Maclean's Interview: Stephen Harper - Macleans.ca

Maclean’s Interview: Stephen Harper

The PM on embracing deficits and that dramatic week in Ottawa

by

Stephen Harper

Q: Over the last couple of months, through the formation of the coalition and proroguing of Parliament, what was the experience like for you? What did you learn from all of that?

A: Well, you know, in a sense it hasn’t changed the government’s plans. The plan was to pursue a budget as early as we could, early in January, and that’s what we’re going to do. I can say it’s been an interesting time—obviously there’s been a change in the opposition leadership as a consequence and so, you know, my great hope is it will lead us to some greater knowledge of what it is the opposition’s actually seeking in terms of public policy. We obviously have significant economic challenges in the country, we’re consulting widely on what should be in the budget, and what may be interesting out of all this is if we actually get some idea from the opposition what their economic priorities are.

Q: What are your priorities going into the new year? The campaign platform wasn’t really the same as the Throne Speech which wasn’t really the same as the economic update, and then the economic update was abandoned a couple of days after it was read, and now we’ll probably see something new in the budget.

A: Well, most of the measures in the economic update will be brought forward into the budget, other than a couple where we indicated some modifications, but the budget will once again be different because the reality is that throughout the fall we’ve been facing increasingly changed economic circumstances. We’ve been doing something unprecedented, which is not just consulting private sector forecasters on the economy but consulting them every two to three weeks, and every two to three weeks we have had materially different interpretations of the economic circumstances than we did the time before. So we continue to revise and update our plans to deal with those circumstances. I still think the underlying reality is that Canada enters this recession in a pretty strong position compared to most Western industrialized countries. We’re entering the recession later; all the indications are it will not be as deep here and we should be able to come out of it sooner. If you look around the world at what other countries are now doing, they’re things that Canada did over a year, year and a half ago, particularly some of the big tax reductions they’re talking about in the United States, and the sales tax cuts that Prime Minister Brown has bought in in Britain.

Q: So why do we need all this stimulus spending, and $30-billion deficits, if we’ll be able to ride this out in six months?

A: Well, the reality is that the situation is, notwithstanding all of that, still worse than forecasters were indicating three, four months ago, and we’ve got to make sure we don’t have a deep and prolonged drop in economic activity. So in our judgment, that is going to require fiscal stimulus. Obviously large-scale spending and deficits—even short-term deficits—are not something I particularly relish.

Q: Then why do them?

A: They are what is necessary for the economy now.

Q: You’re a better economist than I am, so I’m sure you’ve seen the studies on stimulus spending, and in almost every case when we have a recession and spend to stimulate the economy, the economy’s usually in recovery by the time the spending actually takes place. Governments just can’t be nimble enough to time the markets.

A: Those are very real risks. What I’ve indicated to the premiers, and what we’ve been indicating in our cross-country budget consultations, is we’ll be looking at short-term spending that will have very quick impacts, short-term budgetary measures that will have quick impacts. At the same time, we will continue to ensure we take measures to make sure that we control longer-term spending and that we’re able to come out of a deficit as quickly as we come out of a recession.

Q: I asked you about what you learned through the month of the coalition and all that excitement. Aside from what the opposition’s up to and what the opposition wants, what about the way you guys handled things? Are you happy with everything you did?

A: Well, you know, my own judgment is that what we really saw there was a continuation of a pattern we saw prior to the election—part of what led me to call the election—and during the election was the increasing opposition-for-the-sake-of-opposition approach of the other parties, and their increasing willingness to work together to do that. I think that reached a crescendo, and now I think they’ll obviously have to make some decisions: you know, are they serious in providing the government with their input on the economy? If they are, obviously we will take those things into account. If not, they’ll make their own judgments about how to go. I mean, our focus will be on what we think is best for the economy.

Q: But you don’t think you made a mistake or you mishandled your relations with the opposition?

