How Stephen Harper ruined our national balance sheet

Posted on May 1, 2008 in Debates, Governance Debates, Inclusion Debates – opinion – How Stephen Harper ruined our national balance sheet: A Liberal argues that the Tories are driving Canada into deficit
Published: Thursday, May 01, 2008. Ralph Goodale

Stephen Harper’s claim that he can be “trusted” as a “safe” economic manager through uncertain times is a big stretch.

The Prime Minister inherited the strongest economy in recent memory, and the most robust fiscal position in all the G-8 group of world-leading nations. Federal deficits had been eliminated. The government of Canada was working on its 10th consecutive balanced budget. Debt was on a steady downward track. Inflation and interest rates were low and stable. Taxes (especially income taxes) were declining. The provinces were benefiting from the highest-ever federal transfers to support vital social pillars such as health care. And federal financial flexibility of about $100-billion was projected over the next five years to further reduce debt and taxes, to guard against unforeseeable shocks, and to invest in the social and economic priorities that enrich our lives.

Yet, in barely two years, Mr. Harper has obliterated that margin of fiscal security.

He has taken this nation to the brink of a deficit — the first in more than a decade. And it’s deliberate. It’s his ideological obsession to stop the federal government from being an instrument for good in the lives of ordinary Canadians.

Among major bank economists, academic think-tanks, bond rating agencies, the Bank of Canada and the International Monetary Fund, the prognostications are all consistent. The Canadian economy is now in a major slowdown. It will likely last longer than first expected. And the Harper government may soon be in the red.

Canadians would find a return to deficits inexplicable. They sacrificed too much to achieve discipline in the nation’s finances to see that success now squandered. At the same time, they won’t like Mr. Harper’s way of avoiding his self-inflicted deficit. He will slash federal programs and services and say the “deficit-devil” made him do it.

Even when the Harper government had a $13-billion Liberal surplus on its hands, he cut the Court Challenges program, which helped the less wealthy access their constitutional Charter rights; adult literacy services; the advocacy of women’s equality; historic measures to bridge gaps between aboriginal and non-aboriginal Canadians; funding for child care spaces; a credible plan to fight climate change; student aid; and more.

The debilitation of Canada’s fiscal position was not the result of external factors beyond domestic control. It was deliberately engineered here in Canada by Stephen Harper — in three ways.

First, always preoccupied with short-term election positioning above all else, the Conservatives have become very big spenders. Their budgets have ballooned by more than $40-billion in just over two years. Stephen Harper is today the biggest spending prime minister in history, but few Canadians can name a single thing they’ve gained from it all.

Secondly, the transparent safeguards that were previously built into federal financial projections have been abandoned. Even the most basic “Contingency Reserve” has been eroded. These provisions used to serve as shock absorbers to prevent unpredictable events from pushing the country back into the red, events such as the Asian currency crisis, the SARS outbreak, the havoc caused by mad-cow disease, and 9/11. In the face of future threats like these, Canadians will have no cushion.

Thirdly, with respect to tax cuts, Mr. Harper chose to concentrate on the GST — where his cutting does the least amount of good and costs the most. The saving for the average Canadian is less than a dollar per day, but the impact on the Treasury is about $13-billion every year. It does nothing to improve tax fairness, disposable incomes, household savings, productivity or competitiveness. And it’s so costly, it crowds out other more helpful tax reductions.

These are the steps Mr. Harper has taken that threaten to push Canada into a deficit. They are steps no prudent economic manager would take. They are imprudent, ideological and short-sighted, demonstrating that this Prime Minister cannot be trusted to steer the economy safely through the difficult economic times that lay ahead.

-Ralph Goodale is House Leader for the Liberal Official Opposition. He was Canada’s minister of finance from 2003 to 2006.

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