Conservatives hiding the facts on EI

We know the Conservatives have pretty much killed the EI reform panel. And it seems they're now spending more time trying to blame others for their unwillingness to approach the issue seriously and actually discuss reforming EI then they did actually trying to reform it.

You'll recall the Conservatives essentially blew the panel up when they prodded the independent civil service into doing a "costing" of the Liberal EI reform proposal. But rather than cost the actual Liberal proposal, the Conservatives asked them to include a slew of things the Liberal proposal didn't in order to get a vastly inflated number, an inflated number they could then use as an excuse for doing nothing on the issue, while hiding behind the civil service when challenged on the fictitious nature of their numbers.

The Liberals rightly challenged them on this and asked the parliamentary budget officer, Kevin Page, to do his own costing of the Liberal proposal. After all, Canadians deserve to know the real numbers. Page is working on it, but there's one little problem:

The Parliamentary Budget Officer hasn't received all the information requested of HRSDC Deputy Minister Janice Charette, which includes data, analysis and assumptions underlying the government's cost projections. The office said that, if necessary, it would produce the analysis in the next two weeks, even without the information.

Meanwhile, while the government continues to try to block a truly independent and fair costing of the Liberal EI reform proposal, Conservative MP Pierre Poilievre is still sticking to the Conservatives' fictitious, fantasy land costing, using the independent civil service as a shield for his party's political gamesmanship.

The Conservatives, it seems, are concerned that if the public knows the real cost of the Liberal plan, the government's inflexibility on the issue, and the fact they've yet to even release a proposal of their own, will be quite negative. Unable to win the argument on its merits, they need to stack the deck. They need to cheat to win.

If they're confident in their positions, let's have the real numbers and then let the people decide. Stop trying to hide the truth, and to withhold the information Page needs to do an independent costing.

And Pierre and company should have the guts to stop hiding behind the independent civil service, who should not be used as partisan blockers for a weak quarterback afraid of getting sacked.

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We need clarity on the Parliamentary Budget Office

If I could channel Stephane Dion for a moment, when it comes to this brouhaha around the Parliamentary Budget Office (PBO), what we need here is some clarity.

I doubt the debate around the role, powers and place of the PBO is one that really resonates outside the world of policy wonks and political media and bloggers. That doesn’t really matter though, because good governance should concern us all, and that’s what this is about.

As I make it out, there seems to be a gap between what the PBO was intended to be based on the spirit and rhetoric back around its creation by the Conservatives (an independent officer of parliament, a la auditor general, who would report to parliamentarians and the public by providing an independent analysis on matters budgetary) and what the enabling legislation actually created (a branch within the library of parliament, with a reporting structure through the parliamentary committee).

It's important first to remember that distinction between what the rhetoric was, and what the legislation actually did. Despite the rhetoric, the legislation is what it is, and I think it's legitimate to say Kevin Page and the PBO need to be governed by the actual legislation, not what we thought or wished it had said.

That seems to be the position of the Liberal Party at the moment, and I can accept that. We should respect the legislation and law as written, and Mr. Page should govern his activities accordingly.

But where we need clarity, and where I’d like clarity from the Liberals, is on whether or not we feel the legislation should be amended to create what we thought we were creating in the first place, to fulfill in legislation the spirit of the original rhetoric: an independent officer of parliament. To my knowledge, the Liberals have been silent on that issue (I suspect I know the Conservatives’ position; they're a lost cause) and I want that to change.

Now, for sure I know the theoretical political arguments against it. Sure, we love the PBO now while he’s causing angst for Stephen Harper and Jim Flaherty. But what about a future Liberal government? An independent PBO could be a thorn in our side too. So let’s rein him in now, under CPC cover.

A defensible tactical argument, to which I reply tough cookies. This is about good governance; we need to rise above base political considerations. And there's a simple way to avoid getting into conflict with the PBO: provide accurate, honest, and clear budgetary forecasts. And if we still have disagreements with the PBO, argue our case on the merits, respectfully.

