The Pearson Centre for Progressive Policy

Progressive Dialogue and Policy for a Better Canada

Oliver’s tax and spend strategy leaves government on the edge

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November 19, 2014

Oliver’s tax and spend strategy leaves government on the edge

By Andrew Cardozo

Much is being said about the bare cupboard that the Conservative government is creating, so that it will box in other parties and prevent them from making any promises that cost money.  Problem is the joke is on the Canadian public.  This really boxes in the Government of Canada including the present one, and in so doing provincial and municipal governments.  This government whittled away the surplus left by the Liberal government in 2006 with the popular cut in GST, resulting in a tenuous situation with the unpredicted financial crash hit in 2008.

And here we are again, on the brink of a surplus, just climbing out of the mess of 2009-2014 and rather than having a nest egg, Finance Minister Joe Oliver has revealed the Conservative government’s approach of glorious tax cuts all round – well actually not really all round.  For those income brackets more likely to vote a certain way.  Instead of a $6.4 billion surplus predicted in the February budget, we now can expect a $2.9 billion surplus.

And here we are again with another crash, this time of energy prices – which is hurting the Canadian economy.  The golden egg of the Canadian economy, petroleum,  stands to be a little less shiny because of the sudden and considerable decline in oil process worldwide.  Gotta love that globalization!  They, somewhere out there, reduce the price, or use less oil and we here get the blowback instantly.  The strongest part of the Canadian economy is recoiling.  And what if we continue to have major disasters, be they train derailments, floods or ice storms, whose repairs cost million and billions. That $2.9 billion may not even be $2.9 after all.

The desire for tax cuts and tax breaks is so strong, and stands to be rewarded so handsomely, that declining to be prudent managers of the Canadian economy seems to be a no brainer.

And at the time that economists all over are saying this is the time to invest in infrastructure, when interest rates are as low as they are, and making money very cheap.  It’s not good enough for our federal politicians to say the infrastructure deficit is a municipal responsibility and therefore can be ignored by the feds.  As the legendary Myron Thompson once said, “there’s only one taxpayer, and that’s you and me”!

Infrastructure is not about prettying up neighbourhoods, or building gazebos, it’s about making sure the roads can be travelled, that bridges don’t fall down, that sewers don’t back up when the floods come, that our broadband network is world class, that Canadians in big cities can use more public transit and less cars, and…..

Squandering a surplus is a high stakes game for political parties, governments, for vets, for seniors, for young parents, for average Canadians.

Andrew Cardozo is president of the Canadian Centre for Progressive Policy.

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