[unimaginative2]

Ottawa's $2-billion hit list
Liberal programs long loathed by Tories get axe despite government's big surplus
STEVEN CHASE

From Tuesday's Globe and Mail

OTTAWA — Prime Minister Stephen Harper's government tightened federal purse strings by $2-billion yesterday -- slashing spending hated by many Conservatives, such as medicinal marijuana research -- even as Ottawa disclosed that its coffers are bulging with another near-record budget surplus.

Last year's surplus was $13.2-billion, Finance Minister Jim Flaherty announced yesterday -- the third highest in recent years. He said it will all go to reduce the national debt, signing an oversized cheque to that end at a press conference that resembled an election campaign event.

Much of the surplus was built up under the previous Liberal government, Mr. Flaherty charged, serving notice that the Tories plan to make such windfalls a thing of the past.

"We're going to budget much closer to line . . . No more so-called surprise surpluses at the end of the fiscal year," Mr. Flaherty said.

The Tories used yesterday's spending cuts to put their own stamp on the federal government, slashing programs loathed by rock-ribbed Conservatives but cherished by previous Liberal regimes.

They unveiled $1-billion in spending cuts to take place over two years and announced that another $1-billion in savings over that period will be extracted through unidentified "tighter management" measures.

Spending on the chopping block includes funding for the Medicinal Marijuana Research program, as well as the Court Challenges Program, which funded litigation in the name of equal rights -- an initiative that partisan Conservatives have always derided.

"I just don't think it made sense for the government to subsidize lawyers to challenge the government's own laws in court," Treasury Board president John Baird said.

The Tories defended the cuts as eliminating spending that was ineffective, unnecessary or unpopular in order to fund their budget plans.

"We are investing more resources in programs that are important to ordinary Canadians such as child care and safer streets," Mr. Flaherty said. "We won't apologize for our capacity to say no to bad ideas."

Opposition critics charged that the cuts were more of an ideological hit list than a cost-savings exercise.

"To do these announcements of huge cuts to the least privileged Canadians at the same day you announce of $13-billion surplus, it tells you a lot about the Conservatives' frame of mind," Liberal finance critic John McCallum said.

One of the biggest cuts hits foreign visitors to Canada. The Tories are eliminating the Goods and Services Tax rebate program, which allows foreigners to recoup the GST they pay while in the country.

Mr. McCallum warned that this will discourage tourism, which is already hurting from a stronger Canadian dollar and could be further damaged by pending U.S. border restrictions.

"It's not the time to give the tourism industry a punch in the nose," he said.

But the Canada Revenue Agency defended the reduction, saying less than 3 per cent of foreign visitors -- 939,000 -- applied for rebates in one recent year.

Business groups cheered Mr. Flaherty's $13.2-billion pay-down on the federal debt, but said the size of the surplus suggests the Tories have more room to cut taxes.

"It's a clear signal that you can do a better job in terms of tax reductions, and that is the message I hope that Mr. Flaherty will have received," said Nancy Hughes Anthony, president of the Canadian Chamber of Commerce.

Economists pointed out that the 2005-06 surplus of $13.2-billion would have been even higher -- exceeding $16.5-billion -- had Ottawa not taken $3-billion of that cash before the fiscal year ended March 31 to dole out to the provinces for items such as public transit, low-income housing and postsecondary education.

Canada's federal debt has shrunk by $81.4-billion over the past decade, from a peak of $562.9-billion in 1996-97.

The national debt as a percentage of the country's economic output is now at its lowest level in 24 years.

Harper's cutbacks

Some of the programs, initiatives and other areas being eliminated or reduced to help the federal government save $1-billion over the next two years -- part of a $2-billion savings plan -- and the amount of savings for each:

$50-million: Elimination of unused funding for Northwest Territories devolution

$4-million: End to medical-marijuana science funding

$78.8-million: End to program that gave GST rebates to tourists

$11.7-million: Removal of unused funds for mountain pine beetle initiative

$46.8-million: Smaller cabinet announced in February

$45-million: "Efficiencies" in Canada Mortgage and Housing Corporation

$4.25-million: Consolidation of foreign missions

$13.9-million: Cancellation of National Defence High-Frequency Surface Wave Radar Project

$6.5-million: Elimination of funding for the Centre for Research and Information on Canada

$4.6-million: Cuts to museum assistance

$5-million: Administrative reductions to Status of Women Canada

$6-million: Operational efficiencies at the Canada Firearms Centre

$4.2-million: Cuts to Law Commission of Canada

$15-million Elimination of residual funding for softwood-lumber trade litigation

$4.6-million: Elimination of the RCMP drug-impaired-driving program's training budget

$5.6-million: Elimination of Court Challenges Program

© Copyright 2006 Bell Globemedia Publishing Inc. All Rights Reserved.

