What’s on the agenda for G8/G20?

China
Prior to the G8, Prime Minister Harper will hold bilateral with President Hu from China on June 24th who is in Canada for a state visit. The visit will mark 40 years of diplomatic relations between Canada and China. Bilateral trade now stands at $50 Billion between the two countries. It is expected that PM Harper will raise the importance of China’s role in helping to bring stability and security to the Korean peninsula as one of the few nations that talks to North Korea and as a permanent member nation of the UN security council.

India
On June 27th, PM Harper will host bilateral with Indian PM Singh in Toronto. PM Harper will look to build upon agreements signed during last meeting in India which addressed economic partnership and energy cooperation.

Focus of the G8 for the government of Canada:
– focus on achieving 2015 United Nations Millennium Development Goals (halving extreme poverty levels, cutting the spread of HIV/AIDS)
– nuclear non-proliferation and continuing work achieved at non-proliferation treaty review conference in NYC and Nuclear Security Summit in DC. Focus specifically on keeping nuclear arms out of the hands of terrorists.
– Recognition that Iran and North Korea continue to pose threats to global security.
– International cooperation on fighting Latin American, Caribbean, West African and Asian transnational criminal networks.
– Muskoka Initiative on maternal, newborn and child health.
– Progress in Afghanistan, in Pakistan and in the Middle East on combatting terrorism and its link to organized crime and drug trafficking
– G8 leaders will join seven African leaders as well as the leaders of Colombia, Haiti and Jamaica in order to discuss the interlinkages of crime and terror networks.

G20 priorities for Canada:
– G20 should restore public finance while maintaining economic growth in order to achieve global economic recovery.
– Canada implores G20 nations to tackle fiscal consolidation, reduce debt, reduce deficits and for countries to return to balanced budgets
– address root causes of global economic crisis
– fully implement stimulus plans
– prepare fiscal consolidation measures
– resist protectionism
– promote open markets
– continue reforms to financial and regulatory systems
– continue governance reforms to international financial institutions and multilateral development banks
– call upon the international financial institutions and multilateral development banks

Tim Hudak interview at the Manning Centre Conference

I asked Hudak about principle vs pragmatism in opposition compared to government, about how he would balance the deficit, the difference between Harper/McGuinty deficits and about the renegotiation of health transfers that is rapidly becoming visible on the horizon. I spoke to the Ontario PC leader after his remarks at the Manning Centre networking conference in Ottawa this weekend.

Call and answer

I like Warren Kinsella. One of the reasons I like him is because he went for my open question, brought in the other side to weigh in, and now this allows us to fill in the blanks too. Oh, and he introduced me to Bob Rae, the next leader of the Liberal party!

Tweet the first:

Tweet the second:

Other potential tweets:

“Senate reform: can’t wait to pass legislation that has popular support by folks that have a democratic mandate from Canadians! The scotch budget, however, will remain.”

“Respect for the Alberta: Liberal-free since 2006. WK may return but has to wear black hat in the parade”

“When the ‘decade of darkness’ for the military re: Liberal investment is so far in the past, kids file it along with ‘moon landing’ and ‘Michael Jackson’ as crazy #$@* that happened that only our history books can really tell us about”

“When the Liberal party stops offering us out-of-touch humanities professors to feast upon, and tosses us a street-brawler like Jean Chretien or (oh please) Ruby Dhalla”

“When ‘Unity Crisis’ is mistaken as the name for an 80s revival band that covers Starship, rather than our recurring Liberal ballot headache”

What other things are you hopeful for in the future?

Liberals: election now, before the economy gets better

In politics, one is usually driven to action to prevent a problem from developing, or to act to make something better when it is going in the wrong direction.

On the website of Michael Ignatieff’s war room chief Warren Kinsella, we learn why the Liberals are itching for an election now:

[In] politics, as in war, you attack when your opponent is weak, not strong. … Right now – due to the recession, due to a stumblebum Tory team, due to their leader who nobody likes – we know the other side is really, really weak. In a few months – due to a economy rebounding, mainly – they could be strong. Go with what you know is the reality, not what you hope may be the reality.

