December 4th, 2005
You are currently browsing the articles from Jay Currie written on December 4th, 2005.
Between Ralph Goodale mistaking the federal purse for Santa’s sack and Steve Harper blowing 4.5 billion out the door to make the next plasma TV just a bit more affordable, the idea of fiscal rectitude is very much out of fashion this Holiday Season. But, hey, there is an election to be won.
Here’s what a fiscally sound, politically suicidal, party leader might tell Canadians.
We would love to cut taxes and increase spending. And we will. But we are not going to do it by ignoring our responsibilities.
Canada has a national debt of 499,863 million dollars. Four hundred and ninety nine billion dollars. Ralph Goodale in his pre-election mini-budget made two points:
* Canada’s debt-to-GDP (gross domestic product) ratio is expected to decline to 38.8 per cent in 2004–05, down from 68.4 per cent in 1995–96.
* The Government remains committed to reducing Canada’s debt-to-GDP ratio to 25 per cent by 2014–15. (budget overview)
While this sounds great it is important to look at the real numbers:
1996 554,162
1997 562,850
1998 560,718
1999 557,871
2000 544,726
2001 524,564
2002 517,545
2003 510,576
2004 501,493
2005 499,863
Last year we paid down a whopping 1.7 billion.
And that is net debt: the actual interest bearing liabilities of the federal government at March 31, 2005 was 615 billion. To get to the 499 billion figure the government deducts certain financial “assets” such as tax accounts receivable with no decernable attempt to “season” such receivables.
Even with low interest rates and a decline in the outstanding debt, Canada has annual debt service costs of 31.8 billion dollars in 2004-5. 17.3% of total federal expenditure. Down from the 32% in 1996-7.
Before we cut taxes we need to drive the debt to much less than 25% of GDP and we need to drive debt service charges below ten percent of the federal budget.
How? Well, three ways: first, no tax cuts. Second, use all but a small percentage of every surplus to pay down the debt. Third, look for program cuts to free more money for debt reduction and economic growth to fuel an increase in the base from which we gather taxes.
Rather than aiming to reduce the debt to less than 25% of GDP by 2014, we should be aiming at the virtual elimination of the debt by 2025.
Instead of throwing away eight billion dollars on pre-election promises or 4.5 billion on a GST cut, we are committed to spending every nickle of that on killing the federal debt. Every dollar of debt paid today is a dollar on which we will never again have to pay interest and that interest can be used to retire more debt.
This year Canada has a ten billion dollar surplus. If that amount was paid against the debt we would reduce our debt service charges by a little less 500 million dollars annually. With reasonable growth, a “hold the line” position on new spending and no tax cuts, in nine years we should have managed to repay at least 150 billion of the current total.
At that point a wonderful thing will happen: the remaining 350 billion dollars will be paid down, depending on the rate of economic growth, in four or five years. Compounding is a lovely thing when it is running in your favour.
Once the debt is paid there will be lots of room for tax cuts and spending programs. More importantly, a resource rich, debt free, hard currency nation is going to be an investment magnet for the rest of the world.
Canada is pretty much the only Western nation which has the potential to be debt free in the near term. It is the only Western nation which has an increasing stock of oil, billions of gallons of clean, pure, water and a highly skilled, relatively homogeneous population.
With an explicit policy of no deficits, significant debt reduction and prudent taxation, Canada could become a safe haven for European money fleeing the collapse of the EU and the Euro and skittish American money worried about the combination of massive trade and budget deficits. We are already seeing some of the effects of this in the appreciation of the loonie. That appreciation will continue.
Canadians need to invest in our future by repaying the debts we have run up in our past. It is not the easy course, just the right one. Our children will thank us.
(Needless to say: there is no chance at all in the current election that any politician is going to say anything of the sort. But voters, at least the ones who are paying a little attention, are may be getting smarter. Being bribed with their own money for no other reason than political opportunism is becoming less and less attractive - especially when both the Liberal and the Conservative party are playing the same con.)
Written by jay on December 4th, 2005 with 10 comments.
Read more articles on CPC and Canadian Politics and Fiscal Policy and Liberals and Uncategorized.
At the moment the campaign is essentially doing a practice run for the real campaign which will begin on or about January 3. Yes, the leaders are flying about. Yes, Buzz Hargrove has endorsed strategic voting for the Liberals if the NDP candidate has no chance. Yes, Harper is making a blistering annoucement a day schedule - which will be turning to farce soon as he runs out of national level, new, iniatives.