 

[bizorky]

Much of the surplus was built up under the previous Liberal government, Mr. Flaherty charged, serving notice that the Tories plan to make such windfalls a thing of the past.

So a big surplus is bad?

Actually to be fair, the Conservatives will do away with the surplus by way of their own spending. This is probably the last big pay-down on the debt.

 

[cacruden]

I prefer smaller government.....

I just don't trust any government to run a balanced budget (without padding it significantly).

The federal government should focus on fewer departments, and let the provinces run all "leftest" programs (i.e. social programs) with associated room to increase taxes provincially if necessary.

 

[rbtaylor]

So a big surplus is bad?

When it's fiscal only and doesn't take into consideration the capital deficit, yes, it's very bad.

Municipalities could easily spent $10B per year for a number of years across the country just bringing infrastructure back up to grade.

 

[spmarshall]

It makes my head spin what $10-12 Billion could pay for - you could fund the entire 1/3 federal shares of light rail projects in Vancouver (Coquitlam line), Calgary (additional radial lines), Edmonton (Heritage extenstion), Kitchener-Waterloo, Toronto (St. Clair, Kingston Road, Waterfront), Ottawa, Montreal (South Shore and Parc) as well as planned heavy rail in Vancouver (Canada Line, Skytrain from VCC to Granville), Toronto (York U and Scarborough) and Montreal (St-Michel to Pie-IX, Laval) as well as GO, AMT and even some VIA improvements (which the feds would pay the whole amount).

And that's just one year. The next year you could expand VIA, start on high-speed rail, and improve roads in rural areas and get cracking on other hard infrastructure.

Or it could merely put water, transit and road infrastructure to a state of good repair. And/or invest huge in medical/high-tech industry. It's just that, to generalize slightly, conservatives hate spending money, except on prisons, police and the military.

 

[bizorky]

Municipalities could easily spent $10B per year for a number of years across the country just bringing infrastructure back up to grade.

In answer to your reply, I also think this surplus should go to areas in need - and there is no shortage of them. The present government will not have a surplus worth speaking of in two years. There will no longer be an opportunity to find extra money for additional programs or needs.

The only source for new funds would be a tax increase, and the people at The National Post have told us that this is always naughty.

I prefer smaller government.....

I just don't trust any government to run a balanced budget (without padding it significantly).

The federal government should focus on fewer departments, and let the provinces run all "leftest" programs (i.e. social programs) with associated room to increase taxes provincially if necessary.

So ten governments doing the job instead of one is smaller government?

 

[cacruden]

There will no longer be an opportunity to find extra money for additional programs or needs.

If they need additional money, set priorities, and cut something near the bottom of the list.

So ten governments doing the job instead of one is smaller government?

If they did not overlap or conflict, yes. The larger an organization you have, the more hierarchy you have, the more politics enter the arena, and the more inefficient the organization becomes. In the case of private companies, other private competitors will enter the picture if the original company becomes dated or horribly inefficient -- and replace/shrink the inefficient company until it is efficient or bankrupt. This cycle helps private companies stay more efficient. You don't have that cycle with governments, so keeping them small and focused -- reduces the likelyhood this scenario happening.

FYI: The US government is not conservative -- there seems to be no-one left. Neo-cons are just big governments, but different priorities than Socialist governments.

In this case, most of the social programs are within the constitutional domain of the provincial government. The power of the purse, and the fact that areas of federal domain are less "sexy" to the voter than education and health (among others) -- that are in provincial domain -- has lead the federal government to interfere, duplicate, etc. functions that exist provincially. That costs money that would be better spent on the programs themselves.

 

[urbanboyto]

private sector comparisons with government services are problematic at best.

Right wing governments have a long standing record (Reagan, Thatcher, Harris, Bush) of running up huge deficits and centralizing power, in contrast with their overblown ideological rhetoric about 'free markets" and "small government". If Harper gets a majority you can kiss the surplus goodbye.

 

[unimaginative2]

I am absolutely baffled, flabbergasted, and astonished that in Canada, we've used big surpluses to attack the Liberals. I've told people from other countries about this and they try to correct me, saying "You mean they get attacked for running big deficits." It's possibly the most ridiculous criticism that the former opposition and the media have cooked up. Obviously you want to run a surplus when the economy grows significantly faster than expected and oil prices are way higher. If we had a tighter budget and oil prices had stayed at $50 or below, as everybody expected, or if interest rates had gone up, we could be in an equally big deficit situation. I guarantee that's where we'll be in a year or two after an American property bubble with Harper and his budgeting to the line.