Of course, this logic is sound; if your enemy is weak, attack your enemy. This is strategy 101 and Iggy’s guy is among the best in the professional political class. However, it is difficult for Michael Ignatieff to say that he wants parliament to work when Liberal strategy reveals itself as ambition at the expense of jobs and the economy. If the economy is on track to rebound, why endanger this by throwing the helmsman overboard with an election? Prime Minister Stephen Harper released his second report on the Economic Action Plan to see Canada through this difficult economic period. Conservatives have revealed that 80% of planned stimulus is already out of the gate and those shovels are in the ground. It was also revealed that increased EI payments accounted for a large chunk of the deficit.

It will be difficult for the Liberals to go to an election on the economy for the following reasons.

  1. their chief election strategist explains that the economy will get better under the Conservatives and that the reason why Canadians should go to an election is because the Liberals don’t want the Tories to get the credit.
  2. they’ve complained that the stimulus money isn’t flowing when in fact it is.
  3. they’ve complained about the size of deficit when their only major plan for the economy is to increase EI eligibility (ballooning the deficit)
  4. Michael Ignatieff has written 17 books but at most a few scant paragraphs on economic theory while Stephen Harper has a graduate degree in economics.
  5. Ignatieff’s friends in the White House are racking up substantially larger deficits per capita and are doing nothing to stop an allied congress from destroying the Canadian economy with its “Buy American” protectionism.
  6. The Liberals have not produced any substantial pushback outside of Parliament save a boring two minute Youtube lecture on the politics of nice from Dr. Ignatieff. And on the economy? Grit girl Youtube ads? Torytube it ain’t, Warren.
  7. The Liberals don’t have a strong record themselves of balancing their own books. In substantial debt themselves under Dion and still posting underwhelming fundraising numbers under Ignatieff, how can the Liberals manage our pocketbooks when they cannot manage theirs?
  8. Conservative scandals highlighted by the opposition have not been on the economy. Raitt-gate will not turn the average voter. The scandal regarding Raitt’s unfortunate private remarks about cancer may indeed represent a “sexy” opportunity for career advancement for Dr. Ignatieff, however, he’ll find that the average Canadian voter doesn’t find this inside the Queensway stuff all too sexy or even relevant to them. Isotope supply is relevant, but a tape recording is not.
  9. If Michael Ignatieff wants to run an election on EI, he should wait a few years in order to pay as much into the system as the average Canadian voter. Forgive the talking point, but the man was outside of Canada for 34 years.
  10. During an election, Liberals will without fail propose social spending to fix the economy. This puts them on the ugly side of the wedge that is the $50 billion deficit.

July election on EI? Possible but quite improbable

Is there election fever in Ottawa? This seems to be the question on Parliament Hill whenever we move through the months of May and June in a minority parliament. Of course, the most fevered example was during the late months of spring in 2005 when Stephen Harper’s newly minted Conservative Party tried an assortment of creative parliamentary procedures to take down the Paul Martin government only to be upset by former Conservative leadership candidate Belinda Stronach when she crossed the floor to sit in cabinet.

But in June of 2009, months after an attempt by opposition parties to form a coalition government without vetting of the idea before the Canadian electorate and just months and a few weeks after that electorate returned Stephen Harper to power to deal with the global economic crisis, will we have yet another election?

From the MPs that I’ve spoken to, many believe that it is a real possibility with Michael Ignatieff tabling a confidence motion on Employment Insurance which will paint the NDP into a corner forcing them to support a vote of non-confidence in the government. For Jack Layton, leader of that fourth party in the House, his votes are critical to this government’s survival. Though Mr. Layton’s party is not poised to make any serious gains in an election held in the short-term any failure to deliver – in the context of an embarrassing collapse of the coalition game – will have the party grassroots looking to replace its leader. The next election will be Mr. Layton’s last if he does not perform. Mr. Layton needs more time to explain why he’s still fighting and build a real election plan. NDP executive director Brad Lavigne was in Washington last week meeting with senior Democrats to get a fix on both strategy and tactics. As for NDP confidence, they could easily save face if a number of their MPs had the flu on the day of Ignatieff’s confidence motion.

