Maybe not the whole nine yards, but a few

ANDREW COYNE on the Speech from the Throne

That was one of the more economically literate Speeches from the Throne in recent memory, even at the cost of saying rather little (and taking rather too long to say it). But what was there was at least mostly in the right direction.

Throne Speeches are tricky things. Lines that seem innocuous turn out to be freighted with meaning. Momentous-sounding announcements turn out to mean not much at all, or never make it into legislation. A pledge to “reform and strengthen education,” for example — meaningless boilerplate, or the beginnings of a national education strategy? An “aggressive” plan to “close unfair loopholes” — a couple of technicalities of interest only to accountants, or wholesale tax reform?

Still, the general tendency of the Speech, at least in its economic chapters, was clear: smaller government, freer trade, less intervention in markets. If hardly a major change in direction — did anyone think that’s what “recalibration” meant? — it does signal the government is turning up the volume on some conservative economic themes that had hitherto been buried in the mix. The government can read the opposition’s body language as well as anyone, and can see they are not spoiling for an election. So it has taken the opportunity to steal a few yards for conservativism, without being unduly provocative.

Indeed, it’s an achievement of sorts that so much of the reaction to the Speech seemed to be in the ho-hum, is-that-all-there-is vein. For it contains at least a couple of potentially important policy initiatives. Opening the doors to foreign investment “in key sectors,” including — but not limited to — telecoms and satellites, is the most startling, even if it was telegraphed in advance. Not long ago this would have been considered a political third rail, and yet it seemed to occasion very little response from the opposition. Good: aside from offering greater choice and competition for consumers, foreign investment will be a vital source of the capital needed if Canada is to improve its dismal productivity performance — as it must, to pay for the coming wave of baby-boom retirees.

The other potentially significant development was the pledge to freeze departmental operating budgets. Again, this seemed to escape notice, with most commentary focused on the symbolic but fiscally insignificant salary freezes imposed on ministers and MPs. But a freeze on departmental budgets, depending how long it is in force, could mean quite sharp cuts in spending in real terms — not enough, certainly, to balance the budget on their own, but perhaps a sign of what is to come in the budget.

It had better. Despite the nod to restraint, the Throne Speech maintains the government’s official line that the budget can be balanced without either raising taxes or cutting transfers to the provinces and elderly. It’s true that you can grow your way out of a deficit, if you don’t care how long it takes: give it 10 straight years of growth, and even the worst profligate can balance its books. But the more leisurely the schedule, the greater the chances of a recession or other unexpected event wrecking all those pleasing fiscal forecasts. And of course, the longer you take to stop adding to the debt, the higher it climbs.

What we need is a serious plan to balance the budget in three or four years, that is within the usual economic or political cycle, coupled with a strategy to tackle the longer-term demographic challenge. That will certainly require either significant cuts in spending or substantial tax increases. I’ve argued it can and should be done by cutting spending. But whether it’s one or the other (or both), it can’t be neither.

A couple of other important omissions from the speech. On the plus side, there were almost none of the usual giveaways to politically powerful industries. To be sure, there was the expected list of shout outs to the forestry, fishing, and farming sectors. But rather than shower them with subsidies and special treatment, the speech proposed to help them by cutting red tape and opening new markets: what might be called “small government activism.” (The glaring exceptions: shipbuilding and supply management.)

More distressing was the absence of any mention of the economic union. To be sure, there is a pledge to press ahead with the creation of a national securities regulator, in place of the current provincial hodgepodge. But until lately the government had much more ambitious plans. A previous Throne Speech, in 2007, vowed to take aggressive action to dismantle provincial trade barriers if they did not do so themselves, if necessary by use of the federal “trade and commerce” power under the Constitution. The Conservative election platform in 2008 added a deadline to this commitment: 2010. Well, here it is 2010, and in a document devoted to competition, productivity and free trade there is no mention of the economic union.

Fine words, as they say, butter no supply-managed parsnips.

FOR THE RECORD: Here’s what the October 2007 Throne Speech had to say about the economic union:

Our government will also pursue the federal government’s rightful leadership
in strengthening Canada’s economic union. Despite the globalization of
markets, Canada still has a long way to go to establish free trade among our
provinces. It is often harder to move goods and services across provincial
boundaries than across our international borders. This hurts our competitive
position but, more importantly, it is just not the way a country should
work. Our government will consider how to use the federal trade and commerce
power to make our economic union work better for Canadians.

