Thursday, June 25, 2009

Conservative Mismanagement Making the Recession Worse

Like it or not Canadians are stuck with a Conservative led minority parliament for the remainder of the summer, and perhaps longer. The opposition parties had the opportunity to topple the government early in the new year, and again within the last few days, but on both occasions the Liberals came to Stephen Harper's rescue.

While polling indicates that an overwhelming majority of Canadians don't want an election any time soon, the more pressing question should be whether or not we should continue to let Stephen Harper and the likes of Jim Flaherty manage the economy during these scary times.

Harper and his minions have been telling Canadians that nobody saw this fiscal s##t storm coming, and that they're doing a good job of handling the downturn in economic fortunes. Firstly Harper and the Conservatives absolutely saw this recession on the horizon. That's why they sent Canadians to the polls back in October after just 2 years in power, despite a well functioning parliament, and ignoring their own commitment to fixed election dates to boot.

No government wants to be forced to the polls when the economy is in the dumpster. That's why the Tories pulled the plug early in hopes of garnering a majority mandate which would give them four plus years to weather the storm. Its also why they painted a rosy picture of the treasury's balance sheet during the campaign. Imagine if Enron Jim Flaherty had hit the hustings with projections of a 30+ billion dollar deficit!

That's ancient history of course. The question now is whether Steve and Jimmy boy are up to the task of steering the ship while this storm rages. I know there has been a lot of press about 'green shoots' and a slow but steady recovery being just around the corner, but I don't believe it for a second.

Here are the challenges Canada is facing.

Interest rates are at their lowest levels ever, with nowhere to go but up. That means borrowing costs are going to be on the increase, both for individual consumers and government. How are the Tories dealing with this reality? They're cutting taxes and borrowing money like drunken soldiers about to embark on a suicide mission.

Canadians are going to be facing increased taxation down the road, coupled with reduced government services. Money spent servicing the debt means less money for programs.

Harper, since his days with the NCC, has never been a fan of universal health care. And now he's setting up a situation where it would be easy to dismantle it. Sure it's nice, but where's the money going to come from in 5 years after we've added one to two hundred billion to the accumulated federal debt? As interest rates climb our debt is going to be taking a bigger and bigger bite out of each and every tax dollar.

The Liberals under Jean Chretien came into power during another devastating recession, back in the early 90s. They just about wiped the Conservatives off the map with a promise to eliminate the GST, the hated tax imposed by Brian Mulroney and Michael Wilson. Thankfully (in retrospect) they didn't fulfill that pledge, using the monies generated to help slay the deficit beast.

Canadians had two opportunities to make Chretien pay for reneging on his promise, but I suspect we were happy to see our accumulated debt going down. The electorate rewarded Chretien with three consecutive majority governments, followed by a 4th minority mandate under Paul Martin. On a personal level I only voted for the Chretien Liberals once, the first time...but became disgusted with "L'affaire Grand Mere".

The Tories under Harper have dropped the GST from 7 to 5 per cent. And now with the economy in trouble we've gone from massive surpluses just a few years back, to a deficit that keeps climbing higher and higher with each new Flaherty projection.

Consumption taxes like PST and GST though are much more progressive in my opinion as compared to income taxes. Prostitutes, drug dealers....anyone involved in illicit activity, they don't have income tax deducted at source, their money is tax free. But at least with consumption taxes the guy dealing weed from his hydroponic basement garden is paying some taxes. The more money you make, the more money you spend typically. Cutting the GST means huge savings to the wealthiest in our society, while the rest of us get an extra couple of pennies left in our pockets at the Tim Hortons window.

Another challenge is the rising price of oil. After crashing all the way down to below $50 USD a barrel, crude is once again on the rise. Pump prices are hovering around $1.00 a litre in Toronto once again. Obviously we need governement to encourage alternatives to oil. And with Canadians worried about the enviorment anything green is good.

How have the Tories reacted? Thanks to Conservative cabinet minister Lisa Raitt, she of the loose lips and hard to hold onto briefcase, its seems that a 1 billion dollar fund intended for wind generation has been diverted to the oil patch, near Environment Minister Jim Prentice's Calgary riding...nice for his constituents, but not very smart for the country as a whole or for the air we breathe.

We have a manufacturing base that's been decimated, the higher value of the Canadian dollar being a key component. Recently the city of Toronto signed a massive deal for street cars with Bombardier, a deal which would mean thousands of decent jobs in Thunder Bay.

Its also another black eye on the environmental front for the Harper Tories as they've refused to commit any cash to the initiative. They could have turned that black eye green by providing some stimulus money, thus retiring 30 year old streetcars for new less carbon emitting replacements. Maybe they could steal the money from the tar sands? You know, the money that was originally for wind generated electricity?

We need a smarter pair of hands on Canada's tiller right now, hands which will worry about the fate of all this nation's passengers. Not just the ones sitting in first class.

Comments are welcomed and feel free to pass this along via email or through a social network like FaceBook, just click on the ‘Share’ icon below.

No comments: