  Yet it is an undisputable, scientifically proven FACT that we are all living way longer than we used to when these programs were originally designed.  It seems to me it’s these “progressive” Harper haters who want to ignore the facts here and keep their heads jammed in the sand.  Something’s gotta give here.  At least the Conservatives are acknowledging that fact. 

        • except for the FACT that Harper is the biggest spending PM in Canadian History. Or the FACT that cutting taxes and the GST are major causes for our current situation. Or the FACT that a full 1 in 4 dollars of our national debt have Haper’s ugly face on them.

          People living longer is not the root of the problem.

          • Fact:  you’re not going to fix the huge demographic problems that we have just by hiking the GST back to where it was.  And by the way, can you point me to a major Canadian federal party that proposes raising the GST? . . . I didn’t think so.  I was opposed to the GST cut, by the way. 

            Harper’s stimulus program was supported by the Liberals and the Dippers and the BQ.  Can you point to a major Canadian federal party that opposed it? . . . I didn’t think so.

            So your solution to this problem is . . . what, exactly?  Keep our existing retirement expenditure programs exactly as they are?  Do nothing? 

    • The Canada Pension plan was conceived in a time when people did not live as long as they do now, and when the fiscal scope for government action was considerably broader than it is now. Is raising the age of eligibility really “beyond the pale”? 

      Frankly, if you look at who faces challenges in this country, it sure ain’t geezers. We’ve got a government-driven housing bubble in this country. For old people that means equity, for young people it means high rent and no chance of owning their own home. Youth unemployment is about 80% higher than the national unemployment rate, as a good proportion of this generation is being shut out of job opportunities. Today young people aren’t getting jobs because the economy is bad, tomorrow it will be because they “have no experience” (gee I wonder why). 

      What is more, the vast majority of expenses in life are front-loaded. People in their 20′s and early 30′s are starting to raise families (which is kind of more important for the future of this country, than ensuring the viability of the catheter industry). When we siphon off money from productive young people to unproductive old people, we discourage some from having families, and make it harder for others. Our tax code, and social policies should – if anything – work the other way. Any 65 year-old today has experienced an unprecedentedly fortunate work environment throughout their life – real GDP per capita increased by about 354%. Should young, productive taxpayers really be underwriting those that failed to plan for their own futures? 

      The proper role of government should be to provide public goods. What is the positive externality to society of sending money to old people? There is none (the main social good provided by old people is their role as grandparents, which, ironically, they would be more likely to perform without the CPP, because more would live with or near their children). Seniors should count their blessings that they get even a penny from the state for doing nothing. 

      • If you instill this attitude in your children, they’ll be plotting to put you down by the time they exit high school. 

        • A vapid response, but at least it’s mildly humorous. 

          Think about what we’ve done to a traditional structure that worked fairly well. I want to see much closer bonds between elderly parents and their children. For most of human history, grandparents were caregivers to grandchildren. What we’ve done is created the notion that grandparents should live apart, and provided subsidies (the CPP) to make this feasible. 

          And then we talk about the need for government sponsored childcare spots… or the difficult tradeoff faced by career women that juggle their desire for children with their professional goals… or how demanding it is on one’s time to raise children… all while elderly people live a lonely existence, chatting to telemarketers because their kids never call. Grandparents as secondary caregivers just make sense.  

          We took a modest problem (a few seniors are poor), threw money at it, and created much larger problems, both fiscal and social. Old people shouldn’t starve to death, but I don’t see the purpose of a massive entitlement program (why provide CPP payments to rich seniors?), either – particularly when the age demographics underlying its conception no longer apply.  

          • “why provide CPP payments to rich seniors?”

            Uh, I think that you just proved your ignorance of the retirement system with that comment. CPP comes to everyone, because everyone pays into it, and benefits are capped. You collect the maximum only if you work for a full 40 years at max salary.

            If “rich seniors” are having about $7000 (max) in CPP added to their annual income, they are probably being pushed into a higher tax bracket, meaning that they are essentially paying back some of that money.

            The program that keeps “old people” from starving to death is Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). You get the GIS only if you in real poverty, and the OAS benefit declines with increasing income, until at about $50K in overall family income, a senior gets no OAS at all. (All figures above approximate.)

            There may well be other ways to better help seniors, but telling people that they’re not entitled to a program they paid into for up to 40 years is not the way to go.

          • “There may well be other ways to better help seniors, but telling people that they’re not entitled to a program they paid into for up to 40 years is not the way to go.”

            But why is the CPP some sort of special commitment – immune from fiscal consideration – while other government programs are not? What is the practical distinction between paying taxes for say, healthcare, for 40 years versus paying “into” the CPP? We all know that the government treats CPP as a piggy bank, and that benefits are set based on political consideration, just like any other government program. We all know that any CPP deficit will be funded by taxpayers, and that there is no reason for current contributors to expect there to be a mathematical relationship between what they contribute and what they will get (because both benefits and contributions can be changed arbitrarily). 