As for the leader of the Liberal Party, Mr. Ignatieff has an important objective; the man who ran second place to Stephane Dion in a leadership race doesn’t want to go into the summer looking like his leadership predecessor. You’ll recall that when Mr. Dion was leader of the party, his MPs were shamed and embarrassed as Stephen Harper rammed his legislation through while the Liberals feably sat on their hands. While Mr. Ignatieff doesn’t face a caucus revolt over inaction, he does want to appear as though he’s given the Conservatives a rough ride and his party will claim it as a victory as they go into the summer with their heads held relatively high. Strategically, going to an election in July wouldn’t be ideal for Mr. Ignatieff as a $5-6 million Conservative pre-writ ad buy defining the Liberal leader would be much more effective if the Conservative messaging is fresh in the minds of Canadians. On the other hand, despite a $50 Billion projected deficit posted by the Conservatives recently, the Canadian economy is starting to show signs of recovery. If Michael Ignatieff wants to defeat Stephen Harper in an election which which will certainly be defined upon the Conservatives’ traditionally perceived strength (taxes/economy), his advisers are likely telling him that this may be his best chance. Yet Michael Ignatieff’s only visible policy proposal on this has been EI reform.

As for the Prime Minister, he will only precipitate an election if he believes that he can orchestrate a majority win. Many observers now agree that the dissolution of parliament previous to the last election was a defensive measure by the Prime Minister as he read the global economic indicators and found himself staring into an abyss about to rattle Canadians. If we are to have an election, it will be because the Prime Minister would have allowed it; either allowed himself to fall on a Liberal confidence motion, confident on the framing on an election on EI, or because he will orchestrate a political crisis which will upend the polls. For example, polling is moot if the Prime Minister were to frame an election on cutting public subsidy for political parties with the $50 billion deficit to back him up as to why. “If an election were to be held today” is a pointless question when elections are framed, campaigns are waged and events occur to shape electoral intent during a 36 day writ campaign.

An election based upon EI is a ruse. It’s a ruse because it splits voters into two politically inequitable camps: the employed and the unemployed – the latter won’t deliver a win for Ignatieff. It’s a ruse because most Canadian voters have paid more into EI than Michael Ignatieff as the Liberal leader filed his tax returns to British exchequers and American secretaries of the treasury for thirty four years. It’s a ruse, because the man who came second to Stephane Dion is only trying to appear that he has already bested him now after just a couple months as Liberal leader. An Liberal triggered election on EI is a ruse because the Conservatives occupy an entire side of the debate, the other parties will be fighting each other to stake out their position on the issue. Finally, the Liberals need to rebuild their party. They are still only raising money at par with the NDP and of their nominations, I’ve heard that they still have about 200 spots to fill.

An election in July? A dreadful prospect for any opposition party and not ideal for the PM unless the man best positioned to set the stage can line up a major win.

Liveblogging Flaherty’s economic statement

4:09pm: Persuant to a standing order I do not recall, the Minister of Finance tables his economic statement.

4:10pm: Time of unprecedented economic deterioration. Uh oh, this sounds bad.

4:11pm: IMF projects global growth weakest since ’93. Good thing the IMF puts Canada in the best fiscal position of the G7.

4:13pm: CTV reports that the Liberals will not support the economic statement. This statement is a matter of confidence and if defeated would precipitate an election.

4:14pm: Reformation of global finance will be done with global partners.

4:15pm: Trade will be expanded.

4:15pm: Opposition mocks Flaherty for saying the government planned for the downturn last year.

4:15pm: Taxes have been reduced by $200B. Investments have been made in infrastructure, S&T and training.

4:16pm: Funding for infrastructure projects. Taxes down by equivalent of 2% GDP. Sustainable and permanent tax relief.

4:19pm: Canada will come out of the crisis in a strong position because it went in a strong position.

4:21pm: Will not engineer a surplus just to say we have one.

4:21pm: Budget is balanced for now, but future injection of government stimulus may move Canada into deficit.

4:22pm: Days of chronic structural deficits are behind us.

4:23pm: Tax dollars for political parties and tax credits for donations brought up. Flaherty talking about the $1.75 per vote subsidy. Political parties should pay their own bills without excessive tax dollars.

4:25pm: $1.75 subsidy gone as of April 2009.

4:26pm: Spending growth will follow sustainable track.

4:27pm: Spending review will also look into crown corporations. Government will save $15B over the next five years because of expenditure management system.

