We face a greater than $54 B deficit and many Canadians still have real and worthwhile needs that aren’t being met due to the continuing effects of financial crises and regular poverty. According to The Star report² (28 May 2010) the money could otherwise have been spent on

“Three years’ worth of vastly improved health facilities for women and children in developing countries; $1,000 tuition cuts for every student in Canada; 11,000 new construction jobs.”

Not to mention, it could of course have gone into decreasing the deficit, or as the NDP suggested, committing it to foreign aid, which would make a real difference to health services for women in countries that currently lack the means. That would have an effect, unlike the hollow intentions Harper promotes as his topic for the conference. The world is noticing this too, consider what Kenneth Roth, head of Human Rights Watch, said in the Winnipeg Free Press³ (8 June 2010)

“Canada punched above its weight. It was a nation to be contended with. Now, unfortunately, Canada is barely punching at all. . . . it is no longer seen as a strong moral voice on key international issues. . .”

Harper’s Conservatives are committing what in some reports (The Star⁴ 7 June 2010) may reach $2B for holding these questionable conferences. Since the Conservatives don’t appear to care about the more important things that money could be spent on. They’re instead getting a fake lake built in a pricey tourism pavilion, wide screen TVs, a steamboat retrofit that won’t be completed in time for the conferences, and lots of publicity (Financial Times⁵ 8 June 2010).

Harper considers the whole spectacle to be an opportunity to show off Canada and the region in particular to the world. The CBC⁶ reported (8 June 2010) him saying of the pavillion

“In fact, it’s a $2-million marketing project. . .”

I think that he has a point in promoting Canada on a global stage. Certainly getting publicity for such events can help to raise Canada’s profile in the world. However, that is not the purpose of the event. The event is for world leaders to discuss serious problems. I haven’t yet read a Conservative comment showing how all this marketing and wasteful spending serves that purpose.

Finally, if this really is the time to showcase Canada to the world, and promote tourism or simply good will, wouldn’t it be a good idea to show what we really can do? Rather than fake lakes, show some of our many, beautiful real lakes and couple that with announcements of how we’re finally going to follow through with strong commitments to our environmental obligations.

Show some of our public hospitals and couple that with announcements of how we’re going to spend a significant amount of money helping impoverished nations improve their maternal health resources.

Bring out some fiscal leaders to announce that we’re going to participate meaningfully in banking and other economic reforms to ensure the world doesn’t undergo another devastating financial meldown.

Since the remarks get pulled back into the public sphere regularly to haunt him, it’s reasonable to consider his old commentary in relation to what he’s done as Prime Minister and figure out if his thinking has grown or changed much.

A lot of people are probably familiar with the speech I’m referencing (full text available on the CTV Web site¹). In the speech, Harper made a bunch of disparaging remarks about his country and fellow citizens, and presented a perspective that was grossly simplistic. While some of what he said was probably intended for humour value, the observations, jokes, and overall perspective represent his manner of thinking.

I’ll quote Mr. Harper and then match the quote to something relevant in his tenure as PM.

1) “…it’s legendary that if you’re like all Americans, you know almost nothing except for your own country. Which makes you probably knowledgeable about one more country than most Canadians.”

• Change? Yes: This jest makes one think that Harper wasn’t very impressed with Canadians’ knowledge of history, current events, government, etc. Considering his joke presented the problem, he must have been concerned about this lack of knowledge. Usually a lack of knowledge is solved through learning, or education. While Harper used to be concerned with Canadian education, now he prefers to cut programs designed to improve it.

2) “Canadians make no connection between the fact that they are a Northern European welfare state and the fact that we have very low economic growth, a standard of living substantially lower than yours, a massive brain drain of young professionals to your country, and double the unemployment rate of the United States.”

