Photograph by: Reuters, Canwest News Service
According to the Canadian Press, Conservatives MPs have been asked to consult their constituents for advice on stimulus spending going forward. In an open letter to the Conservative caucus, Stephen Harper has asked each of his fellow 142 MPs to find ideas for the next phase of the “economic action plan.”
The concept behind the letter is to solicit low-cost ways to create jobs and eliminate government waste. He also warned that no “massive new spending programs” are on the way.
Well, thank God for that.
I’m also pleased to hear that the government is looking for ways to eliminate waste in its spending, though I can’t see how they’ve been very successful on that front to date.
I think the best economic action plan for the government to take would be the simplest. None. It need not do anything other than manage the financial affairs of the country in a responsible manner, maintain low corporate income taxes and allow for the private sector to do what it does best. Create jobs.
It isn’t, or certainly shouldn’t, be the responsibility of the government of a nation to “create jobs”. I don’t know when or where this concept took hold in our society, but the fundamental purpose of a government is to free the restrictions, obstacles and interference that keep the economy from moving along in an efficient manner of organic growth.
If I’ve railed against Finance Minister Jim Flaherty before — and I have — it’s because I never agreed with the concept behind the stimulus program, otherwise known as the economic action plan. Nor do I think much of the stimulus spending was allocated to projects that provided much in the way of economic stimulus.
The Fraser Institute, for instance, panned the impacts of the stimulus by arguing government spending and infrastructure investment accounted for just 0.2 per cent of growth between the second and third quarters of fiscal 2009. At the time it said permanent tax relief would have been a far better method of economic stimulus than increased spending.
But early into 2011, it’s probably to safe to say that while the economic action plan wasn’t the magic bullet it’s been advertised to be, the Conservative Finance Minister has had a hand in the economic rebound. How? Well, by doing precisely what the Fraser Institute advised him to do.
The Conservatives have cut federal corporate income taxes 4.5 per cent since taking the reigns from the Liberals in 2006. What’s remarkable about this statistic is that they’ve managed to do it despite a pervasive political climate of anti-tax relief advocates in opposition.
Indeed, the Liberals and NDP have been quoted frequently as saying they oppose the final cut to the corporate rate to 15 per cent in 2012, believing it will further harm Canada’s deficit projections. That’s not entirely untrue in the short-term. Corporate tax cuts have an immediate negative impact on the collection of tax receipts and therefore revenue for the treasury.
But the longer term benefits are considerable. By cutting corporate taxes, it frees the companies to hire more workers, invest in more materials and begin larger projects that all generate bigger dividends for taxpayers in the end. It is more likely that the economic rebound in Canada is due to committed tax cuts, than any strategic economic action plan.
As others have already pointed out, it was Chretien’s fiscally conservative Finance Minister, Paul Martin, who set the example for generating stimulus when he lowered corporate taxes seven per cent over four years. And now, with the continued work of the Conservative government, that rate has fallen 11.5 per cent in the past decade.
At 16.5 per cent and falling, Canada is slated to have the lowest corporate tax rate in the G7. The advantages to such a competitive tax market cannot be overstated.
Agreed, clear explanation, thanks. Sometimes I believe issues like these are misunderstood by many Canadians.
Cut the vote subsidy. It’s time to put an end to political welfare.
As a small business owner, it seems as if every time I turn around, I’m hit with another tax i.e. “stuffing tax” (call me if you want details on this total waste of $), new HST (they keep claiming that it will help small businesses but all it’s succeeded in doing is raising my costs), etc. I would dearly love to expand my business and hire extra staff but I need to make enough $ to do so.
Agreed, but I wonder how that would play politically?
Interesting analysis. Our economy depends on exports. Our tax receipts fell of the cliff during the recession? (The deficit was $55 2009 now its $45B in 2010)
They are now doing well again. Our stuff is moving again and more countries have decided to buy our currency.
Fed-Province-G20 moved in concert?
Taxation, increased productivity:
Our ability to compete and move goods with other nations. If other governments provide stimulus or advantages it is short sighted to suggest we can ignore the un-level playing field.
The Chretien Martin legacy of offloading of big ticket items, refused to fund the military, infrastructure at adequate levels left the heavy lifting for the next government.
Chalk River was slated to be closed in 2000. I could list the third world conditions on the reserves and the billions spent upgrading them since Liberals lost in 2006.
The discounted dollar and robust American recovery helped the Liberals balance the federal books. The Liberals raised payroll taxes and made EI more difficult to collect during the last recession.
Our road to recovery will follow the same path with targeted cuts, expanding our trade to other markets and lowering our trade barriers.
Our PM did not follow with drastic cuts to balance the books after global meltdown in Fall 2008.
