Final cabinet speculation

Mostly certain:
– Prime Minister Stephen Harper
– Flaherty to stay in Finance (confirmed by numerous people in the department)
– Baird moving (confirmed)
– Clement moving
– Guergis moving (family has flown in, and hair appointment booked early AM tomorrow apparently)
– Bernier not in cabinet
– Aglukkaq in cabinet
– Prentice staying in Industry (no indication of a move from bureaucrats or political staffers up until midnight)
– Lunn moving (family has flown in)
– Verner moving
– MacKay stays in defence
– a good number of Secretaries of State named

Responsibly speculative:
– Cannon in foreign affairs (heard this from a high level source on Tuesday night)
– Kenney at CIC
– Nicholson stays in Justice
– Strahl stays at INAC
– Clement in trade
– Baird in transport
– Verner to intergovernmental affairs
– Ambrose to HRSDC
– Shea or Duncan in Fisheries
– Raitt in cabinet
– James Moore promoted

Wildly and so irresponsibly speculative:
– Raitt to get NRCan (doubtful)
– Liberal crosses the floor and enters cabinet (sourced at a high level, but I don’t see it happening. Yet, a number of Liberals staffers have been confirming they’ve heard the same rumour for days)
– Rob Moore in cabinet

Cabinet facts and speculation

See my final cabinet speculation here

Tomorrow, Prime Minister Stephen Harper will name his new cabinet at Rideau Hall at 10:30am. There is a lot of speculation flowing out there and from this, I’ve been able to discern a few facts.

First, the easy facts: cabinet will be larger and have more women. Stephen Harper was returned to 24 Sussex on October 14th with an increased minority. Among the new seats gained by the Tories include a number of well-qualified women.

Second, Jim Flaherty stays in finance. In a time of global economic uncertainty, and after an election fought on stability in these times, changing the minister of finance could be seen as a bad signal to the world.

A few speculated that Helena Guergis may be retiring to the backbench. However, Guergis has told her junior ministerial staff that they’ll be employed in her office for at least the short-term future. I’ve also heard that Guergis is moving portfolios. Josee Verner is also moving portfolios.

Environment minister John Baird will also be moving portfolios now that green leader of the opposition Stephane Dion is stepping down. Baird was the go-to guy for acting as a shield for the government on tricky portfolios. He’ll move on to new responsibilities in cabinet.

As of Friday night, when most cabinet hopefuls had received their calls from the PM invited them to serve in the new cabinet, Maxime Bernier was left waiting. A few speculated that he’d return to cabinet, however, it seems that he’ll have some more time in the penalty box.

The newly minted Member of Parliament from Nunavut Leona Aglukkaq will serve in the next cabinet. Stephen Harper personally recruited the former territorial minister and has made northern sovereignty a defining issue of his Prime Ministership. Aglukkaq would be the first female Inuit to serve in federal cabinet. It is expected that she’ll become responsible for the new opportunities agency for the north.

Speculative news that I’m hearing is that Trade will be shifted from Foreign Affairs to Industry and that the Minister of Industry would also assume duties for this portfolio. Or, alternatively, trade will be under Industry bur will have a separate minister. The last election saw the defeat of Harper’s trade minister and a failure to re-offer by his foreign affairs minister.

On foreign affairs, I’m hearing that Lawrence Cannon will herd the cats at DFAIT. A french-speaking and centrist Conservative, Cannon may be Harper’s choice to head that portfolio.

In departmental news, I’m hearing that Transport and Infrastructure will be broken into two. Rookie MP Lisa Raitt may be a perfect fit for a reduced transport portfolio, while a Toronto area minister such as Peter Kent may fit the bill to shower the region with infrastructure development money. UPDATE: A bureaucrat that has seen the briefing books for Transport’s next minister says that infrastructure is still part of Transport’s mandate.

Will there be another Liberal defection to cabinet? I’m hearing yes and that it’ll be from Quebec (I’d categorize this as speculative even though my high level source seemed to be certain). After the last election Vancouver MP David Emerson jumped from the Liberal ranks to sit as a Conservative cabinet minister. With a Liberal party in ruin, we may just see one or more defections tomorrow.

UPDATE: Tony Clement is now confirmed as moving from the Ministry of Health.

UPDATE: Jim Prentice is expected to stay at Industry.

UPDATE: I’m hearing that Verner is going to intergovernmental affairs.

UPDATE: Late breaking speculative gossip: Ambrose to HRSDC?

UPDATE: Hill from Whip to House Leader?

Budget notes

From conversation with some friends in the PPG,
– while detained in budget lockup, someone yelled out regarding CBC Newsworld being shown on the tv: “what’s this s**t? Turn it to TSN!”. The budget document/executive summary was easily consumed in 20 minutes and there was an NHL trade deadline looming.