• Change? Not really: It’s possible Harper’s comment was relatively neutral, suggesting simply that there’s a connection between welfare and low economic growth, indeed you’d imagine that if there isn’t much economic growth there might be more unemployed people needing assistance. However taken in context of the rest of his cynical speech it reads more like he’s disparaging the normally high standard of living we have and Canadian attitudes toward helping those who are less fortunate. He begrudgingly succumbed to improving the employment insurance program. In late 2009, the Conservative minority needed a way to survive a non-confidence vote. They traded their normally feeble stance toward EI for the NDP’s timely demands and temporary support. Background from the CBC² (12 September 2009). The Calgary Sun³ (21 December 2009) reported on the surprising $1B in EI this resulted in–badly needed within the context of an economy hurting from the global economic crisis. Harper was dragged into this one so I can’t give him a “yes” for change in this respect. Also I cannot seem to find any articles confirming whether or not he learned that Canada is not on the European continent.

3) “In terms of the unemployed, of which we have over a million-and-a-half, don’t feel particularly bad for many of these people. They don’t feel bad about it themselves, as long as they’re receiving generous social assistance and unemployment insurance.”

• Change? No: Canadian news agencies like the CBC⁴ reported in October 2008, when the economy was heading downhill, job losses were mounting, and people were worrying about how bad it might get that Harper suggested buying stocks. One would have to imagine that he believes the unemployed receive extremely “generous social assistance” for that kind of commentary to resonate.

4) “…our executive is the Queen, who doesn’t live here. Her representative is the Governor General, who is an appointed buddy of the Prime Minister.”

• Change? No: Although he didn’t appoint this particular Governor General, Harper phones her up for a little friendly prorogue whenever he’s having a bad day.

5) “…the Senate, our upper house, is appointed, also by the Prime Minister, where he puts buddies, fundraisers and the like. So the Senate also is not very important in our political system.”

• Change? No: He still doesn’t seem to believe that the Senate is important in our political system. The proof is in his actions. He said it wasn’t important because it was an appointed body of buddies. Yet Harper has appointed many senators, in spite of committing to making it an elected body.

6) Referring to the executive, two legislative houses, and supreme court: “. . . if you sort of remove three of the four elements, what you see is a system of checks and balances which quickly becomes a system that’s described as unpaid checks and political imbalances.”

• Change? No: Harper reaffirmed how imbalanced our system is when he twice prorogued parliament (see the little friendly prorogue link above) and went ahead carrying out his Conservative program, unchecked and chock full of deficit. Of course, if he’d just let our system’s watchdogs do their jobs, we might have a little more checking going on.

7) “. . . the NDP is kind of proof that the Devil lives and interferes in the affairs of men.”

• Change? Yes and No: Although it sounds like Stephen Harper doesn’t like the NDP much (he saw them as interference) he’s grown to see them, like the Liberals and Bloc, as a source for occasional support deals–when it serves his ulterior political motives. I mentioned one example above: the EI versus non-confidence issue. Harper also once upon a time, approached the NDP to help him form a coalition to topple the former Liberal government. If you’re Harper, that’s making a deal with the devil. Of course, they’re too far apart ideologically for that to have worked and when it truly didn’t work he chose to brush his little rejection under the carpet. Later, running from his own imminent loss to a non-confidence vote and Liberal/NDP coalition, he dishonestly framed coalitions as undemocratic⁵. Seems even lost opportunities with the devil can come back to bite. The CBC⁶ article from 1 December 2008 says
  

  “All three opposition leaders accused Harper of reversing his position, pointing to a 2004 letter to the governor general by then Opposition leader Harper that suggested he be allowed to form a coalition government if Paul Martin’s Liberal minority government were to fall. Layton said Harper should remember the meetings in which he proposed the coalition. “I walked out,” the NDP leader said, adding that he wrote about it in his book.”

People change. At least I believe people are capable of changing. Cynics might like to argue that point with me (if you convince me to change my mind–I’ll have proven my point). Often times, in the public sphere, a politician will take a particular stand at one point in time and years later, if he or she changes position, the media will call out the past position as though the politician is being dishonest.