A: Well, I think it’s always the right of the government to pursue what it believes is in the public interest. There were some measures—particularly the political subsidy measure—the opposition parties disagree with, but the government listened, and the government has decided to go [with] a freeze instead of an elimination. But make no mistake, the government believes that the elimination of these subsidies has to be done eventually, that that’s in the public interest.

Q: So it’s good policy but the timing is a political mistake?

A: Well, I guess that’s a conclusion you have to reach because we withdrew it. That said, it’s still the right policy, widely supported by Canadians.

Q: Are you going to come back to it then?

A: It will be part of our platform in the next election campaign. In the meantime we’ll put a freeze on these subsidies. I mean, I think it’s ridiculous that, at a time of economic recession, political parties are getting subsidies from the Canadian taxpayer that bear no relation to their own attempts to even raise money—that’s ridiculous. And we’re obviously disappointed there’s no willingness in the opposition to deal with that problem and to indicate, you know, that we’re prepared to lead by example from the top. We’re disappointed with that—the Conservative party would have taken the largest reduction of any party as a consequence of that policy—but that’s their decision. But I could go back: they’ve said that that’s not the reason they’ve done what they’ve done, and in fairness they did the coalition well after we indicated we weren’t pursuing that particular policy. So I do think, as I said before, that some of the opposition leaders are on the record saying this is in fact a plan that they had all along. We’ll see now, having seen public reaction, whether they choose, in effect, to recognize the results of the election, to accept that the government is the government, and to give the government their ideas about how to run the economy, or whether in fact they try to bring the government down. Those are the two choices before them.

Q: We have Stephen Harper now embracing targeted bailouts and large deficits. Is conservativism dead at the federal level in Canada?

A: No, we’re just dealing with the times and the realities we have. You asked about bailouts in terms of the auto sector. What we’ve done there is the only thing we can do under the circumstances. When a car is manufactured in this country, in North America, it crosses the border several times in assembly. It’s integrated in all aspects from the beginning of production to the marketing stage; it’s a completely integrated industry. The United States is engaging—is going to engage—in a government-directed restructuring. Either we participate in that in some way, or the industry will be entirely restructured out of Canada and we will lose 500,000 jobs in six months.

Q: Are you going to do any other industries besides the auto industry?

A: Obviously the government’s preferred approach, as you know, is not to provide direct assistance to industry unless it’s necessary for competitive reasons. Our preferred way of going is to invest in public infrastructure, to keep taxes low, business taxes low, [to keep a] competitive environment.

Q: But it’s too early to say it will stop at the auto industry?

A: We have to be pragmatic. We have to handle each problem according to the reality we’re in. In the auto sector I think everybody who’s looked at this seriously knows we’ve done the only thing we can do here.

Q: Do you think it’s fair to say that the big-spending liberals of Canada and North America are taking advantage of the political situation to drive through more of their ideological agenda?

A: Well, look, this is a risk. First of all there’s nothing—I should be clear—there’s nothing unconservative about running deficits during a recession. There’s actually pretty strong economic theory that would indicate that you don’t start raising taxes and reducing government economic activity during a downturn, but what we’ve got to be sure of as we enter a deficit [is] that those spending measures are short-term and that we’re in a position where, as the economy recovers, we move back into surplus. And obviously the risk the government faces is that this becomes an excuse for permanent long-term spending that is, in fact, not stimulative, it’s just simply big government that becomes a burden on the economy. That is a significant risk, which is why I think it’s important to have a Conservative government managing this kind of program.

Q: You did a lot for Quebec as prime minister—expanding its role in foreign affairs, recognition of its nationhood by Parliament, and [providing] billions to answer the perceived fiscal imbalance between Quebec and the rest of Confederation. And then during the election the province effectively turned on you over a minor issue of arts funding. What’s your plan in Quebec now?

