Bob Rae is a lawyer with Olthuis Kleer Townshend, teaches at the University of Toronto and is the author of What's Happened to Politics?
The rant in these pages from Preston Manning on the federal government should all be taken with a large shaker of salt. One might have hoped that at least a glimmer of perspective and non-partisanship might have taken hold of the president of the modestly titled Manning Centre, but no such luck. This is a full-blown attack.
First, to suggest that the current federal deficit compares with the situation in the early 1980s is just nonsense. Do the math. Second, all governments, of every stripe – left, right and centre – came to grips with what was undeniably a serious financial challenge facing both the country and every provincial government in the early 1990s, and with the benefit of sustained growth in the United States saw major improvements in our economy, and a healthy change in our fiscal health.
The Martin government's defeat in 2006 was not a repudiation of the remarkable fiscal record of the Liberal government. Ironically, Stephen Harper's election prompted a big increase in spending (a minority government needs more friends) and the decision to cut the GST, a nod to populism and a raspberry to every economist and fiscal conservative in the land, respectively. The crisis of 2008-09 made the Conservatives sudden converts to Keynesianism, and $150-billion was added to the federal debt. Let me be the first to say that running deficits in those years was wise, prudent, sensible and the right thing to do, given the severity of the crisis.
What is now emerging is the extent to which necessary spending was consistently cut in the final years of the Harper government in the rush to get back to balance, no matter what the underlying condition of the economy or the needs of the most vulnerable in the country.
Those who now complain about oil and gas not getting to market need to look in the mirror. The challenges facing pipeline construction need to be faced, discussed and resolved. But the approach of the last 10 years has failed. Douglas Eyford, the adviser appointed by Mr. Harper, has set out the reasons in his two reports: a failure to engage, a failure to consult and a failure to persuade. These are the failures that need to be overcome.
We are a country that will always benefit from its resources, and we need to be resourceful (and respectful) in how that is done. Dividing east and west will never be the answer. Provincial and federal governments will have challenging decisions to make, understanding that carbon pricing is now being embraced around the world, and also appreciating that we are a country where resources, including oil and gas, matter, and will matter for years to come.
The argument for ensuring the success of our aeronautics industry – and its largest company, Bombardier – is about recognizing that nowhere in the world does this industry work without taxpayer support, for research and development, and, yes, for ensuring stability in a difficult competitive environment. The same logic applies to assistance to people, industries (and provinces) that are facing the current collapse in oil and gas prices.
Those who say the $250-million to Alberta is just a "drop in the bucket" are of course right – the impact of what is happening is far greater than that – but Albertans, and all Canadians, need to keep discussing how to get through what is going to be a longer and more difficult period than many are even now prepared to admit. Premier Rachel Notley is sticking with her promise not to introduce a sales tax to Alberta. This makes little sense economically, whatever its political logic at home. Those living in provinces that have long had sales taxes (every other Canadian) might suggest that to ask for more help without visibly helping oneself is less likely to be successful.
Alberta no doubt feels it has lots of fiscal room to borrow, which it does, for the moment. So does Canada. But we have all learned, as a country, and as provinces, that sustainability in public finance is just as important as it is in the natural environment and economic development. Consumption taxes (including green and carbon taxes) are a necessary part of the mix. Combined with offsets to assist low-income Canadians (through refundable tax credits and raising tax thresholds), they can indeed be part of a "green shift" that is good economics and good public policy.
The commentariat has been full this week of palaver about spending and debt that bears no relationship to where we really are as a country. There are limits to what we can spend, borrow and tax. We need to keep the lessons of the past, and present, in mind. But we should also stop repeating partisan and populist rhetoric that doesn't help us going forward.