While it may be the case that the politician is indeed being dishonest, sometimes it’s also possible that the person’s experience and thinking simply evolved over time. If politicians would just, publicly state when they’ve changed their minds and what led them to change their minds, I think it would go a long way toward dispelling the aura of dishonesty.

I’d rather vote for people that show me they’re capable of learning and addressing situations the best way possible, rather than sticking to some preconceived notion in spite of contrary evidence or public opinion. I don’t see Stephen Harper doing that but I also don’t see him changing much.

CBC News reported¹ (13 January 2010) on the PBO report. The CBC article describes a structural deficit as “…a portion of a country’s budget deficit that exists even when the economy is running at full capacity during a period of expansion.” Which is important to keep in mind when listening to Conservative Finance Minister, Jim Flaherty, explain that future economic growth will be an important contributor to ridding ourselves of this deficit.

Page’s just-released report² Estimating Potential GDP and the Government’s Structural Budget Balance (13 January 2010) states a number of interesting points. Right upfront it points out the worry in accepting the Flaherty-growth-justification.

“It’s unlikely that future economic growth will be able to alleviate the deficit.PBO’s estimates suggest that the Canadian economy was operating significantly below its potential in 2009. More importantly, PBO’s estimates also suggest that the downward trend in potential GDP growth observed since 2000 will continue over the projection horizon, averaging 1.9 per cent over the 2009 to 2014 period. The projected decline in potential GDP growth is a function of the projected decline in the growth of trend labour input, which reflects slower growth of the working age population and a decline in the trend employment rate associated with the shifting age composition of the workforce.”

Lest anyone is tempted to argue the PBO and Conservative government form their estimates through different accounting frameworks, the PBO report makes an interesting statement on its method. It notes that the frameworks are different but shows that its method nevetheless almost always produces results that since 1976 are strongly correlated with Finance Canada’s. It only recently began to diverge, as in, when the Conservatives took over and tried to paint a more rosy picture of their budgeting. Here’s a snapshot of that portion of the report.

“Despite the differences in accounting frameworks, calendar/fiscal years, and methodologies, Finance Canada and PBO’s estimates of the Government’s structural balance track each other closely over history (the correlation coefficient is 0.96). However, since 2006-07 (calendar year 2006) when the structural balance was estimated at $8.8 billion by both Finance Canada and PBO, the structural balance estimates appear to have diverged. Indeed, in 2008-09 (calendar year 2008) Finance Canada estimates a structural surplus of $13.8 billion while PBO estimates a $3.2 billion structural deficit.”

An article on the subject in The Globe and Mail³ (13 January 2010) said

“…even if the government successfully shuts off the taps on all stimulus spending by 2011 and keeps government growth below four per cent, it still will not have enough money coming in to erase the deficit. As a result, Mr. Page said there will be a structural deficit of $18.9-billion in 2013-14, which is the period when Ottawa expects to be narrowing in on a balanced budget.”

Since the report essentially rules out the possibility that economic growth could cover the deficit or even return us to non-deficit status, the other most obvious options are to either increase taxes or cut services. I don’t think it takes much effort to imagine the direction the Conservatives will go with that choice. They’ve already proven their propensity toward cutting taxes even when there isn’t good reason to do so, and repeatedly said they want to cull the government programs and services that help define the wellbeing of our society. Indeed in the same Globe and Mail article, it says

“Mr. Flaherty has said that if economic growth comes in lower than expected, savings can be found by not renewing government programs that have a set end date.”

Flaherty and Harper have been talking this way quite a bit. They’ve been chomping at the bit to cut government programs since they came to power. I’ve argued in the past that the Conservatives engineered much of the deficit specifically to create a rationale for cutting programs. Unfortunately many of those programs are important to our present well-being and our future growth, for example the recently cut CCL.

A larger portion of the population is heading toward retirement (particularly over the next few years). Additionally the global economic downturn means more people in Canada need assistance through programs such as unemployment insurance. Taken together that means the government receives less money in taxes but simultaneously has a greater responsibility to provide to social programs.