            So why can’t we discuss social security on its policy merits. What public goods are provided by the program (the one reason I thought we did it – keeping seniors from starving in the streets – doesn’t actually seem to hold, as you’ve pointed out)? Why are the taxpayers of this country being called upon to fund the program? Why can’t we cap benefits for some seniors (eg. rich ones*) just because they’ve paid into the program – we don’t mind that, for instance, people with no kids pay taxes to cover education, and healthy people pay for public healthcare? 

            *Incidentally, you betray a rather limited knowledge of tax brackets. Income taxes work at the margins. When you “jump up a bracket”, the higher rate only applies to the new income. Moreover the marginal rate tops out at about 46.41%. 

            **Also among seniors, net worth is probably a better indicator of how well-off they are than their income.  

          • _____

          • _____

          • Oops. Put the reply text in the wrong place to get it published.

            “But why is the CPP some sort of special commitment … We all know that the government treats CPP as a piggy bank… We all know that any CPP deficit will be funded by taxpayers”

            Uh, no. Wrong again. The CPP is fully funded *by its contributors* out to at least 75 years at current contribution levels. The fund assets are managed by an investment board, and the fund itself (currently in surplus) is completely independent of Parliament. All workers pay into the fund from their earnings; all retired workers are entitled to collect their regulated pension. “Taxpayers” have nothing to do with it. Also, you show that you have no grasp of the policy behind the CPP. It has nothing to do with providing an income to seniors per se. Rather, it was established to help workers in jobs that have no pension program — which lately represents more and more jobs.

            “Incidentally, you betray a rather limited knowledge of tax brackets… When you “jump up a bracket”, the higher rate only applies to the new income … [topping] out at about 46.41%”

            Now you’re just trying to chest-thump because you were caught with your pants down. Where did my reply give the slightest indication that I had no grasp of marginal tax rates? All I said was that, as a person’s
            income rises, they will be giving back a larger portion of their CPP. If
            you’re at the top of level 1 after all your income and deductions, and
            you move to level 2 because of CPP on top of that, then most of your CPP
            is being taxed at the level 2 rate. Remember, it was you who complained
            about “rich seniors” adding unduly to their income.

            Given that you’re evidently clueless about the nonexistent “taxpayer
            involvement” in the CPP, there’s not much point addressing the rest of
            your arguments, which mostly rest on that foundation. However, I will
            point out that the current Government has, in fact, already cut CPP
            benefits to those who might want to retire early. They lowered the
            percentage payable to those retiring between 60 and 65, and they raised
            the rates for those retiring between 66 and 71. So some low-income
            Canadians have already seen their potential retirement income reduced,
            while those “rich seniors” who can afford to wait to collect their CPP
            can make out like bandits. Typical CPC thinking.

            _____

          • There’s no “reply”option on your comment lower down. 

            First, if the point of the CPP is to provide pensions for people in jobs that do not provide pensions, why are all workers eligible for the CPP? Moreover, what are the positive externalities of doing so? 

            Second, the CPP is NOT fully funded. It operates on a hybrid model, partly relying on “pay-as-you-go”. If the investment board’s fund is worn down, then contributions will have to rise, or benefits will have to fall. The CPP investment board has 150 billion dollars, which is clearly less than the sum of all contributions by current and future retirees (moreover, in 2009 the CPP board assets had a -18.6% return – how many of those sorts of incidents can it survive). 

            Third, CPP premiums are a tax. If you exceed the maximum contribution, then you are paying into a system and not getting anything back. Moreover, the government can (and has) changed benefits, or the age of eligibility or even end the program, so it isn’t an entitlement in a legal sense. That is not meaningfully different from taxation. 

            But it seems like you are primarily interested in playing semantic games rather than defending the program itself. 

  3. “I’m saddened that the opposition parties will choose to oppose all those good things, or at least to pursue them in a manner that shuns clarity and urgency”

    Couldn’t agree more! This story pretty much sums up the complete and utter uselessness of our current opposition. They’re opposing changes when they don’t even know what they are! 

    But I guess we won’t be having an election for a while, so the opposition thinks they might as well just bray about everything, and continue calling Harper evil (that’s been working REAL well for them for the last 6 years, hasn’t it).

    • Our main opposition parties seem to stand largely in favour of one thing:  maintain the status quo in all matters.

  4. PW is not a tory toady…there got it right his time Phew!.

    Something big, major eh. Well this is coming up – http://www.youtube.com/watch?v=fyrVl0AMS4c&feature=related 

    What’s happening to Mr H? Has he caught the Martin PM syndrome – too many priorites. Not as easy making choices as it is enemies eh Steve?