4:28pm: re: public sector… New legislation will put in place “annual wage increases for the federal public administration, including senior members of the public service, as well as Members of Parliament, Cabinet Ministers, and Senators, of 2.3 per cent in 2007–08 and 1.5 per cent for the following three years, for groups in the process of bargaining for new agreements.”For groups with collective agreements already covering 2008–09, the 1.5 per cent would apply for the remainder of the three-year period starting at the anniversary date of the collective agreement. In addition, the legislation would suspend the right to strike on wages through 2010–11.” Some honourable socialist members: “oh, oh”.

4:32pm: Largest increase in infrastructure spending. $6B in spending. Aim is to provide new jobs.

4:33pm: Flaherty wants more power to help sustain the banking industry. These powers would include:
– Funding in the unlikely event that there is a draw on the Canadian Lenders Assurance Facility.
– The Canada Deposit Insurance Corporation (CDIC) to establish a bridge bank as a further resolution tool to help preserve banking functions.
– An increase in the borrowing limit of CDIC to $15 billion to reflect the growth of insured deposits since the last increase in 1992.
– The Minister of Finance to provide the CDIC Board of Directors broader scope of action when systemic risk concerns may result from the potential failure of a member institution.
– The power to direct CDIC to undertake resolution measures when necessary to prevent adverse effects on financial stability.
– The provision to CDIC of greater flexibility in the timing of preparatory examinations.
– The Government to inject capital into federal financial institutions to support financial stability, with appropriate provisions to protect taxpayers.

4:37pm: taking action to allow RRIF holders to keep more money in their RRIFs.

4:40pm: increase available credit to the exporting sector. $350 million injection of credit for these businesses.

4:41pm: Inject an additional $350 million of capital to the BDC to help SMEs.

4:44pm: “The greatest histories are written in the toughest times”

4:45pm: Scott Brison to respond for the opposition. Demands a “real action plan”. Brison accuses Conservatives of symbolism over substance. Conservatives have provided gimmicks instead of a game plan. “Nothing for manufacturing, autos”.

4:46pm: Brison: PM wants to change the channel from economy to politics. Canadians are hurting. They want talk on economics rather than politics.

4:48pm: Brison bringing out the personal anecdotes describing real Canadians and real concerns. Liberal are making this statement out to be about that $1.75 vote subsidy cut.

4:50pm: Brison accusing the Conservatives of huge spending and huge cuts at the same time.

4:51pm: Brison: government is selling the house to pay for the groceries.

4:51pm: Brison calls Flaherty “Deficit Daddy”.

4:52pm: NDP will not support economic statement.

4:53pm: CTV reports that the government is digging in their heels on the $1.75 subsidy.

4:55pm: Brison brings up Obama and speaks about his economic team and accuses the Conservatives of schemes.

5:00pm: Brison calls for “a new deal”. Brison’s seat mate earlier called out “FDR”

5:01pm: Gilles Duceppe responds for the Bloc. Duceppe: hat was presented was not an economic statement but an ideological statement.

5:02pm: Duceppe: government blind to urgent need to stimulate the economy. Government is attacking democracy, women’s rights and worker’s rights. Government has attacked Quebec.

5:03pm: Duceppe: government has sparked a democratic crisis.

5:03pm: Duceppe: economic statement runs against Quebec’s interests.

5:04pm: Duceppe: Bloc will not cave in on its principles.

5:06pm: Duceppe: Bloc ready to support the reduction of the size of the state.

5:12pm: Bloc Quebecois will oppose the economic statement.

5:13pm: Layton responds for the NDP. He’s got his wounded face on.

5:14pm: Layton: government has failed to act on the economic crisis. Layton is speaking quietly and slowly to show concern and disappointment.

5:15pm: Here comes the anger. Now Layton is doing some finger pointing.

5:19pm: Layton applauds Duceppe and Brison for “standing up to ideology”.

5:21pm: Layton reiterates NDP’s position that they will vote against the economic statement.

Jim Flaherty at the Fraser Institute

Last night, supporters of the Fraser Institute gathered in the Adam hall of the Chateau Laurier to listen to federal finance minister Jim Flaherty deliver an assessment of the Canadian and global economies. On Thursday, the minister will be delivering a sobering fall economic update in the House of Commons and last night, we got a hint of what might be to come.

Flaherty was introduced by former Ontario PC Premier Mike Harris, the finance minister’s former boss and mentor. Harris disappointed the crowd saying that he was not about to return to politics but that a deep-rooted fixation on Canada’s future prosperity is one that both he and Preston Manning hold. Manning and Harris are the authors of Canada: Strong & Free, a six-volume set of books describing Canada’s ideal path along internationalism, economic freedom, federalism, and education among other topics. Last night’s dinner was held to mark the release of their sixth summary volume called Vision.

In minister Flaherty’s speech, he described Canada’s position in a rapid yet sustained decline of the global economy and while trumpeting Canada’s economic leadership among G7 nations, we are simply the country that is sinking the slowest. Indeed, at a recent meeting of the G20 finance ministers, Mr. Flaherty revealed that not one minister was optimistic about their economies domestic or international. Flaherty will project a surplus through the end of this fiscal year ending April 2009, however, as he conceded the next fiscal year will present “a challenge”. The minister sketched a fiscal portrait in broad strokes declaring that the crisis will not end tomorrow, next week or in the next few months and warned that we have not yet seen the worst of the situation.

Yet despite its faltering position, Canada is an economic leader among its economic peers. Flaherty described the economic measures implemented by the federal government to prepare for such an eventuality saying that they’d never apologize or regret cutting the taxes of Canadians or bringing in more stringent regulatory frameworks to maintain Canada’s economic structure. Indeed, the IMF, as Flaherty noted declared Canada to be the best economic shape going into the global economic downturn.

In the United States, President-elect Barack Obama has conceded that he will delay the rollback of the Bush tax-cuts and in Canada, Flaherty suggests that this Conservative government will maintain Canadian tax-cuts to retain this increased spending power among Canadian consumers.

Perhaps the worst-kept secret in Ottawa is that this government will project a deficit in the near future. Flaherty has declared that he will sing from the same songsheet as other national government and use the federal treasury to stimulate growth, or rather stem the “negative growth”. For this, infrastructure minister John Baird will become a hero of sorts in Ontario as federal dollars are channeled through on road, rail and other contruction projects sustaining jobs. Prime Minister Harper days earlier declared that some deficits provide opportunity and are necessary. Flaherty promised that the stimulus would be underway by March 2009. The pairing of the temporary and artificial sustenance of Canadian jobs via government spending with the consumer spending power of a less-tax-burdened population may help the good ship Canada weather the global economic storm until it subsides. Or at least the theory goes.

Deficit spending will be accomplished in order to sustain the “real” economy. Flaherty promised no ‘structural’ deficit.

For my part I asked the minister during the dinner about conservative opportunity describing this as a time when Conservatives in power could be allowed to make cuts to government spending and suggested that a reduction in the size of government rather than its growth would help balance the books in a real rather than artificial way. The finance minister unfortunately balked at the question suggesting that some areas of growth are necessary such as the rescue of the state of the armed forces. If given a follow-up, I would have suggested that some cuts are necessary too. Even in a recession, the government is a growth industry. The minister described a treasury board review of all programs to measure value for money and promised to extend this review through both core and non-core assets.

As for the public sector, wages will not increase faster than the private sector. This has caused some concern among public sector employees and the minister reached a deal with PSAC, it’s largest union late yesterday. The two parties have settled on a wage increase of 6.8% over the next four years.

On interprovincial trade barriers, the minister promised to break these down and suggested that the current economic climate behooves governments to allow uninhibited trade within Canada. The minister welcomed a cooperative spirit among provincial and territorial ministers on addresses the economic downturn domestically.

The minister declared that the government would not artificially engineer a surplus. Perhaps this is a reflection by the minister on Paul Martin’s method of balancing budgets by slashing transfers to the provinces and “fixing” healthcare for a generation. Ontario has warned Ottawa not to balance its books on the back of the province and what is needed is economic stimulus in the province through reduction of its corporate tax rate. For the part of the Conservative federal government, Flaherty described a $37B debt reduction, a reduction of the tax burden by $200B and a 2012 projected corporate tax rate of 15%.

On securities regulations, the minister promised the creation of a single national securities regulator. The federal government will seek to regulate leverage and large pools of capital. A more transparent market infrastructure is needed according to Mr. Flaherty.

The sum of Flaherty’s speech was to say that this government is acting to sustain economic activity for the foreseeable future as economies around the world reconfigure to recover. Taxes will remain low, spending is temporary and a deficit would be a temporary and an short aberration from Canada’s economic plan.