I am coming to that. That was a government in which the two most important economic ministers of the current federal government, the Minister of Finance and the President of the Treasury Board, were both key players.
The Harris government laid off 10,000 public servants, closed more than 30 hospitals and fired 8,000 nurses. But better than that, of even greater incompetence, the Conservatives found they had made a mistake and they had to hire back many of those nurses.
So zealous were they to cut taxes before the money was in the bank and so blatantly did they fix the books that what happened after they lost power? The auditors came in and instead of finding the promised balanced budget, what did they find? They found a deficit, and it was not a small deficit. It was a deficit of $5.6 billion.
Now two of the prime architects of that financially disastrous regime are sitting across the aisle holding the two economic portfolios of the federal government. That fact alone should make Canadians quite worried about Conservative fiscal incompetence, but there are other reasons.
In the election campaign, when the Conservatives released their economic platform, they got the numbers wrong, so they re-released it. Then they got the numbers wrong again, so they re-re-released their election platform. Now that is incompetent.
Just yesterday, the Minister of Finance said that he was cutting income tax, when in fact he raised it. The nicest interpretation is that the minister is demonstrating crass incompetence. The most likely explanation probably cannot be said in the House.
The Conservative plan consisting of increasing income tax to reduce the GST is a poor financial measure and, once again, it is incompetent.
As Herbert Grubel, a former Reform finance critic, told me, reducing the GST may be a good political move, but it is a disastrous economic one. In other words, it makes sense only for a Prime Minister who puts political opportunism before the good of Canada.
The Conservative Party's refusal to identify its cuts on budget day is also fiscally irresponsible, but it is not a surprise. The Harris duo across the aisle know this trick well: cut the taxes today with vague promises of spending cuts some time tomorrow. This is a recipe for deficits if ever there was one. They certainly delivered a big one, $5.6 billion.
Our government disclosed over 100 line items of detailed expenditure reductions on our budget day last year. If the Conservatives had any degree of fiscal competence and fiscal responsibility, they would have done the same thing yesterday, but they did not.
Yesterday the budget eliminated what is called economic prudence, a technical term which is essentially money set aside to provide further assurance against running into deficit if something negative hits the economy, and something that is negative always might hit the economy. We have seen SARS. We have seen hurricanes from time to time. We have seen recessions. One hopes it will not happen, but even a terrorist attack could happen. Many things could happen. If we are skating close to the edge, if we have gotten rid of the prudence, there is nothing there to protect us should some unforeseen negative occurrence happen. Then the Conservative government would be much closer to deficit than our government under the Liberal leadership would ever have been. This is fiscally irresponsible, fiscally incompetent. It is playing fast and loose with the nation's finances.
The Prime Minister speaks disparagingly of surpluses and the associated debt paydown as excess taxation. When the Prime Minister or finance minister travels internationally to G-8 meetings I know they get lavish praise for balancing the books. I have heard it: “How did you get rid of your deficits? What magic formula does Canada have to get rid of deficits when other countries have failed to do so?”
Does the Prime Minister answer that question? The Prime Minister I assume, since he does not like fixed surpluses, would say, “No, George, this is not a success; we have a terrible problem in Canada. Our surpluses are much too big”. Or he could say:
“No, Jacques, we have a crisis in Canada. Our surpluses are much too big”. This attitude of the Prime Minister’s is ridiculous.
If he actually did say that to George Bush or Jacques Chirac, he would certainly be a laughingstock.
The Prime Minister fails to understand that surpluses and debt paydown are not excess taxation for today's generation. They are lower taxes or better government services for future generations. It is dangerous when the Prime Minister of Canada disparages debt paydown and when he does not care about future generations, especially when we live in a world of an aging population.
Maybe it is not surprising. The Prime Minister seems to care about only one thing: votes in the next election. Future generations will not be voting in the next election. That is sufficient reason for him not to want to pay down debt for the benefit of future generations, because they will not be voting come the next election.
All this is very worrying for Canada’s economic future. The country’s finances are so healthy now that the risk of deficit is not imminent. However, the government’s financial mentality and incompetence are such that I am worried about what the Conservatives will do with our vital asset, that is, our financial competence.
We who have built up this asset have to be extremely vigilant so that it is not destroyed by the government. Canadians cannot afford to return to the long-term problems that are engendered by the Conservatives’ usual deficits and their financial incompetence.
The other long-term problem posed by the budget is the absence of a grand design for the country. The budget does not ask the sole question that any responsible minister of finance would ask in 2006.
The question is as follows: how can a small country with some 30 million inhabitants continue to prosper in a world in which superpowers such as China and India are beginning to elbow their way in and former superpowers such as Europe and the U.S. are taking dynamic measures to advance their own economic interests?
The government seems to think that the world owes Canada a living. It does not.
In terms of any sensible plan that would answer this question, the government is either going in precisely the wrong direction on tax policy, or it is totally missing in action on everything else.
If the object is to enhance Canada's saving and investment, promote productivity and prosperity, then a hike in income tax to pay for lower GST is the worst policy in the world. This is not a controversial statement among economists and policy experts. The government is proposing to fritter away some $10 billion per year, an enormous sum of money, in a tax cut that does nothing at all for Canada's future prosperity or competitiveness. This is another triumph of political expediency over what is best for Canada. It is a disgrace.
I truly believe that the Prime Minister, himself an economist, should know better than to fritter away all the taxpayers' money in a way that does absolutely nothing for the long term economic health of Canada.