I remember the AG reports during the Liberals.
The AG reports are much different now. Military spending is always a problem regardless of the government.
The big ticket items are transfers to the provinces in stable funding that was cut from the previous Liberals.
Health, Education, Social Services. Equalization Payments.
This government did not promise a radical different model of government from the Liberals. They promised responsible and reasonable ideas. Nothing to date has been a gross violation of trust or mismanagement.
Why do you think the base has been there since 2004? Why do you think CPC are 5/7 in by elections and added 17 seats in 2008?
The media and opposition are losing their narrative.
Some fiscal conservatives will stay home, more moderates, independents will come aboard to replace them. This centrist government that tacks left to help during the tough times.
I may not be pleased with the spending on some projects but I am not trying to win a majority, keep the coalition fighting amongst themselves.
You keep bringing up the Paul Martin BS of when he was Finance minister.To do what he did while finance minister, he took from other programs $50 billion from the EI.He then downloaded all the problem programs he couldn’t handle to the provinces.What a great finance minister he was.Oh tell me again how much tax his steam ship line paid to Canada.Just keep the puke out of conversations and give credit where credit is due.THE LIBERALS ARE NOT IN CHARGE OF THE MONEY ANYMORE.The Conservatives are making policy,not Liberals,not NDP,not blockheads,so quit trying to spread the good news onto the corrupt Liberal,s.The Conservatives are deserving of ALL the credit,not some of it.
Pretty good, I would say. Poor economic times, cutting back, etc. The public would go for it. Plus it would have the added bonus of smoking out the coalition again.
Bert,
I wrote that the Liberals cut corporate income taxes 7%. Kind of relevant to the story. I did not, however, say the Liberals are God’s gift to creation.
We’re not in danger of doing that. Employment has been restored to pre-recession levels and tax receipts are coming in line as well. It would be a mistake to continue spending money that has dubious benefits and results. As I wrote above, it wasn’t the stimulus that saved Canada. It was prudent and continuous tax-cutting that kept Canada competitive.
Granted. But nobody forced them to waste the kind of money they’ve wasted on the kind of programs they’ve wasted it on. This idea they’ve only made necessary investments neglected by the Liberals isn’t exactly holding water. Spending on immigration, for example, has increased 120%.
I’ve diligently documented the Liberal theft of EI.
I don’t have a problem with military spending currently, except for the dubious benefits of the F-35 fighters. I’ve written before that I’d rather that money have gone toward a continuing mission in Afghanistan.
Uh, yeah. That’s the problem. The feds have made transfer payments the largest federal expenditures. They’ve had the power to turn the taps in either direction at any time of their choosing.
A gross violation? Perhaps not. But their promise not to run deficits in October of 2008 was a campaign promise. They failed.
Now they have an opportunity to show some fiscal credibility going forward into a post-recession era.
Let’s try this again. Liberals had a majority and did their damage.
You used 120% to illustrate big spending? Try using real dollar figures. Check with PBO, AG and 2006, 2007, 2008 budget is that a Big Ticket item?
This is a minority and they can’t ignore the majority of MPs in the cheap seats.
Are you going to suggest Canada was immune to the Global meltdown and our Government could have avoided the spending? (Really?)
BTW our PM did warn about the US and negative economic forces in his 2007 year end address and he was attacked for fear mongering by the opposition. (Need a link?)
“Dubious spending” with low rates from decades of neglect in those areas?
Remember I am talking about big ticket items not $ 57k for a reflective pool.
Is $9 billion 65 planes over 40 year life time expectancy a big ticket item for planes?
Let me get this straight, so I’m reading you right.
The Liberals didn’t spend enough money, which is why the Conservatives have been forced to spend record amounts of cash?
Listen, I’m trying to give the Conservatives some credit here. Let’s not whitewash it by going on about the Liberals.
I did not give the Liberals credit for balancing the federal books without noting their neglect in many areas that are now being addressed by this minority government. (Big ticket items)
This government handled this recession differently than the last government tech meltdown 2000-2001. The plan is to balance the books in five years.
November 2008 the opposition decided they could replace the government without having another election for two years. The economic update was not draconian.
Shit hit the fan December 2008 and they acted in concert with the G20-Provinces-Cites for a massive boost to global, national, local economy in a 2 year plan. (The Liberals agreed but have criticized everything just asking for Report Cards)
The AG praised the spending on EAP?
I would like a much smaller federal government and no over lapping with the provinces in many areas. ( That party does not exist)
I am a REALIST and understand Liberals-PC-CPC only three parties that have formed government will not do anything “radical” and engineer their own defeat.
PC got wiped out for not listening. Liberals appear to be following in their foot steps.
I don’t buy the rhetoric from all parties.