– budget lockup means no communication with the outside world, so reporters complained of not having Google to check facts, do background, and put together the finer details on a story. One wonders how reporting was done before 1993. But seriously, something could be done about this. Wikipedia, for example, can be downloaded to an iPod (or laptop). Not perfect, but it could help fill in some blanks in background understanding.

– One reporter said to me “I’ve never seen the Liberal government so willing to publicly commit suicide so frequently and willingly”

from conversation with conservatives,
– conservatives are generally happy that the Conservatives have passed their first “conservative budget”. Debt reduction and the new tax-exempt savings account are the headlining items for the movement.

– conservatives are unhappy about the spending increase projected for 3.4% this year. That totals 14.8% government growth under Flaherty (source: CTF). Why can’t we rein-in government growth?

– Guaranteed Income Supplement raised to $3500 should help patch things up with seniors whom have been upset about income trusts, according to Bob Fife and Craig Oliver of CTV. This budget item sounds like creeping socialism. (UPDATE: Oops, that was poorly interpreted. The GIS tax exemption has been raised, encouraging seniors to stay in the workforce.)

– taming the EI beast is a welcome change. Capping EI surpluses and moving towards better fiscal management (and proper allocation) of the fund is long overdue.

– effective communications line of the day was from Stephane Dion’s team which described the budget as “a mile wide and an inch deep”. The line was often repeated on newscasts and in print. It’s a perfect descriptor for Dion to achieve his objective: diminish the significance of the budget and and his subsequent approval of it. It’s also important to note that the Liberals have claimed this to be a “watered down Liberal budget”. Is Harper as Tom Flanagan would put it “triangulating” the Liberals out of relevance? This was first done with the Afghanistan mission, now the budget. Liberals essentially support the Conservatives in coalition without any leverage.

– the NDP is using the Liberal support of the budget to make the argument of Liberal bankruptcy from the left; they argue voters who don’t agree with Harper’s government can oppose it with the NDP. But this isn’t exactly news. What changes will the NDP have to make in order to more effectively challenge the Liberals from the left?

– the only thing sustaining the Liberals is their brand.

Predicting the future
– In the absence of Liberal opposition, will segmented conservative interests in the party and in the movement start leveraging for their own agenda? With slim majorities we see maverick government MPs potentially holding the balance of power subject to their agendas (PM Chretien government with MP Paul Martin). With large majorities we can see whole factions form and break off (as with Reform and the Bloc from the Mulroney government). Harper has the power of majority with the psychology of a minority; the PM can govern on the agenda he chooses because the the prize of a majority is still in sight and this will generally keep maverick MPs and the movement tightly following Harper’s lead so that their agendas can be realized in the future.

Harper’s now in the sweet spot of governance; he sits opposite a neutered opposition but holds the incentive of untapped potential for his government and its MPs. I’m certain that the Prime Minister would be very satisfied continuing his government under this balance until the fixed election date in fall 2009.

February/March election? Think again

As we break for the Christmas/New Years holidays, Ottawa has been talking about a real possibility of an election in February and March.

I believe that the current conventional wisdom on the timing of an election is wrong.

First, no party is really in a good position for an election.

Consider the Conservatives; statistically tied with the Liberals in the latest Harris/Decima poll, the Tories aren’t riding their traditional high numbers. Some have attributed this decline to Canada’s bad press at Bali, some blame the attention that Mulroney has received. But a budget will be a bonanza of tax cuts in February, you may think, and this surely will be enough to buoy Conservative numbers. It may, but the Conservatives need the decision of at least one party to survive and three to defeat it.

That brings us to the main opposition party: the Liberals. Stephane Dion has been routinely embarrassed in the House of Commons by being forced to abstain from votes of confidence such as the throne speech and subsequent crime legislation (named a matter confidence by the PM). A staffer in Dion’s office recently told me that this pattern cannot continue at length. He’s right. The Liberals will stand in February to defeat the budget. In fact, they’ve already indicated that they intend to try force an election. This is a necessary move by Dion, as he cannot remain neutered indefinitely lest his caucus revolts. The smart play here is that he’s been first out of the gate in declaring his intentions meaning that he will not have to race Jack Layton and Gilles Duceppe to the waiting cameras outside of the House doors (besides Layton and Duceppe are closer to the doors anyway). So Dion is forcing the NDP and Bloc to react to Dion whereas earlier Dion reacted to the declared intentions of those two parties instead. Dion is well ahead on this vote. This will help relieve some of the negative attention received from his chronic abstentions in this latest session in 2007. The move, however, is somewhat disingenuous as Dion knows that at least one other party will save Harper’s government (and Dion) to fight another day.

While the NDP has had better fundraising fortunes than the Liberals, this opposition party still needs to continue its strides in becoming a viable opposition in the minds of Canadians. While they will no doubt vote against the budget (and the Conservative government won’t change its legislation to accommodate them), they are unlikely thrilled about a March election. Further, the NDP standing with the Conservatives on a conservative budget would destroy much of the NDP’s credibility.

That leaves us with the Bloc, who shares a particularly important electoral interest with Stephen Harper: Quebec. The Bloc will vote for the budget because there will undoubtedly be some good items for their province. In fact, we can be quite confident in this prediction as Harper/Flaherty would be unlikely to pen a budget without extended consideration for Quebec. If they did, they would guarantee that their government would fall and that their hard-fought gains in that province would be tenuous at best and their planned gains would evaporate overnight. Expect good things for Quebec in 2008 and expect the Bloc to pass the budget; the Bloc is the only party Harper needs onside to survive.

This scenario generally satisfies all parties to some extent. The Conservatives will continue to govern while entrenching their image as tax fighters in the minds of Canadians. They will also continue to build in Quebec. The Liberals (and especially Dion) will relieve a lot of pressure internally in caucus and externally in their image as the hapless leader breaks his abstention streak. The NDP will still get to stand up to the Conservatives (the NDP gains from this scenario are the least of the four parties). Finally, the Bloc will have voted for a better budget for the people of Quebec, even if it is delivered by Conservatives. The Bloc has been concerned by the Conservative encroachment upon their nationalist strategy as it has been reconfigured by Harper as decentralization and respect for provincial jurisdiction. Duceppe would only be handing Harper voters if he defeats this government as the Prime Minister will be seen to be a better defender of Quebec’s interests.

If the Prime Minister really wants an election in March, the budget will contain a poisoned pill that is inert to Quebeckers but unacceptable for the Bloc.

Ontario by-elections

Two by-elections are upcoming this fall in Ontario and I’ve got a bit of info on these individuals and the timing of the contest to be called by the Prime Minister.

Maureen Harquail will be taking on Martha Hall Finley from the Liberals in Willowdale and Mark Warner will be appealing for votes in Toronto-Centre as he battles against former Liberal leadership contender and NDP Premier of Ontario Bob Rae.

Harquail has completed reserve duty with the Canadian armed forces and was an environmental prosecutor. She also happens to be the cousin of federal finance minister Jim Flaherty. The cousin connection has already come in handy as the Tories are said to be packing their war-chest for the riding pre-writ by bringing in some highly visible cabinet minsters for fundraisers. Peter MacKay has already been seen in the riding pitching for Harquail, and besides cousin Jim, environmental minister John Baird is also expected to raise some funds for the Tories in Willowdale. Willowdale consists of significant jewish, korean, persian and japanese communities among others. Retiring Liberal MP Jim Peterson won the riding last time for the Grits by 14,000 votes, however, a significant portion of that support rested in Peterson’s popular personality rather than the Liberal Party. Yet, Willowdale should be a challenging riding for the Tories to pick up. At this point, the NDP have yet to forward a candidate and Harquail would only benefit from a strong NDP effort in that riding against the Grits.

Mark Warner will be challenging for Toronto Centre. Warner is a lawyer will some impressive credentials that include lecturing in law and practicing for the OECD internationally. In the riding, Warner will have a bit of work to do as the Tories only secured 18% of the vote in the last election. We may, however, see some split with the “progressive” side of the spectrum with NDP voters showing up to vote against Rae, and a relatively stronger Green presence there. Plus as Warner is running for the incumbent government, this may produce a small boost. Warner was acclaimed February 9th and has already hosted a couple of successful fundraisers including one with justice minister Rob Nicholson and popular Ontario candidate Tim Hudak. Despite the good fundraising start, Warner is still a bit of a long shot in this realist’s opinion.

I’ve heard from a couple of senior Tories that the by-elections will be called after the provincial election. Former Toronto city councillor David Shiner, the provincial challenger in Willowdale is likely to be a bellwether for Harquail’s success in that same riding federally. The Tories may be angling to hold the federal contests after the provincial election in order not to be seen as interfering in provincial politics and to tap into the mood of the electorate after the provincial contest (whether to balance a McGuinty win, or buttress a breakthrough by John Tory)

Economic update

Here are the main points of Flaherty’s economic update:

  • Eliminate the net debt by 2021

  • Reduce debt to 25% of GDP by 2012-13
  • inflation target at 2% until at least 2011
  • GST at 5% by 2011
  • Working Income Tax Benefit for low-middle income Canadians
  • Income tax reductions based on interest that would have been paid on the debt. Debt reduction will result directly in income tax cuts.
  • Establish lowest tax on business investment in G7.
  • Large investments in the knowledge and training economy

Here’s the executive summary of Advantage Canada.

Income splitting, but just for seniors. No GST cut yet.

VERDICT: Nothing too exciting. A good direction forward.

UPDATE: David Akin sends me a correction live from the finance committee! It’s NET debt that’ll be gone by 2021, not the debt.

