Tag Archives: Budget 2017

Roundup: Not headed for a debt bomb

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In light of the fall economic update, and the myriad of concerns about the level of the deficit and lack of a plan to get to balance in the near term, economist Kevin Milligan took us all to school over Twitter yesterday. The main message – that it’s not 1995, and we can’t keep talking about the deficit as though it were.

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Later on, Milligan took exception to the notion that the government has backtracked on their tax reform promises and made the situation worse. Not so, he tells us.

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So there you have it. Armchair punditry on deficits or tax changes (even from some economists) doesn’t necessarily stack up.

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QP: Responding not in anger but with pity

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Wednesday, caucus day, and Justin Trudeau was present for QP, ready to take all of the questions. Whether he would actually answer them, well, remained to be seen. Andrew Scheer led of, mini-lectern on desk, and read about the reach that we call the Morneau Shepell conspiracy theory, Bombardier edition. Trudeau stated that it was false, there was not conflict of interest, and that they were supporting the aerospace sector. Scheer switched to English, asked the same thing, and Trudeau simply reiterated the support for aerospace, but didn’t denounce the accusation. Scheer tried again, and Trudeau said that the opposition was only interested in slinging mud because they couldn’t fault their economic growth. Scheer tried to pivot to the tax credit for diabetics, and Trudeau insisted that they would never be as mean as the Conservatives to cancel refugee healthcare or closing veterans offices. Scheer tried to riff on how “mean” the Liberals were to businesses or farmers, or indeed diabetics, but Trudeau hit back with his economic record that the Conservatives failed at. Guy Caron was up next for the NDP, and he railed about the Morneau Shepell conspiracy theory, Bill C-27 edition, to which Trudeau denounced the accusations, and reminded him of the ethics screen. Caron demanded a closing of loopholes, and Trudeau expressed his disappointment in the NDP for going for the Conservative tactics of personal attacks. Nathan Cullen was up next to sanctimoniously denounce Morneau Shepell and its various tentacles, and Trudeau responded by regaling him with tales of visiting Alberta and Quebec of the last few weeks and he heard about how everyone praised the Canada Child Benefit. Cullen stated that he was moving a motion at the Ethics Committee to call Morneau before them, to which Trudeau listed the programs they feel are making a difference for Canadians.

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Roundup: Economic update choices

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The fall economic update was released yesterday, and while the rapid pace of economic growth has meant more revenues and a smaller deficit, it also means that the government isn’t going to put too much more effort into getting back to balance anytime soon, keeping the focus on reducing the debt-to-GDP ratio instead (which is going down faster). Instead, finance minister Bill Morneau insisted that they would be “doubling down” on investing in the middle class, mostly by indexing the Canada Child Benefit to inflation earlier than planned, as well as enhancing the Working Income Tax Benefit (and I will note that this part of his speech seemed to be one where Morneau acknowledged that singletons existed and needed a hand up too). There was some additional programme spending in there as well (for more, the National Post outlines eight things in the update).

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While the economy is growing at an enviable pace, it could put the government and the Bank of Canada in a bind as the need to start withdrawing stimulus measures comes to the forefront, and deciding whether fiscal or monetary policy should make the first move. There is also a marked shift between last year’s update and this year’s in that the focus is moving away from longer-term goals to short-term ones (and that could be political reality setting in). Critics accuse the government of using the update to try and change the channel on the recent headlines around Bill Morneau’s assets and disclosures, while Andrew Coyne gives his signature scathing look at the choices of the deficits, and around the rapid growth in government spending.

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QP: Deflect to the economy

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In the lead-up to the fall economic update, Bill Morneau was absent, instead in the lock-ups to do the media rounds there. Justin Trudeau was present, however, and that meant he got to take the fire that has been sent Morneau’s way for the past few days, but hopefully he wouldn’t just do as Morneau did and respond with pabulum. Andrew Scheer  led off, mini-lectern on desk, and raised about the concerns around diabetics being denied the disability tax credit, alleging that it was only to pay for out of control spending (as though the rounding error of dollars it would bring in would do that). Trudeau reminded him that they wanted to ensure that all Canadians have access to the credits that they are entitled to, and that they were rehiring nurses that the previous government fired in order to better process claims from the beginning. Scheer repeated in English, got the same question, and Scheer asked if raising taxes on vulnerable diabetics was fair. Trudeau reminded him what people voted for in the last election, and that the upcoming economic statement would demonstrate their success. Scheer lamented the cancellation of their assorted tax credits, and Trudeau reminded him that the by-election results in Lac Saint-Jean demonstrated who Canadians believe on the economic. Scheer switched to English to conspicuously read a Morneau Shepell question, but Trudeau listed all of their kept promises on the economy. Guy Caron was up next for the NDP, and railed about the Morneau Shepell/Bill C-27 conspiracy theory. Trudeau insisted that the accusation was false and that there was no conflict, as all the rules were followed. Caron listed previous resignations as proof that Morneau was in the wrong ethically, and Trudeau said that the opposition was torquing up accusations with no basis. Alexandre Boulerice asked the same again, got the same answer, and then some blanket condemnation. Trudeau retorted with the Lac-Saint Jean results.

