9.27.2006

cuts

Here's a bit of Canadian politics that looks all too familiar to me: conservative government = budget cuts.

Whether it was New York State's Teflon governor George Pataki or the massive Reagan-era budget cuts - for which funding was never restored - I've seen first-hand what that looks like. A tiny savings that taxpayers will never notice in their wallets, a freebie for voters who vote against "government handouts", or are biased against people who benefit from them, and for the programs themselves, devastation.

And in this case, the Harper government cuts programs while while there's a budget surplus! Paying down national debt is important. But how much money could Canada save if it stopped killing people in Afghanistan? (Some opinions here.)

These are the kinds of programs many people love to mock - funding for groups mounting court challenges that test constitutionality, or stop-smoking programs for First Nations people - as wasteful or catering to "special interests". But if you've ever worked in public health, or education, or the arts, you've seen the important work these programs do, and seen the vacuum their absence will cause. Funny how few, if any, of these budget cuts effect social programs in Quebec, where the Conservatives most need votes.

Star columnist Thomas Walkom, one of my favourite local reads, has an interesting take on this. He says the Tory spending isn't significantly different from Liberal spending, and that the differences are superficial. This is not to say the Conservatives are really more liberal than we think. Rather, that the Conservatives are not the great fiscal managers, and the Liberals are not the wasteful spenders, that the Tories would have you believe.
If there is a theme to the spending cutbacks announced by federal Finance Minister Jim Flaherty yesterday it is a familiar one: The Stephen Harper government wants to get re-elected.

How else to make sense of an exercise in alleged fiscal restraint that, on the face of it at least, is much less than it seems?

There are the usual ideological bows to the Conservative base. The $5.6 million court challenges program, for example, is history. That's the federally funded program that gave money to so-called disadvantaged groups who wanted to mount constitutional challenges. It's been used as evidence by some Conservatives (including Harper's chief of staff, Ian Brodie) to prove that women and gays now have more clout with the courts than rich white guys.

In fact, Brodie's thesis is untrue. The bulk of Supreme Court decisions, most of which do not make the front page, favour corporations. But that's beside the point. A good many in Harper's Conservative base believe that the country is run by women, gays and other undesirables. They'll be thrilled to have this shocking state of affairs addressed. The government clearly hopes they will be so thrilled they won't notice how paltry the spending cuts are in total.

And paltry they are. The federal government spends roughly $210 billion annually. Finance Minister Jim Flaherty's $1 billion in spending reductions are to be phased in over two years, which means his cutbacks amount to about one-quarter of one per cent annually.

Even then, the cuts aren't always exactly cuts. About $256 million of the total is to be accounted for by greater efficiency. Statistics Canada, for instance, is supposed to save $15 million by being more efficient. How is it to do this? By firing staff? Cutting back on what it does? Re-using paper clips?

So far, we don't know.

In many areas, the government is counting as savings money that was simply never spent. But here, too, we know too little to say whether the cutbacks mean anything.

For example: Flaherty includes $11.7 million that was supposed to have gone to fight the pine beetle infestation in British Columbia but in the end was never disbursed. Is this good public policy? Bad? Was the money not spent because it wasn't needed? Or is it simply that Stephen Harper's Conservatives like pine beetles? We don't know that either.

What is clear is that the Conservatives are trying their best not to offend too many people - a sensible strategy for a minority government that may soon have to go to the polls. So there aren't many real cuts aimed at the broad middle classes. Program spending is down this year, for instance, largely because a one-time $4.3 billion expenditure in 2005 to deal with medical wait times wasn't repeated.

But even that is of little real significance since the former Liberal government had not planned to repeat this particular bit of spending.

Where the government has unequivocally cut, it has done so to make a political point - or, to use the language of marketers, to brand itself.

For instance, it has eliminated the medical marijuana research program. Clearly, the hope here is that this cutback will lead the television newscasts, thereby reinforcing in voters minds the notion that Stephen Harper's law and order Conservatives don't toke up.

The reason for Flaherty's lackadaisical attitude to spending cuts is that he didn't need to make any. Like the Liberals before them, the Harper Conservatives miraculously ended up with much more in the kitty than they predicted - $5.2 billion more, to be exact.

They'll put that, along with the $8 billion surplus they did predict, to paying down the debt. This is not a terrible idea given the strong economy. But the very fact that the government has the luxury of putting $13 billion into debt repayment only serves to underline that Flaherty's spending cutbacks are three parts perception to one part reality.

It is not that the Harper Conservatives aren't different. They are. Their early decision to kill the national child-care program demonstrates that. But yesterday's announcement demonstrates that in fiscal terms, they are no more tight-fisted than their Liberal predecessors.

And like the former Liberal regime, they are using the annual economic update primarily to make a political point - about who they are and who they are not.

5 comments:

Scott M. said...

To be fair, there's a law, passed by the Liberals, in place which can't be overturned quickly enough to move the billions into the next year's budget. If they did it now they could stop that from happening next year, but this year their hands were a bit tied.

The idea behind the cuts was that they believe they are putting together a balanced budget for *next* year, which would require cuts. That being said, it's likely they underestimated revenues again and they probably don't need to cut those programs.

The silliest cut they made from a PR perspective was the "cut" to the Mountain Pine Beatle program. What a way to piss off the west.

James said...

How else to make sense of an exercise in alleged fiscal restraint that, on the face of it at least, is much less than it seems?

This is completely unrelated to the thesis of the article, but...

Aren't "on the face of it" and "what it seems" pretty much the same thing? Isn't this sentence talking about "an exercise in alleged fiscal restraint that looks like much less than it looks like"?

L-girl said...

Isn't this sentence talking about "an exercise in alleged fiscal restraint that looks like much less than it looks like"?

I don't think so.

I'm not sure, but I think it means:

"an exercise in alleged fiscal restraint that, as far as I can tell, on at least a superficial analysis [i.e. at least on the face of it], is less than it is touted to be."

That's my reading of it, anyway.

And I'm on the Perpetual Redundancy Watch, also known as the Squad Squad.

L-girl said...

That being said, it's likely they underestimated revenues again and they probably don't need to cut those programs.

Yeah, I find it a little hard to believe that those programs actually need to be cut. It seems clearly ideological.

Lone Primate said...

I have to admit, as time goes by, I'm getting more and more suspicious something fishy is going on. Maybe I'm being cynical, but where the hell is the money coming from? I know it's boom times in Alberta, but that can't be enough to explain it.

Don't get me wrong; when I first heard about a budget surplus back in the mid-90s, and then that the government had paid down the debt, I was stunned. I never thought I'd hear that in my life. And then it went on, year after year.

Some part of me just thinks there's a shell game going on, and someday we're going to find out some kind of spiffy Enron accounting was going on all that time; externalization of debt, something. I know the US is spending stupidly in Iraq and really bleeding financially right now, but I can't understand how the relatively healths of the economies can be this disparate. I guess I'm waiting for the "ah ha" moment. :(