It's time for clarity on the Liberal position on the PBO. Do we support amending the legislation to create an actually independent PBO, yes or no?

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Where's the plan, Steve?

In the midst of a disastrous week for the Conservatives, Stephen Harper finally admitted what has been obvious to everyone with half a brain for months: the Flaherty budget projections of emerging from deficit within five years are fantasy and will not be met:

Prime Minister Stephen Harper has scrapped his government's controversial promise to stop running annual budget deficits in five years.

For the first time, Harper said today that keeping the government's pledge to balance Ottawa's books by 2013-14 will depend on how quickly Canada's economy recovers.

"We will allow the deficit to persist if necessary," Harper said.

At least he's not lying to us anymore on the deficit time line. But while, once again, he is tacitly admitting that he and his finance minister were very wrong (see $50B deficit) and Parliamentary Budget Officer Kevin Page was very right, he still wants us to know Page is dumb:

But yesterday, Mr. Harper disputed the suggestion that the government would need to slash spending or boost taxes to balance its budget when the economy recovers.

"We will not start raising taxes and cutting programs. That's a very dumb policy and, to the extent, frankly, that the parliamentary budget officer suggested it, it's a dumb position," he said.

Well, Harper is an economist, after all. I'm just a writer, but I have to say I find Harper's plan to balance the budget, which seems to boil down to "do nothing and hope for the best" to be irresponsible and doomed to failure. Maybe Harper just doesn't plan to be around when the bills come due?

But it has become increasingly clear that we won't be able to grow our way out of this hole. Through endemic Conservative economic mismanagement, we're now in a structural deficit, as Page has reported. Harper seems to dismiss this finding, but let's consider his and Page's track-records here: who you gonna believe?

There are only two ways to deal with a structural deficit: spending cuts or tax increases. Or some combination thereof. There is going to need to be sacrifices, and Canadians deserve the truth from their government, not the willful ignorance of Harper and Flaherty.

According to Ipsos Reid, Canadians are increasingly skeptical of the veracity of anything the Conservatives have to say on matters budgetary. Indeed, just 35 per cent of Canadians believed the Harper Conservatives would be able to meet their budget commitments. And that was before Friday's credibility-busting admission.

The poll also found 88 per cent of Canadians favoured spending cuts over tax increases, which is hardly surprising. Asked in isolation, that's always going to be the case. But ask someone to choose between actual services, such as health care, and taxes you're going to get a different answer.

Ipsos doesn't seem to do that, but they do ask which spending people would like to see cut first:

But if the Canadian government and others were to cut spending, the top three programs that should be on the chopping block are, according to survey respondents, foreign aid, salaries and benefits of government workers and military spending. Environmental protection, public transportation, education spending and health care were at the bottom of the list.

Fact is, you're not going to find substantial savings in government spending without getting into those areas favoured for protection by survey respondents. There's little savings to be found in foreign aid and government salaries, and military cuts would be difficult. Much of the recent spending there has been capital acquisitions anyways. But the point is, to have any meaning, a spending cuts-alone policy will hurt those areas Canadians don't want hurt.

Of course, it's a discussion Stephen Harper is unwilling to have with Canadians. Just cross our fingers, he says, close your eyes, keep spending, and never mind the perpetual deficits. It will all be fine. Trust him.

You're supposed to be an economist, Stephen. And you're supposed to be a leader. So level with us: where's the plan? Or are you just making it up as you go along?

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Structural deficit, or how Harper and Flaherty squandered the sacrifices of the 1990s

Jim Flaherty: Worst finance minister, ever?

OK, a harsh statement to be sure. But I’m really starting to wonder about Jim Flaherty and Stephen “I’m an economist” Harper, and the evidence is adding-up.