A: Well, first of all I’m not sure it was that simple. We did hold our vote in Quebec and held our seat gain from 2006 which was considered a historic breakthrough. Obviously we would have liked to do better. But look, the government will continue to do what it believes is in the best interests of the country. Where there are things we can do to accommodate Quebec nationalism within a united Canada we’ll do them, and that is consistent with the Conservative party’s historic philosophy of federalism. When it comes to things we think are not in the interests of the country—spending that’s inefficient or, quite frankly, doing things like offering a governmental role to separatists—obviously this party will not do that.

Q: Will the government amend the Canadian Human Rights Act to prevent unwarranted interferences in free expression by human rights commissions?

A: The government has no plans to do so. We’re certainly aware of the issue. My understanding—we’ve been monitoring this closely—I think you’ll actually see there’s been some modification of behaviour on the part of the Canadian human rights commissions. The most egregious cases right now are mostly at the provincial level. And it is a very tricky issue of public policy because obviously, as we’ve seen, some of these powers can be abused. But they do exist for valid reasons, which is obviously to prevent public airwaves from being used to disseminate hate against vulnerable members of our society. That’s a valid objective. It’s probably the case that we haven’t got the balance right, but I’m not sure the government today has any answer on what an appropriate balance would be.

Q Tories are doing well in the polls right now—you’re as high as you’ve ever been—but I don’t think there’s been a leader of a federal party in Canada who improved his standing in Parliament with an election during or right after a recession, and I also don’t think there has ever been a leader who won a majority on the fourth try after not achieving one in the previous three tries. What are the odds of a Stephen Harper majority, especially in this economic environment?

A: Look, I’ve said another election is not my focus right now. Obviously if the opposition defeats us on the budget, my view is that we should be having another election.

Q: But you want a majority, no?

A: If we have an election that will be my objective, but my objective is not to have an election. I’ve been through three national elections in four years. Since I returned to politics a little over six years ago—I guess it’s getting close to seven—I’ve been in three national elections, two leadership races, one party referendum, and a by-election to win my seat. All I’ve done is run for office continuously. I would, even during a recession, relish the occasion to actually sit back and attempt to govern for a while! But look, the fact of the matter is this, that before the 2004 election all of the pundits were predicting a crushing Liberal majority and, of course, they won a minority. In the fall of 2005, all the pundits were saying the Conservative party had no hope of winning the election. We won the election. We won a strengthened minority [in October 2008]. Granted, it’s still a minority but we won a strengthened mandate in the beginning of a recession, which is unheard of in Canadian history. I can tell you from conversations I have with foreign leaders that the results of the election stunned them, and largely, by the way, elated them because they all feel more optimistic about their own possibilities. Granted, most of them have much worse economies than we do. So look, I’ve obviously had a lot more political success in my life than I thought I would have. I’m honoured to have the job, whatever mandate the Canadian people give me, that’s the mandate I’ll work with, but the reality is that I don’t want to have an election right now. Obviously, if we had an election today somebody will have a majority because it will be either Canada’s Conservative government or the coalition.

Q: So you think the coalition’s going tostick together?

A: Well, I’m saying if we had an election, if they were to defeat us—and you know my view—if they defeat us the only constitutional political and moral option is to ask the people to choose who should govern and then there will be two choices, and somebody will win a majority if those are the choices. But my preference is not, for all kinds of reasons, not to have that election.

Q: So you think they’d actually run as a coalition?

A: I don’t think they have any choice: if they defeat us as a coalition they have to run as a coalition, and I think those will be the real choices before the electorate. The electorate will know that if you’re not electing the Conservative government you’re going to be electing a coalition that will include the NDP and the separatists. But, as I say, my strong preference is to govern, and I think to go through several more months of election, of a new government being formed, all the things that that takes, all the delays, would serve no useful purpose to the economy right now. I think it’s just better for us to govern, and I think it’s better for the opposition, rather than just opposing us and rather than getting together to oppose us on everything, to actually tell us realistically what kind of things they think we should be doing for the economy.