Yesterday’s policies
by Fred McMahon


The Moncton Times and Transcript, The Halifax Daily News

Over a decade ago Jean Chretien was tagged “yesterday’s man.” Now leading a seemingly invincible government, yesterday’s man plans to take Canada into tomorrow’s new millennium.

Since being labeled obsolete, Jean Chretien has won two majority governments and seems set to win a third straight majority, a feat even the mighty Trudeau failed to pull-off.

Unfortunately, the old take on Chretien was right, as last week’s cabinet shuffle shows. Chretien’s policy drive is stuck in the 1970s, the era of polyester suits, platform shoes and neckties as wide as the Canadian Shield.

Government then had a case of hubris. The world was coming off the greatest period of growth in human history, and government took the credit. Canada had also launched a series of hugely successful programs, from the Canada Pension Plan to medicare.

The policy wisdom was simple: government spending is good. Whenever money was available – or even if it wasn’t – government should spend more. Patronage was in full swing, something many advanced democracies, but not Canada, have since wrestled down.

With his cabinet shuffle and recent pronouncements, Chretien put these two precepts – big government, big patronage – front and centre.

He brought into the cabinet Liberals from the “lets-spend-more” wing of the party, including Maria Minna who had been openly contemptuous of government’s effort to balance the budget.

On the patronage front, Chretien did one better than Brian Mulroney. He lifted Sergio Marchi out of the cabinet and dropped him into the ambassadorship to the World Trade Organization (WTO), previously a patronage-free posting.

The WTO makes vital decisions that affect virtually every Canadian industry and company. Previous governments believed it was vital to have a fully knowledgeable, skilled diplomat in place. Not any more. Patronage trumps economic policy.

Now that finance minister Paul Martin has balanced the budget, Chretien has repeatedly signaled he intends to use new money to bloat spending. Tax levels aren’t important, the infallible Prime Minister pontificates.

When he said that to an Irish audience, giggling broke out, even among the Irish dignitaries on the stage who tried valiantly to suppress their laughter. Tax cuts were key to Ireland’s economic boom. In the mid-1980s, before Ireland reformed its taxes, Canadians on average produced two-and-a-half times as much the average resident of Ireland and our unemployment was often half the Irish unemployment rate. Now we are the poorer nation, and we have the higher unemployment rate. That’s some fall.

The reason Chretien thinks he has so much money to spend is that taxes have never been higher in Canadian history. Through many little tricks, Chretien raised taxes every year he’s been in power. That’s how the deficit was fought.

Chretien may be stuck in the 1970s, but there’s one thing he doesn’t like about the decade. Taxes were too low.

Canadians may think taxes were high in the 1970s, but that would be tax heaven. Government taxed away less than 40 per cent of everything Canadians produced. Now government taxes away nearly half of all we produce. Everytime you earn a cent, government takes its cut; everytime you spend a cent, government gets another cut. Medicare costs less than 10 per cent of GDP. What the hell is government doing with the rest of our money?

In the 1970s, Canadian taxes weren’t much higher than U.S. taxes. Canadian and U.S. unemployment rates were similar. The Canadian and U.S. dollars were roughly equal. Canadians and Americans took home about the same amount of money.

Now, Canadian taxes are about a third higher than U.S. taxes. Our dollar is worth a third less than the U.S. dollar. Unemployment is a third higher than in the U.S. Canadians take home about a third less money than U.S. residents.

While Canadian taxes have risen nearly every year since 1980, U.S. taxes stayed at about 35 per cent of GDP. That’s about where Irish taxes are now. Any surprise that Canada’s the lagging performer? With half of everything we produce going to government, there’s just not enough left for the investment needed to generate growth and jobs.

Now the government is maneuvering to launch a $12 to $15 billion day care program on the grounds government can do better looking after children than their parents who just aren’t up to the task, as a discussion paper on the proposal make clear. “It is increasingly unrealistic to expect that parents can undertake the task of ensuring early child development outcomes without systemic and structured [government] support.” That’s Orwellian.

Government that taxes away half of our national income is already too large. Why doesn’t Chretien get it? Why is his government concocting a bunch of new ways to spend your money and continue its stealthy tax-increase strategy? Well, if you tip Chretien upside down and read the label, you’ll find the clear warning: “Best before: 1980.”