UPDATE: NDP finance critic Judy Wasylycia-Leis is decrying the Conservative plan to put so many surplus dollars against the debt. A sound endorsement!

UPDATE: Liberal finance critic John MacCallum isn’t impressed and believes that this doesn’t change anything. Underlines the distinction of “net-debt” and calls it a gimmick. Net-debt is a valid OECD measure though.

UPDATE: reaction from stakeholders (the ones that do press releases!)…

The Canadian Real Estate Association
(CREA) and its more than 88,000 REALTOR(R) members across Canada welcomed the
federal government’s identification of tax, fiscal, and infrastructure issues
as key elements to improve the quality of life for all Canadians. The three
were among the five Canadian Advantages outlined in the Fall Economic
Statement delivered by Finance Minister Jim Flaherty today.

One of the proposals outlined by Minister Flaherty in the Advantage
Canada document was the reduction of taxes on savings, including capital
gains, to make Canada’s tax system more competitive. REALTORS(R) have been
calling on the federal government to implement a capital gains rollover
provision for small investors when the proceeds of the sale of real property
are reinvested in another real property investment within a set timeframe.

Certified Management Accountants:

CMA Canada is encouraged by the direction of
Federal Finance Minister Jim Flaherty’s economic and fiscal update and looks
forward to the government accepting its recommendations to achieve economic
objectives.

“We are pleased that the economic groundwork laid out by the Finance Minister today is aligned with our recommendations to the government,” said Michael Tinkler, CMA Canada’s public finance analyst. “However, the proof will be seen in the specific measures delivered in the next federal budget.”

Canada’s life and health insurers:

Canada’s life and health insurers strongly commended the government’s Advantage Canada economic plan. CLHIA President Greg Traversy said, “The combination of tax reduction, debt reduction and paper burden reduction will position Canadians to compete effectively and prosper over the years ahead. Life and health insurers particularly welcome the commitment to foster a dynamic and globally competitive financial services industry and look forward to continuing their own efforts towards that goal in the context of the improved business environment set out in Minister Flaherty’s plan.”

Greg Sobara, Minister of Finance of Ontario:

The federal government’s economic update
contains a few positive signals that Ottawa may be listening to Ontario’s call
for fairness in federal transfers, Finance Minister Greg Sorbara says. “What I don’t see – and this disappoints me – is any detail on anything except tax cuts and debt reduction,” Sorbara said. “There are no specifics on how they’re going to invest in infrastructure. There are no specifics on how they’re going to address the fiscal imbalance. There are no specifics on how they’re going to invest in post-secondary education.”

CUPE:

“Today’s Fiscal and Economic Update shows
that Stephen Harper’s government is trying to buy the votes of Canadians with
the promise of more tax cuts that could lead to deep spending cuts in the
future,” said Paul Moist, national president of Canada’s largest union – CUPE.

Certified General Accountants:

The Certified General Accountants
Association of Canada (CGA-Canada) is pleased with the federal government’s
plan to boost Canada’s productivity and global competitiveness. Of special interest to CGAs are the government’s policy commitments relating to: Program spending, the Canadian economic union [and] the business environment “We welcome the government’s policy commitments. The plan to reduce taxes, streamline the regulatory environment, reduce the paper burden and remove internal trade barriers will address Canada’s competitiveness”

Federation of Canadian Municipalities:

“We welcome the reaffirmation of the Government’s commitment to work
toward a comprehensive infrastructure plan that includes long-term and
predictable funding. The extension for two additional years of the federal gas tax transfer is an important first step as we transition toward a longer term effort to erase Canada’s municipal infrastructure deficit. This also signals the Government’s long-term commitment to vibrant and competitive cities and communities.

Canadian Taxpayers Federation:

“Since 1997, the Canadian Taxpayers Federation has called for Ottawa to implement a legislated debt relief schedule and eliminate the debt in a generation,” said CTF federal director John Williamson. “Today, Finance Minister Jim Flaherty announced the Government of Canada will do just that.”

Williamson continued, “We applaud Mr. Flaherty for embracing and adopting policy advanced by the taxpayers’ federation, but for this policy to be meaningful the Conservative government must table legislation to make it the law of the land. Otherwise it is an empty promise. With the national debt standing at $481.5-billion, lawmakers cannot afford to not take debt repayment seriously.”



“In the May budget, Minister Flaherty reported program spending would grow by 5.3 per cent this year yet today he reported the annual spending increase will instead be 7.1 per cent,” observed Williamson. “The government has already betrayed its commitment to keep program spending below the growth rate of the economy. Economic growth is estimated to be 2.8 per cent this year. It is disappointing the Conservative government’s spending is already way off target. And if spending targets are missed, meaningful tax relief in the next budget can’t happen and debt repayment just isn’t possible either.”