And here’s that 2008 platform commitment:

A re-elected Conservative Government led by Stephen Harper will work to eliminate barriers that restrict or impair trade, investment or labour mobility between provinces and territories by 2010. In 2007, the government announced that it was prepared to use the federal trade and commerce power to strengthen the Canadian economic union. Since that time, we have seen progress among the provinces and territories in strengthening the existing Agreement on Internal Trade. We hope to see further progress, but are prepared to intervene by exercising federal authority if barriers to trade, investment and mobility remain by 2010.

Maybe not the whole nine yards, but a few

  1. They should really get on with deciding the exact nature of telecom investment. Because while the government was busy twiddling its thumbs to avoid providing documents, there was absolutely no clear policy except for "it's OK this once for Globalive".

    • That's par for the course, Mike. They govern not by rule of law, but by whim of the PMO.

      It's capricous, unfair, and sets extremely dangerous, dictatorial precedents.. and, sadly, most Canadians are too busy trying to simply make ends meet to have the time to see what they're doing.

  2. Perhaps the ho hum reaction has less to do with a lack of concern about the direction than with complete cynicism that the Conservatives will actually do anything they say will.

  3. Good analysis Andrew and I agree the rug has only been inched a little from under the LPT's feet – see lots of references to jobs and innovation which sort of makes moot anything the lib's have said in recent memory – next stop the LPT will thinking a lot at the conference coming up – rofl! .. by the way Andrew I wouldn't be too harsh on the deficit if oil keeps ahead of projections as it has been and the new pipeline comes on line in awhile according to my numbers a surpise could be in order.

  4. Don't worry. Most of the items promised in this throne speech will be nixed when they either prorogue next December or call an election in the mean-time. Big and small l liberals can rest assured that this government doesn't intend to actually accomplish anything other than to keep the other guys out of power. Perhaps the MP pensions have something to do with it.

  5. While we're trying to butter parsnips, I think the proof will be in the Budget pudding.

  6. Thank you for devoting so much time to this, Andrew. It's *forcing* me to care.

  7. Thank you for not mentioning the anthem.
    Isn't it astonishing how completely the media including the Toronto Star on the front page took the anthem head fake or feint, the diversion, and the rest of the media especially radio/TV filled the whole 24 hours between Throne and Budget with pointless drivel letting the important stuff quietly settle into acceptance in our little brains?
    Brilliant PMO.

  8. I believe the words you'll be looking for when the budget comes down will be "Good Grief".

    No matter how badly you want them to be fiscally and economically responsible, it's never going to be true. Pretending it's their "hidden agenda" won't make it so.

  9. Eminently sensible, Mr. Coyne, to support spending cuts instead of more taxes. Hope your colleague Mr. Geddes is paying attention. His recent string of one-sided blogs promoting the "analysis" of the "must increase taxes" crowd, like T-D CEO Ed Clark and former bureaucrats like Clark and DeVries, utterly fails to take account of the Harper Tory's gross overspending (setting aside the recent sort-lived need for economic stimulus). Looks again like a Liberal government is our only hope to restore Canada's fiscal position to sustainability. Liberals once more will have to clean up the financial mess of another roll-the-dice Tory regime (remember Mulroney?).

    • Yes, the Liberals will "clean it up" just like they did before — with massive tax increases that kill the faltering economy. Want proof? Look no further than the current McGuinty Liberal government in Ontario — two of the largest tax increases in the history of Ontario after signing a pledge to not raise taxes. And Ontario is now a "have-not" province.

  10. Andrew, your relationship with the Harper government is both touching and sweet. Unfortunately you are playing Lucy to SH's Tony Romero. ( I know, I don't get the Romero part either.)

    [youtube dlzVDDSfeeA http://www.youtube.com/watch?v=dlzVDDSfeeA youtube]

  11. Andrew, your relationship with the Harper government is both touching and sweet. Unfortunately you are playing Lucy to SH's Tony Romero. ( I know, I don't get the Romero part either.)

    [youtube dlzVDDSfeeA http://www.youtube.com/watch?v=dlzVDDSfeeA youtube]

    • How dare you steal my joke?

  12. actually that bast%$d Wells stole it from both of us!

  13. Good analysis…. Andrew, I always enjoy your column and your comments on CBC

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