Finally, the rather more severe Toronto Star⁴ (13 January 2010) quoted Page

“We are going to have to take drastic measures, either spending reduction or tax increase, to get us back to balances… The question is, do they (the Conservative government) want to make short-sighted decisions or long-sighted decisions?”

The article continues to relate Harper’s lack of worry about a structural deficit and a debt-interest payment trap. It notes that during the 1970s/80s (the last time there were large deficits) Canada had to spend $.35/dollar on public debt interest charges.

(Update: I found an article from Reuters⁵ 13 March 2009, in which Harper talks about seeing a surge in the jobless rate. However, he comments that “It doesn’t change our assessment that when the global economy does recover, all the demographic indications are that we will have labor shortages.” He’s thus recognized for a long time, the demographic trend toward having a smaller total workforce–inline with the problem of a smaller tax intake.)

I remember reflecting at the time of the initial GST cuts what the real rationale might be–it couldn’t be what the Conservatives were saying publicly because that had too many holes to make sense. When the Tories kept announcing what seemed like short-sighted cuts to the taxes, which would have little to no economic affect on the majority of Canadians, why did they consistently tout these as putting money back into the hands of consumers (a sham).

What is the real rationale for the Conservatives’ GST cuts? The GST cuts affect the government’s ability to support various services and programs that impact the well-being of our society. Ah, but that’s right, the Conservatives aren’t generally in favour of such services and programs, they want to shrink government, preferring to leave everyone to fare for themselves. But they can’t come out and tell everyone they want to cut federal programs and services, because then they’d risk losing the minority popular support that they have. So what to do? How about engineering some great big deficits? A deficit situation enables the Conservatives to justify cutting federal programs and services, to justify selling off our crown assets to private interests, all under the guise of being fiscally responsible.

Let’s see how this adds up.

Reuter’s¹ reported (25 July 2008) that the Conservative-led government wasn’t off to a good start to the fiscal year.

“. . . posting a deficit of C$517 million ($507 million) for April and May as corporate and sales tax collection fell sharply. The deficit compares with a surplus of C$2.78 billion in the same two months of 2007. The weak results were due to a 17 percent decline in corporate income tax revenue as well as a 21 percent drop in intake from the goods and services sales tax, the Department of Finance said in a report on Friday.” [emphasis mine]

The article continues to note that the Conservative government estimated it would have a surplus of $2 to $3 billion for the year. It contrasts sharply with the prior year’s surplus of about $10 B. Striking however, that the Conservatives were still publicly estimating a surplus, not a deficit. It suggests that either they weren’t very good at taking stock of the economic situation or else they were simply trying to keep things quiet and control public perception over eventually slipping into a deficit.

Continuing with Reuter’s reports² (18 November 2008), we can see how much the Conservatives tried to veil the situation. This is about the time that budget officer, Kevin Page, prepared to release his first forecast.

“The idea of running a budget deficit in Canada has been political anathema since the 1990s when the previous Liberal government painfully eliminated it over a period of several years. Ottawa has subsequently posted annual surpluses, the only major industrialized country to do so.

The newly re-elected Conservative government of Prime Minister Stephen Harper insisted throughout this year’s election campaign that it would continue to balance the books. However, it has since allowed that a temporary deficit is likely. Finance Minister Jim Flaherty has said he expects to post a small surplus in the 2008-09 fiscal year but the budget might slide into deficit after that as the result of possible stimulus measures that have yet to be defined. In February, when the government laid out its spending plans for 2008-09, Flaherty saw . . . the surplus slimming down to C$1.3 billion in 2009-10.

Economists, including the influential chief economist of Toronto-Dominion Bank, Don Drummond, have estimated Canada could face a budget shortfall of up to C$10 billion next year.”

