Source: Canadian Taxpayers Federation
Well, Andrew Coyne started it all yesterday with an article which said we could balance the $19-billion structural deficit “without really trying.” And while I’m certain about Andrew’s sincerity, I’m a little more doubtful about how simple it would really be.
As he points out in his first paragraph, John Geddes already explained that the notion of cutting the fat from the government is “only a comforting delusion”, engaged in the way that one might speculate about an all-star hockey team, or beating the house at a roulette table.
But it isn’t, as John Geddes explains, a problem of having government fat “finely integrated into essential programs”. It’s a matter of political courage and will, something that not only the Conservatives lack, but every other political party offering alternatives. Simply speaking, any attempt to make widespread cuts to what can only be described as absolutely useless, superfluous spending, would result in a complete revolt by the opposition parties.
I think everybody has identified the elephant in the room as being federal transfers. One of the essential strategies of the Martin Finance department in the mid-nineties was to starve the provinces. As Coyne points out, these have risen fastest of all federal spending, from $29-billion in 2004 to $46.5-billion in 2009. But to cut transfers would only result in the collective whining of every province and every opposition MP who reside within them. So allowing them to grow in line with projected GDP, you could slow down the projected increase in debt, which of course leaves you with savings.
Coyne’s next idea is also a good one, by capping internal spending to inflation-plus-population 2% per year increases. There’s simply no way to beat the unions by cutting off the milk and honey entirely, but again, by slowing the growth of spending increase you actually cut the fiscal debt projections, and hence the structural deficit.
Where his plan runs into trouble, however, is in the first real fiscally conservative premise that would result in a revolt from other parties. Cutting the CBC and making it pay for it’s own upkeep would be seen as an attack on our “heritage”. The CBC currently runs a $1.7 billion budget, but only generates revenue of around $600-700 million, which leaves the taxpayers on the hook for $1-billion more. The problem with the logic of turning the CBC into pay-per-view is whether anyone would actually subscribe to the thing once it actually required voluntary user fees instead of backdoor taxation.
Then there are the regional development “slush funds”, as Coyne calls them [which is what they are], that could all be shut down to generate $700-million. This would, incidentally, include the Conservatives’ own southern Ontario regional development agency, a legacy to add to their big-L Liberal economic policy.
Cutting grants, subsidies, and transfers all sounds like a great idea, too, but again the problem is that all of these organizations being cut off have strong lobbies and connections within the Conservative party itself. Just look at what happened when we touched KAIROS and their puny $7-million over four year grant to see what an absolute political IED that can be.
As Terence Corcoran points out in the National Post, none of these ideas are new. Fiscal conservatives have been calling to cut these unwieldy regional development agencies, foreign aid funds, and behavioural modification marketing campaigns for years now.
The most aggressive, and politically impossible, plans have been forwarded by the absolute authority on fiscal conservatism, the Canadian Taxpayers Federation. But even in their aggressive three-year plan to a balanced budget, there are numerous flaws that wouldn’t survive a moment on Parliament Hill.
They add some good ideas, such as wage freezes for politicians, reduction of MP expenses, and utter transparency of spending to the PBO. But in their very first page of recommendations, they call for political subsidies to be cut, the poison pill that led to the attempted coalition government by the Liberals and NDP in support by the Bloc Quebecois. Without removing campaign contribution limits enacted by Stephen Harper so that corporations and unions and other private organizations could contribute to political parties, there isn’t a single politician not wearing a blue suit who would sign on to this idea.
The ideas expressed in the CTF document show just how the balancing of the budget isn’t just an economic challenge, but largely a political one. Most of the biggest recommendations, such as reform and phasing out of the multi-billion dollar equalization program [which would almost single-handedly balance the budget], would require not just a majority government of some kind, but one with the political will and courage to act.