So what?
The media and political junkies are paying attention; the rest of the country is realizing that there are only 21 shopping days until Christmas, dealing with Canadian winter and wondering if they can afford a sunny vacation in February. The antics of the last Parliament, the Adscam crookery, the pathetic site of Ralph Goodale playing Santa Claus a couple of days before the government fell simply underlined the disenchantment so many Canadians feel about politics. The last thing on people’s minds is the esoterica of whether a GST or an income tax cut is economically more sensible.
Martin is taking today off. Were I running the Liberal warroom I would suggest he take a lot of days off between now and Christmas. Let Harper make the running and take the heat for his Advent and beyond calender of goodies for the electorate. For Martin, shoring up support in Quebec and the Maritimes and several short trips to the 905 will pretty much cover all the campaigning he needs to do.
Now, come January 3, Martin and the Liberals are going to have 30 days of Conservative promises to attack and attack they will. For two weeks Martin will fire broadsides into the carefully constructed Tory platform. they will be neither fair nor accurate but they will grab the attention of a public which, after Christmas and New Years, is ready to listen.
This will be campaign 2.0, out of beta and ready for the real world. It will not be pretty.
Written by jay on December 4th, 2005 with no comments.
Read more articles on CPC and Canadian Politics and Liberals and NDP.
SES/CPAC is doing a nightly tracking poll. They did in the last election and it was certainly interesting if not a deadly accurate predictor.
As of December 2 the national numbers are: Libs 36, CPC 31, NDP 14, BQ 14, Greens 5.
SES breaks out the numbers regionally but with much greater uncertainty because of the smaller sample size.
Atlantic Libs 48, CPC 30, NDP 19
Quebec Libs 31, CPC 8, NDP 5, BQ 54
Ontario Libs 44, CPC 34, NDP 17
The West Libs 31, CPC 35, NDP 18
I entered James Bow’s election prediction contest with a seat breakdown of
CPC 50, BQ 70, NDP 40 and the Liberals 148
The basic premise of my analysis - other than the desire to go for an outlier prediction and win one of Sean’s very beautiful photographs - is that small shifts in popular vote in the right locations can shift a lot of seats quickly. The utility of a tracking poll at the national level is minimal; but at a regional level, despite the small sample sizes, overnights can show trends which actually translate into seats.
For example: if the BQ can bump its percentage in Quebec to 57 or 58 there is every chance that that shift will be coming from Liberal voters in currently Liberal seats. Similarily, if the Liberals maintain a 10 point lead in Ontario CPC marginal seats are going to be lost.
It’s too bad that SES has once again lumped BC in with the rest of the West because there are at least ten and maybe as many as fifteen BC seats which could change hands in this election. This tends to be obscured in the results from the West where the Alberta numbers for the CPC tend to drown out the more subtle shifts which may result in seat changes.
The one thing which is true about the national results is that the Liberal numbers are somewhat seat inefficient because of th number of Liberal votes which will not elect members in Quebec and the Tory numbers are also a bit misleading because there will be Conservatives elected in Alberta who will run up majorities four or five times larger than they need to win.
None of which is news but as I will be watching the SES polls it is worth reminding myself and my readers that they conceal as much as they disclose.
Written by jay on December 4th, 2005 with no comments.
Read more articles on CPC and Canadian Politics and Liberals.
It is pretty clear that Harper and the CPC have written off the more libertarian end of the conservative interest.
Mandatory minimum sentences are a lovely way to send the message that the CPC is tough on drugs. Rather like the GST, the fact that qualified experts actually think mandatory minimums are, at best ineffectual, at worst counter-productive in that, with hard cases crowns and judges will be inclined not to charge or not to convict if they know that there is a mandatory minimum in place, is not going to stop the Tories.
It is no surprise that the CPC is also backing away from the last twenty years of scholarship and experience with respect to marijuana legalization. It seems pretty clear that the Tories want te establish brand differentiation early and this position will certainly ensure that on this issue the Tories have left the building.
Politically it is difficult to see how these positions are going to actually win any votes; but it is a certainty that these fairly simplistic postures will energize the base in the Rovian sense. No bad thing if you are trying to avoid the 50 seat scenario; hopeless if you are looking to pass the Liberals.
Written by jay on December 4th, 2005 with 6 comments.
Read more articles on CPC and Canadian Politics and Liberals and Pot.