At about the same time, the Montreal Gazette reported³ (14 November 2008) Finance Minister, Jim Flaherty’s intentions to sell crown assets.

“Finance Minister Jim Flaherty said yesterday the Harper government is considering selling real estate and other crown assets to help keep the budget balanced as the economy worsens. . . . “We are going to review the corporate assets, the capital assets, of the government of Canada, to see whether they still perform a useful function for the Canadian people. If that review shows that there should be some assets that should be sold, then we’ll go ahead with them.”"

Clearly (because Flaherty says so) the Conservatives knew at this point that they would have at least a difficult time balancing the budget. But he puts the blame on a worsening economy, totally neglecting his own government’s reckless GST cuts. Or were they reckless? Maybe they served the Conservative strategy of reducing federal programs and services. Flaherty’s talking about selling off crown assets–those belong to us don’t they, not private parties. But this talking strategy will prove consistent with future Conservative announcements and with current Conservative ideology.

Jumping ahead, the Conservatives started predicting they’d run a $34 billion deficit for 2009/10, and a $30 B deficit the year after. Harper said the budget they’d introduce would have “permanent tax cuts”–interesting way to deal with a shortfall: lose more money.

The CBC reporting⁴ (22 June 2009) on the massive federal deficit expectation points out that we’re likely to see what had been estimated as a $1.3 billion surplus changed into a $50 billion deficit. Roughly $10 billion of that can be attributed to the GST cut. That’s $10 billion in federal social programs down the drain. The article quotes Canadian autoworks economist Jim Stanford on the link between cutting the GST and the purchasing decisions “The links are not as strong as you might think…” which corroborates others’s positions at the time of the announced cuts (I called attention to these just above).

To be fair, the article also notes that $10 B is only a portion of the ~$50 B deficit. But much of what led to the deficit was not as predictable or controllable as the $10 B portion. Part of the deficit comes from measures, like the economic stimulus taken (and to varying degrees pushed by the other parties) to deal with the severe recession.

Nevertheless $10 B of the deficit was within the purvue of the Conservatives’ decisions. That’s $10 B that could have been used toward stimulus and social programs. That’s $10 B that could have been considered a safety net for a worsening economy (which as we know now, it did). The Conservatives had a safety net coming into office, which gave them some  room to manage our country even while the world was heading into a deep recession. Rather than recognize their good fortune in having that wiggle room they put policies in place, which even at the time signalled an end to such a safety net. That’s an intentional act.

So I ask, can it be reckless planning? Lack of forsight? Or is it part of the Conservative strategy to reduce the government–recognizing that if anything dire did happen, they’d get their opportunity to cut federal programs to support only the most essential of federal duties? I think it’s the latter. While I may disagree with their goals, calling them short-sighted, I don’t actually think the Conservatives are stupidly bumbling around with these measures, rather they’re carrying through with their policies for a reason.

The United Press reported⁵ (11 September 2009)

“Canada’s budget deficit was adjusted upward to $55.9 billion this year . . . Flaherty said much of the effort to get the deficit down to $5.2 billion by 2015 will “require decisions of government that won’t always be popular or pain free,” and “it will require a lot of saying ‘no’ to pet projects and special interests.”"

In order to reduce the deficit (not even talking about hitting a surplus again) by 2015, Flaherty starts trying to get the public used to the idea that cuts will come, and that they’ll be painful. Wondering what he characterizes as “pet projects and special interests”?

My guess is that’s just about anything outside current Conservative doctrine. How long before the Conservatives proceed with deeper cuts to cultural programs, social services, and more? Could cuts required to get us out of this deficit eventually be a rationale for the Conservatives to open the door to privatized health care? So much of the Conservative agenda, reigning in the social infrastructure, which characterizes (in part) the well-being of Canadian life, comes down to cutting the programs and services that are now Canadian institutions.