    Not to worry you should be able to go after the new ndp guy soon enough. I’m going to make a small wager[ which i fully expect to lose] that Harper’s majority is going to be all sound and no fury, maybe even ending in a whimper.

  5. Ya, why don’t we just have everyone retire at 35! The concept of a sustainable pension system doesn’t matter, we’ll just punt it to future generations, and let them handle the problem. Right? 

    It’s this mindset that has so many Western nations on the brink of bankruptcy. We demand everything from our leaders, and demand that nobody has to pay for it. It’s completely illogical, even a 5th grader would realize that it’s impossible. But, entitlements over logic, always!

    • Yeah, wars have nothing to do with it.

    • You make an issue up (that everyone wants to retire at 35), and then say that’s the big problem affecting “so many Western nations.”  Please identify which Western nations are struggling with your make-believe issue?  And then, richest of all, you lament a lack of logic…

      • Umm, Italy, for starters?  Like, do you even watch the news these days?

    • But questioning the cost of the F 35 is off the table.  Maybe we need to get the fifth graders in on this.

      • Without getting into the non-monetary aspects of the F-35 purchase, I believe that the cost often quoted is spread over a long time with the result that the annual cost is under a billion dollars. With a budget of $276 billion, this represents a very small percentage of annual spending.

        And *if* one accepts that we need fighters of some sort, then it’s not possible to totally eliminate this cost, only to maybe reduce it.

        I’ll leave the question of whether we need new fighters and whether the F-35 is the right jet to others.

        • ‘Fighter-planes’ have been obsolete since ICBMs were invented.

          • In that case, someone forgot to tell NATO, Russia, etc.

          • Russia has ICBMs….we don’t.

            NATO is a lost organization frantically looking for a role….and so far they’re losing.

            ICBM’s will be over us, before ‘fighter jets’ can even ‘scramble’

            Stop wasting money on WWII thinking.

          • “NATO is a lost organization frantically looking for a role….and so far they’re losing.”

            Yeah, they accomplished no good whatsoever in Libya.

            Ooops, scratch that last bit . . .

          • @865444ea1a3aec1b5f1890dd40359673:disqus 

            Please stay out of conversations you don’t understand.

            Thanks.

  6. A new category of Con nonsense – the straw herring.

  7. I don’t know about Harper, but this Wells is a funny guy.

    • Harper certainly isn’t funny.

      For an economist, I would say he should go back to year 1 economics.

      A free trade deal with Europe when their economy is headed off a cliff is a sure recipe for disaster for the average canadian worker (knowldege and production).

      The slack capacity in europe will be dumped in Canada and the average worker will suffer.

      The only people who will benefit from this policy in the short and medium term are those who own desireable goods in Canada (i.e. those who own natural resources).

      Harper should have stayed in the mail room.

      • So we should do less trade with Europe because their economies are hurting, in the hope that when they rebound we’ll be able to reap the benefits? Should we kick them when their down too? I’m certainly glad that you’re not a friend of mine!

        • What benefits at this time, and with Harper negotiating, do you think we’ll see?  I’m looking for cheaper prices on European cheese, what do you think the chances of that are?

          • We’ll have more access to European markets. That seems like a benefit to me.

  8. Harpercrite hypocrisy :gives speech of austerity and plans to attack pensions while planning to waste tax payeers money on military jets and prisons we dont need .

    • Thanks for that post from the Liberal War Room.

  9. Cheeky little article from DAVOS in WSJ

    “Canada Locates Itself High Up the Food Chain

    Canada is well represented at this year’s World Economic Forum meeting here in Davos, Switzerland.
    The nation’s finance minister, James Flaherty, already has spoken. The prime minister, Stephen Harper, is due to speak later Thursday.

    But perhaps the biggest coup for Canada is a little stand doling out what promote-government folks are calling a national specialty. It’s not just that the fried-dough based delicacy called BeaverTails look quite tempting. It’s the location of the stand, just outside the Congress Center, where the weighty meetings are taking place, and en route toward the Steigenberger Belvedere Hotel, the posh offsite spot for the powerful to mingle and stay.

    A bit more bout BeaverTails. No beavers involved. The doughy concoction presumably resembles a beaver’s tail. And beavers mean Canada. Atop the fried dough resides sprinkled brown sugar. Bananas or Nutella, a hazelnut spread, can be added

    Taking no chances on subtlety, two members of the Canadian Mounted Police, dressed in their can’t-miss red uniforms and distinctive head gear, stand outside the booth where the BeaverTails are being dished out.

    The Mounties are prepared to take a photo with you, while the friendly Canadian government folks fill you in on why Canada is open for business.  The government representatives will happily discuss corporate tax rates, the nation’s strong banking system and the like.

    As in real estate, in stimulus-overload Davos during the WEF confab, location is all important. The Canadians have it.”

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