Here’s just a few of the headlines the latest report from Parliamentary Budget Officer Kevin Page is generating:

Harper got it all wrong, budget watchdog says
Deficit still looming in 2014, financial watchdog says
Federal deficits to total $156 billion, job losses to mount: budget officer
Raise taxes or cut spending to end deficit: Report

It’s a report that, once again, showcases the utter incompetence of Flaherty and of this government when it comes to budgeting, fiscal forecasting and economic management, and drops one major bombshell: we are now in a structural deficit.

Why is that significant? Everyone (well, nearly) agrees that, in this downturn, a deficit is necessary to help the economy through one-time stimulus spending. This temporary spending will end with the recession, so that, along with economic growth as the economy recovers, we’ll return to surplus in short order without substantial cuts to core services.

A structural deficit, however, is one that is deeper than just short-term stimulus funding. A structural deficit cannot be overcome by the end of stimulus programs and economic growth alone. A structural deficit cannot only be tamed by either program cuts, tax increases, or some combination thereof. And that’s where we now are, thanks to the economic mismanagement of Harper and Flaherty:

In his latest fiscal projections, to be officially released Wednesday but parts of which were obtained by Canwest News Service, budget officer Kevin Page says the deficit will be nearly $156 billion over the next five years, much deeper than the $103.2 billion cumulative deficit that Finance Minister Jim Flaherty's department has predicted.

According to Liberal finance critic John McCallum, Page is forecasting a structural deficit of $17 billion, which means that even with economic growth, even with the end of stimulus, we’ll still be $17 billion in the hole.

It’s not just on the deficit that Page is calling-out Flaherty’s incompetence. It’s also on jobs:

According to sources, the budget officer predicts between 190,000 and 270,000 fewer Canadian jobs this year than estimated in the budget.

For next year, the discrepancy rises to between 200,000 and 500,000 fewer jobs, and even in the years 2011-2014 _ when the recession is expected to be a painful memory _ there are expected to be between 100,000 and 380,000 fewer Canadian jobs each year than the government assumes.

I really have to question if anyone, even Jim Flaherty and Stephen “Want to see my economics degree” Harper can really be this incompetent in their forecasting, of if they really do know better and have just been misleading Canadians. I think it’s some combination of the two.

Look at the track-record. During the last election campaign, the Conservatives repeatedly said if there was going to be a downturn, it’d have happened already. The only way we’ll go into deficit, they said, is if you elect the Liberals. They released a fiscal update in November that ignored the fiscal reality to instead play politics, and laughably insisted there’d be no deficit. When they released their budget in January their overly rosy revenue projections were panned by the experts, until months later Flaherty finally admitted his $50 billion mistake. And as Page’s new report makes clear, that was only the tip of the iceberg that is this government’s incompetence.

One has to wonder though if structural deficits aren’t really part of this government’s plan. What better way to shrink the size of government no matter who is in power (their supposed ideological goal) than sharply choking-off its revenue? That’s what their GST cut was really about: choking off revenue to tie the hands of future governments around program spending.

Whether it was by design or by incompetence though, the structural deficit is now reality. So it’s time for the Harper Conservatives to start being honest with Canadians and tell us how they plan to get us out of this deficit.

Will they raise taxes? If so, which ones, and by how much? Or if, as they insist, they’d never raise taxes ever ever, what program spending will they cut? Where are they going to find at least $17 billion in savings? Which programs, exactly, do you plan to dump over the side?

Or, once again, do they plan to just skulk off into the night and leave the Liberals to clean-up their mess? Whether it’s the federal Conservatives of the early 1990s or the Mike Harris/Jim Flaherty Ontario Conservatives of the early 00s, that does seem to be their pattern.