The National Post⁸ (2 November 2009) discussed Kevin Page’s report (Parliamentary Budget Office) examining our future deficit in relation to the Conservatives’ plans. His office is of course, supposed to shed light on what goes on within their domain and has sometimes been at odds with the Conservatives’ numbers. Page says the federal government will be in a substanatial structural deficit for a number of years and that the government will have to raise taxes or else make cuts in its programs. He also brought up an interesting issue.

“According to Mr. Page, the government’s projections include $5.8-billion in unidentified savings over the next five years through reviews of program spending, including $2-billion this year. Mr. Page says his office has requested expenditure planning documents from the federal Treasury Board, but has thus far been rebuffed.”

And now that the holidays are upon us, the Conservatives are releasing plenty of bits warning that they’ll begin making cuts–are these the unidentified savings, Page mentioned? Perhaps the Conservatives think people will forget these warnings over the holidays, or that the warnings will sink into the background of our consciousness so we’re more receptive when they finally do occur. The Globe and Mail⁶ (21 December 2009) talks about Harper’s stimulus plan exit strategy involving years of “belt-tightening”. They quote Stephen Harper saying:

“The government’s approach will be clear. We won’t be raising taxes, but we will be constraining growth . . . And within four to five years, if we follow that path, we should be back to a balanced budget.”

Harper uses the euphemism “restraining growth” but as his government noted previously, they mean cuts to federal programs and services, along with selling off crown assets. Reading the language used by Harper and his Conservatives, and the way it gets reported frequently you can see that they use words like frugal and belt-tightening, which imply wisdom and resolve rather than the actual short-sightedness or cunning strategy. The article continues with insightful counterpoints from respected economists and ministers

“Mr. Harper’s view that his government will be able to chip away at deficits by squeezing the growth of public spending has been questioned by economists and by former officials with the Finance Department. Former deputy ministers Scott Clark and David Dodge [former Governor of the Bank of Canada] have already stepped forward to challenge the government’s plans for eliminating the deficit, which is projected to reach $56-billion this fiscal year. Mr. Clark has said that Ottawa will have to raise the GST, which Mr. Harper cut in 2006.

“I don’t think it’s very likely that they can balance the budget without some very severe spending restraint,” said Bank of Montreal deputy chief economist Douglas Porter.”"

It’s not just Flaherty and Harper talking cuts, but well-known economists saying the Conservatives cannot follow through on their promises without backtracking their initial decisions on the GST cut or else severely cutting spending. And last but not least, let’s follow this up with the most recent news coming from Jim Flaherty’s mouth and reported by The Globe and Mail⁷ (22 December 2009).

“”Over time, what we’re going to see in the federal government in any event is some attrition because of the demographics and aging public service and we’ll have to be mindful of that as we try to watch growth in spending and restrain growth in spending,”"

Which is an oblique way of saying the Conservative minority government would look toward cutting public services. How can I justify that comment? Consider that if you don’t rehire public workers, or worse, you eliminate their jobs, then you no longer can offer the public services they were responsible for delivering. The article says

“Aiming for a leaner civil service, and looking to the salary savings of a reduced federal work force, provides a new twist on what has long been viewed as the public service’s demographic challenge. . . . “I hope he realizes that when you cut public servants, you cut public service,” said Gary Corbett, the president of the Professional Institute of the Public Service of Canada. Mr. Corbett said cutting public-service jobs means cutting back on important jobs like food safety inspectors and scientific research.”

The Star⁹ (23 December 2009) also has a piece on Flaherty’s recent announcements. It provides some other details such as marking a flippant sounding attitude toward the situation and this point of Flaherty history:

“In his 2001 Ontario budget, Flaherty handed $2.4 billion in tax cuts to the province’s corporations, promised personal tax breaks and paid down $3 billion in provincial debt – all while balancing the books by holding down badly needed expenditures for universities, hospitals and infrastructure projects.”

Furthermore, according to the Globe and Mal article, Flaherty believes government revenues will largely stem from economic growth. That’s sure a positive outlook. While that would be welcome and might even be likely, it’s far from certain. Things could even take a turn for the worse.