I do wholeheartedly support putting some or all of the surplus in an infrastructure fund. That's one of the few things for which it should be used. Paying down the debt isn't bad, either. We'll be incredibly happy we did if and when interest rates go up from their near-record lows.

 

[Antiloop33rpm]

^It is rather baffling that people have come to see surpluses in such a negative light. It is all well and good that our economy is rolling along nicely at the momment, but given how tied we are to the highs and lows of the American economy, oil, and other number of circumstances which we have no control over, prudent planning should be key. At least with a surplus you have a few years to cushion yourself when things get dodgey.

I suppose some people are happy that social programs and other government spending are being cut so they can save a few dollars on a stainless steel barbeque from Canadian Tire with their tax reductions. But I wonder if they will feel the same when the government goes into defecit spending and the economy is struggling and the question of whether to go further into debt or raise taxes becomes the key election issue.

 

[unimaginative2]

Well, I guess the problem is that they're dirty commies. And strategic rivals to the United States.

Chinese puzzled by aloofness from Ottawa
Missing meetings and cancelled trips have cooled off the 'partnership,' to Beijing's concern
GEOFFREY YORK AND BRIAN LAGHI

From Wednesday's Globe and Mail

BEIJING and OTTAWA — A year ago, in a solemn signing ceremony, China and Canada announced a "strategic partnership" -- the highest political relationship that Beijing can bestow on a friendly country.

But a few months later, something happened in Canada that never happens in China: a democratic change of government. Since then, the new government of Prime Minister Stephen Harper has deliberately avoided the "strategic partnership" term. His China policy has fallen into limbo, with the two sides barely talking.

The high-level committee that was supposed to promote the partnership -- the Strategic Working Group, consisting of senior officials in both countries -- has not held any meetings since August, 2005, and no date has been set for another meeting.

Beijing remains keen on the partnership, but Ottawa has been cool or uninterested. "It's going nowhere," one participant said privately.

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The working group's mandate includes moving forward on issues such as trade and investment, counterterrorism, health issues under the World Health Organization, and increased bilateral air traffic. But Canadian officials say China is "not on the radar" of Mr. Harper's government because of its preoccupation with the United States and Afghanistan and because of disagreements about China within the Conservative caucus.

The government has still not sent a cabinet minister to China more than eight months after winning power, according to Foreign Affairs officials. Several cabinet ministers have made plans to go, notified the Chinese government of their intentions, then abruptly cancelled their trips, to Beijing's puzzlement.

Natural Resources Minister Gary Lunn might travel to Beijing in November to attend a mining conference and a heavy oil conference. But even that visit is not confirmed yet, officials say. And Mr. Lunn is hardly the senior cabinet minister that China would expect Canada to send.

Even if that lack of a visit can be put down to the minority situation the Tories find themselves in, a spokesperson for Canadian business said the lack of communication is a concern because the Chinese place great importance on developing deep contacts over time.

"I would certainly counsel the government to schedule a visit by a senior minister at an early date," said Perrin Beatty, president of Canadian Manufacturers & Exporters. "Particularly in a country like China, it is important at a government-to-government level that it be demonstrated that there's an interest in managing relationships."

Mr. Beatty said reducing communications with China is a substantial risk for Canadian businesses because Beijing has overwhelming influence over who its corporations do business with.

Recently, Canadian business people and academics also expressed quiet concern when it emerged that Foreign Affairs Minister Peter MacKay had not yet met with Chinese Ambassador Lu Shumin.

Officials now tell The Globe and Mail that Mr. MacKay spoke with Mr. Lu about 10 days ago and has instructed Foreign Affairs staff to schedule a meeting. The minister also met with his Chinese counterpart, Li Zhaoxing, while in New York last week. Sources said Mr. MacKay pressed Mr. Li about the case of Heyrigul Celil, a Canadian citizen imprisoned in China, and the two men also discussed the trade relationship between the two countries and its growing importance.

Still, the concerns outnumber the recent positives. They include a decision by Mr. Harper's parliamentary secretary, Jason Kenney, to meet recently with the Dalai Lama and the fact that a substantial chunk of the Tory caucus supported efforts, while in opposition, to push forward with a bill designed to give Taiwan greater recognition in diplomatic and political affairs.

Finally, the federal cabinet itself is said to have a difference of opinion over how aggressively to promote relations. Sources said International Trade Minister David Emerson is a voice in cabinet for a more bullish policy, saying this spring that Canada needs to boost foreign investment in China. By contrast, Security Minister Stockwell Day would prefer to put a stronger focus on pressing China to deal with its human-rights record.