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This and that

Clearing out some of the items in my to-do file I've been meaning to comment on:

*The resignation of Robert Marleau as information commissioner this week is another troubling sign of this government's troubling disdain for accountability of any kind. Not that Marleau was particularly effective, mind you. And he does insist his departure is for personal and family reasons. But Marleau's departure reminds me of Jean-Pierre Kingsley's departure as head of Elections Canada a few years ago. Rather than deal with either obstructionism, lack of cooperation, or in some cases even partisan attacks, some are choosing to just resign. One wonders how Kevin Page has managed not to just throw his hands up and walk away, an outcome the Conservatives would certainly welcome. Certainly, the Conservatives weren't making Marleau's job any easier. Their attitude to anyone trying to hold them accountable seems to be stonewall, make their lives miserable and hope they just quit. Replacing Marleau in a minority parliament could prove interesting. Many good candidates could prefer to spend more time with Marleau's family too.

*We'll know an election is near when Stephen Harper takes another trip up North, but oh how his campaign promises to them have melted like the polar ice caps. We heard late last week that their program to build arctic patrol boats is indefinitely delayed. Harper had announced last summer the government would acquire six-to-eight ice-capable vessels, backtracking from his 2005 promise to build armed icebreakers to keep the Rushkies in line.

*The House of Commons defence committee last week asked the Minister of Defence and the Chief of Defence Staff to take the lead in combating the stigma that exists in the ranks around post-traumatic stress disorder. It's a serious problem with soldiers returning from Afghanistan and other deployments, and leadership is needed here. I hope that we can all agree our military members deserve the best care, regardless of how we feel about the Afghan conflict, and I hope Peter MacKay will take the lead on this.

*A federal court is hearing a Democracy Watch legal challenge against Stephen Harper, arguing his election call last fall violated his own fixed-date election legislation. Unclear just what the result of a positive ruling would be. Frankly, though, while interesting I suspect this will just underline what a farce the fixed-date legislation is anyways. It was always just for show. The only reasonable sanction can be political, delivered by the people at the ballot box. Canadians didn't seem to care that much one way or another.

On a related note, this feature from the Globe on the suicide in Afghanistan of Major Michelle Mendes is an engrossing read.

*Yesterday, Christina Spencer, a reporter for Sun Media, was barred from a speech in Ottawa by the Chinese Foreign Minister. The event was organized by the Canada China Business Council (CCBC), and many other journalists were admitted. Conservative ministers John Baird and Jim Flaherty were reportedly at the luncheon, and Canwest's David Akin reported via Twitter that the CCBC receives government of Canada funding. Past Spencer reporting has been critical of China. We have a free press in Canada, and Spencer's expulsion on what appears to be political grounds is unacceptable. Of course, a private organization has a right to admit whomever it wants. But our government also has a right not to give them funding, and our cabinet ministers have the right to refuse to attend events that exclude reporters for political reasons. I hope all parties will speak out against Spencer's expulsion, and any government grants this group receives should be reviewed.

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Psst! The Conservatives say the Afghan mission will cost $11.3 billion

I know the government has nothing to do with the order in which news clippings appear in my inbox, but the order of these three clippings does seem fittingly apropos:


Now which of these stories do you think the government wants to downplay? If you guessed the one sandwiched between the two big-ticket spending announcements, then you would get a gold watch if we hadn't had our budget cut, so you'll have to settle for a kudos instead.

Because hey, what better time to release your first full accounting of the cost of the Afghan war, and that you were $3.3 billion off on your earlier estimate, then a day you're also announcing flashy new anti-crime legislation in GangLand(TM) BC, investing millions in Vancouver-area rapid transit, and creating an emergency $3 billion fund for stimulus?

Here's the story they'd rather you not read above the fold on the front page tomorrow, or hear about in the first segment of the news tonight:

Ottawa pegs direct cost of Afghan mission at $11.3 billion
(Afghan-Cda-Cost)
Source: The Canadian Press
Feb 26, 2009 13:33

------------------------------------------------------------------------
--------

PANJWAII DISTRICT, Afghanistan _ The federal government has quietly revealed the direct cost of Canada's 10-year involvement in Afghanistan _ an estimated $11.3 billion.

It's the first complete fiscal accounting of the mission, which Prime Minister Stephen Harper had previously suggested would cost about $8 billion by the time it ends in 2011.