“The concern expressed by the deputy ministers and others is that the government’s revenues have fallen so steeply that Mr. Flaherty simply will not be able to find enough savings to wipe out the deficit. They argue that even when economic growth returns to normal, the Conservatives’ two point GST cut has left Ottawa with a continuing deficit.”

The Conservatives have thus set up the game board for a future election campaign. With the spectre of permanent deficits, they can pit their party’s harsh cuts to federal services against the other parties’ options, which will likely be to either mimic the Conservative choice or to reverse the tax cuts that the Conservatives propaganda’d their minority public support into applauding in the first place.

There is a clear example of the alternative that could have been, had the Conservatives taken prompt action. In this alternative, Canada could have been taking advantage of an opportunity to develop new green industries, and thus jobs.

Harper who talks an awful lot about his concern for the economy turned a blind eye toward an opportunity that could have repositioned Canadian industry for a more prosperous, sustainable future. The Toronto Star¹ (12 December 2009) reports on a real example of the alternative in a piece about Jack Layton’s (NDP) efforts to bring wind power to Canada after his trip to Copenhagen 13 years ago.

“Toronto had to cut a $1 million cheque to ship the wind turbines from the Netherlands. “I said why aren’t we building these things here?” Layton said.

Almost a decade later, a former Nissan auto plant in Bromont, Que., is doing just that. But now that all countries like China and the U.S. are sinking massive investment into building clean energy technology, harnessing the wind and the sun and the water, it may be too late for Canada to keep pace.”

The point is Layton, like plenty of other people, recognized long ago that there is a lot of opportunity to create new industries supporting the necessary changes countries around the world must make to our way of living in order to sustain a climate in which we flourish (both environmentally and economically). The Conservatives’ fearful tunnel vision, leading them to deny the urgency and necessity of reforms in our environment policy, blind them to real economic opportunities.

The GST enables the federal government to collect a sizeable amount of money that supports all sorts of programs improving the well-being of Canadian living. With respect to the Conservatives’ reducing the GST from 7 percent (in 2006) to ultimately 5 percent in 2007, The Toronto Star said¹ (2 November 2007)

“Economists winced. (Reducing a consumption tax neither boosts productivity nor encourages investment.) . . .  Cash-strapped mayors, weary anti-poverty activists and disheartened aboriginal leaders looked wistfully at the foregone $5.2 billion. And shoppers quickly forgot they had an extra $3.04 a week jangling in their pockets. . . . Ottawa is passing up the chance to strengthen Canada’s industrial base, shore up its aging infrastructure and upgrade the skills of its workers. It is saying that cities can solve their own financial problems, aboriginal communities can continue to languish and the gap between rich and poor can keep growing. . . . Urban voters could have been spared a steep rise in property taxes if Harper had shared 1 cent of the GST with municipalities, rather than giving consumers a bit of extra change at the cash register.”

So if cutting the GST would cause such difficulties for fixing our infrastructure and all sorts of societal issues, who and how exactly would it help? A CanWest News article on Dose² (1 January 2008) explained

“Patti Croft, chief economist with the investment firm Phillips, Hager and North, said anyone making big-ticket purchases will benefit from the consumption tax reduction. But, she said: “In general most economists would prefer a cut in income taxes. It’s a more efficient way to reduce the tax burden. . . . “”

According to the article the cut puts $5 billion ($6 according to Harper) back into the economy. But that equates to only between $150 – $200 per family, per year.

The cut in the GST is really only felt by those capable of making very large purchases, as The Star article noted: “The biggest beneficiaries will be the affluent. A corporate executive purchasing an $80,000 luxury sport utility vehicle will save $800. A single mother buying a $10 child’s snowsuit at Goodwill will save 10 cents.”

In other words the GST cut has almost no real effect on the majority of people’s disposable income but it rips roughly $5 billion dollars out of the government’s hands to effectively use on the programs that make Canadian life better.