The Conservative approach is a far cry from the first year or so of the Liberal rule of Jean Chrétien. Twelve years ago, one year into his first term, Mr. Chrétien led nine premiers, two territorial leaders, 350 business executives and other municipal politicians on a trade mission in an effort to exploit the Chinese market.

Peter Donolo, then Mr. Chrétien's communications director, said the prime minister was trying to capitalize on the move by Pierre Trudeau in 1970 to establish diplomatic relations.

"[Mr. Chrétien] understood that a country like Canada doesn't necessarily have a lot of levers, but, in this case we had one that was gift-wrapped and that was the opening of Pierre Trudeau," said Mr. Donolo. "He was determined to seize on that."

Mr. Chrétien continued with the visits later during his tenure, while his successor, Paul Martin, visited China a little over a year after he became prime minister.

Yuchao Zhu, a political scientist at the University of Regina, said the conundrum, from China's viewpoint, is that the Chinese don't know what is in Mr. Harper's new China policy.

"The Harper government seems to have simply left Sino-Canada relations in the cold since last January," he said. "The political relationship seems to be at a definite low point. The Chinese are certainly frustrated with the current Canadian government."

Yuen Pau Woo, head of the Asia Pacific Foundation of Canada, says Mr. Harper's government is "struggling" with the China issue. The Conservative caucus, like the Canadian public in general, is divided on whether to emphasize trade, human rights or some other priority in its China policy, he said.

In addition to the Ottawa's seeming indifference to China, the relationship is bedevilled by a long list of irritants and tensions. The latest source of friction is Parliament's decision to award an honorary Canadian citizenship to the Dalai Lama, the Tibetan spiritual leader.

The award was pushed by the evangelical Christian wing of the Conservative caucus, which regards the Dalai Lama as a hero. But China, which considers the Dalai Lama a dangerous separatist, was outraged by the decision. Its official news agency quoted four Chinese scholars who predicted it would hurt Canada's relations with China.

Another key source of tension is China's most-wanted fugitive, the accused smuggling kingpin Lai Changxing, who continues to live in Vancouver while he fights a legal battle for refugee status. Chinese officials are irked by Mr. Lai's continuing ability to stay in Canada, and they regularly demand information about him in their meetings with Canadian diplomats.

Among the other tensions and disputes between the two countries: a report by Canadian lawyers David Matas and David Kilgour supporting a Falun Gong allegation that China executed thousands of prisoners for their internal organs; a continuing stalemate on a tourism agreement; and an allegation by Mr. Harper's government that China has engaged in industrial spying on Canada.

 

[bizorky]

I am absolutely baffled, flabbergasted, and astonished that in Canada, we've used big surpluses to attack the Liberals. I've told people from other countries about this and they try to correct me, saying "You mean they get attacked for running big deficits." It's possibly the most ridiculous criticism that the former opposition and the media have cooked up.

If you are liberal (or "socialist" as conservatives tend to characterize anyone from the centre to the left), anything you do or think is wrong-headed according to neo-cons. If you are a U.S. neo-con, you can see that the tax-cutting, excessive military spending and resulting deficits are a good thing. If you are that same neo-con now, very small alterations to taxes (reducing them to very low income earners), large budget surpluses, reinvestment in the country and debt repayment is a really bad thing. Don't expect a reason, when neo-cons say it's wrong, it's just wrong.

The larger an organization you have, the more hierarchy you have, the more politics enter the arena, and the more inefficient the organization becomes.

There is no rule that large organizations are always inefficient. There is no rule that proves that small organizations are always efficient. None. The word "efficient" is a contested term as the measures must first be agreed upon before a judgement can be drawn.

Also, ten governments doing the same thing is lots of government, no? Some would consider that as being "big." Many governments also tend to create much more regulation what with all that differences in play originating from so many governments. But neo-cons hate regulation. So what we end up with is Conservatives hating big government, wanting small government, willing to settle for many more small governments that may result in, overall, much more government and more hated regulation. It must be tough to be a conservative. Too much tail-chasing.

 

[cacruden]

^ As opposed to centralizing everything? Why have provincial governments at all then? Maybe we can centralize AND outsource to another bigger (more efficient) government?

 

[bizorky]

There are some things that probably would work better if managed from one level of (efficient) government.

 

[afransen TO]

"Also, ten governments doing the same thing is lots of government, no?"

Case in point: Canada has 13 securities regulatory bodies. This is insanely wasteful and creates an undue amount of bureaucracy that firms must wade through to do business in this country.