The figures include estimates for the involvement of the Department of Foreign Affairs, the Canadian International Development Agency, Corrections Canada and the RCMP.

The incremental cost estimate does not include post-2011 disability and health care costs for soldiers wounded in battle or diagnosed with post-traumatic stress.

The forecast runs considerably less than the $13.9 billion to $18.3 billion estimate the parliamentary budget officer came up with last October at the height of the federal election campaign.

The new federal numbers suggest almost 80 per cent of the price tag _ $9 billion _ will be for military operations and hardware.

Oh, and perhaps the defence committee (or public accounts?) could summon Peter MacKay and Kevin Page and ask them about this:

The forecast runs considerably less than the $13.9 billion to $18.3 billion estimate the parliamentary budget officer came up with last October at the height of the federal election campaign.

You'll recall, of course, that was a report the Conservatives would much rather you hadn't seen during the campaign.

So why is the Conservatives' estimate so much lower than the estimate prepared by the independent parliamentary budget officer, a position they themselves created?

Inquiring minds, etc.

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Deficit Watch 2009: What happened to truth in budgeting?

It’s only the first day of Deficit Watch and already its not looking good for the Conservatives, with leading economists and the International Monetary Fund casting doubt on Jim Flaherty’s overly optimistic projections of future economic growth. In short, it will take the Conservatives longer to retire these deficits than they’re admitting.

A day after Finance Minister Jim Flaherty tabled a budget projecting that the global and Canadian economies will rebound moderately next year, the International Monetary Fund has thrown a spanner into the assumptions that underpin the government's numbers.

The latest global outlook is in line with Canadian economic expectations in Flaherty's budget for this year -- a 1.2 per cent gross domestic product retreat -- but the two part company over the expectations for next year.

The IMF says Canada's economy will begin to grow at a tepid 1.6 per cent pace, while Flaherty is counting on a 2.4 per cent advance followed by even stronger momentum, to make good his prediction that the government will balance its books four years from now.

Remember the days of Liberal governments regularly running healthy surpluses, a practice Deficit Jim thought was just horrible, but most saw as sound financial planning (particularly in hindsight)? That wasn’t by mistake.

When the Liberals took office from the Mulroney Conservatives (and inherited a big deficit by the by), it had been common government practice for a much larger than forecast deficit to be revealed when the books were closed at the end of the fiscal year. That was because they'd made a habit of basing their budget projections on the most wildly optimistic projections of future growth and revenue. The best-case scenario. It made the bottom-line look better on budget day but it was artificial, a mirage. They wanted to hide the true situation until less people were watching.

When the Liberals and Paul Martin moved into the finance portfolio he changed this practice, adopting a policy of basing his budget projections on an averaging of the more conservative forecasts of both public and private sector economists, essentially erring on the side of underestimating potential growth rather than overestimating.

This policy, along with the contingency reserve (also abandoned by the Conservatives), allowed for a budget cushion should growth be hampered. As a result, each year the Liberal government was able to do a little better fiscally than anticipated, allowing leftover funds to bring down the inherited deficit faster, and then be targeted to a combination of debt repayment and priority program spending. And when the September 11 attacks put severe fiscal demands on the government overnight, we were able to bear them without deficit.

While this all seemed like sound financial planning to me, the Conservatives disagreed. They thought all this fiscal prudence was a totally bad idea. Overtaxation, they'd cry. (ed: So do they consider a deficit undertaxation then?) They killed the contingency reserve. And ironically, given this Flaherty budget, which uses overly rosy revenue projections to downplay and hide the true size and length of this deficit, they also ran in 2005/06 on Truth in Budgeting, and bringing transparency back to the budget process.

Yet another Harper broken promise, as Deficit Jim fiddles with the numbers to cover-up the true size of his deficit. (He knows what he's doing there) I hope the finance committee will put Flaherty on the hot seat over his attempts to cover-up the true scope of the deficit. Kevin Page would be a good witness too.

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