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Roundup: A surprise by-election win

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In the two federal by-elections that took place last night, it was no surprise that the Conservatives won handily in Sturgeon River–Parkland riding that Rona Ambrose used to hold. Mind you, the newly elected MP there, Dane Lloyd, may prove to be uncomfortable given his past history of saying some fairly controversial things, but that’s now Andrew Scheer’s problem to manage. The real surprise, however, was that the Liberals won the Quebec riding of Lac Saint-Jean, the former riding of Denis Lebel. Why is it so surprising? Because for a Conservative riding where the NDP were a close second in the 2015 election, this time around it was a Liberal victory, with the Conservatives barely managing second place, the Bloc in a close third, and the NDP a distant fourth. And this was the Liberals’ weakest Quebec showing in 2015 and a riding that they haven’t held since 1980.

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So can we draw any conclusion from these results? Probably not yet – it’ll probably take a few days to suss out the data and get a sense of what happened on the ground, but it does bear mentioning that the of the three opposition parties, all of them had new leaders, and each of them spent a fair bit of time in the riding over the past couple of weeks, hoping to drum up support. That the Conservatives lost the riding may simply be indicative that the riding was more loyal to Lebel himself than the party he ran for (remember that he was a former mayor from the region), but it can’t be a ringing endorsement of Scheer either. And while the pollsters are all out in force talking about the Liberals’ fall from grace in their polling numbers lately, the fact that the Liberals still managed to win a seat that the Conservatives held, even amidst weeks of headlines about tax changes and Bill Morneau’s assets, in a region where they didn’t have any historic strength, probably still says something about the party’s appeal nationally. Maybe it’s about the collapse of the NDP vote in Quebec, which could possibly be a harbinger of things to come under Jagmeet Singh? Maybe it’s the appeal of sock diplomacy and selfies? Suffice to say, it’s going to be an interesting few days for all of the parties as they figure out what happened, and prepare for the next round of by-elections.

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QP: Conspiracy vs pabulum

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There was no Justin Trudeau today, as he was busy with “private engagements” (which later turned out to be visiting the new Stanley Cup monument on Sparks Street), nor Andrew Scheer. Before QP got started, there was a moment of silence for the third anniversary of the Parliament Hill shooting and the deaths of Patrice Vincent and Nathan Cirillo. Moment over, Pierre Poilievre led off, railing that the government was taking away the disability tax credits for diabetics. Diane Lebouthillier read a statement in English that stated that her husband had died from diabetes, and that nothing had changed and that CRA was hiring nurses to help with the application process as well as improve data collection to ensure there were no problems going forward. Poilievre then turned to the Morneau Shepell/Bill C-27 conspiracy theory, demanding to know if Morneau got written permission from the Ethics Commissioner to table the bill. Morneau said that while the opposition was focused on his finance, he was working for the nation. After another round of the same, Gérard Deltell repeated the diabetes question in French, got the same answer from Lebouthillier, and then repeated the C-27 question in French — and got the same response from Morneau in French. Guy Caron was up next, leading for the NDP, and after trying to infantalise Morneau, he demanded to know where his higher ethical standards were. Morneau reiterated that he was focusing on Canadian families and touted the growth rate, and Caron demanded an acknowledgment of wrongdoing in English. Morneau’s answer didn’t change. (Mmm, pabulum). Alexandre Boulerice was up next, reiterating the C-27 conspiracy theory, and Morneau offered more pabulum in response. Boulerice reiterated in French, and got some francophone pabulum.

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Roundup: Morneau’s pabulum problem

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Oh, Bill Morneau. After weeks of rough treatment, and the last week most especially, it’s no wonder that he was getting a bit testy when the questions kept coming up yesterday. That he snapped at a journalist just got our backs up because how very dare he, and so on. But it’s hard not to see how this is almost entirely a mess of his own making. Not just the fact that he didn’t divest his shares earlier, which make of that what you will – he was still within the law. I find myself ambivalent to the sanctimonious cries that he needs to appear to be whiter-than-white because that’s a Sisyphean task for which there will never be satisfaction short of being reduced to sackcloth and ashes, especially compounded by the oh-so-Canadian reflex of treating him like a tall poppy who must be brought down to size. The Conservative line that he’s a rich guy who can’t understand the woes of the working guy is certainly suffused with that narrative, but that’s also populism for you.

For me, the bigger problem is that so much of this is about the fact that it all goes back to this government’s particular communications problem of responding to everything with a spoonful of pabulum rather than taking their criticisms head-on. When the Conservatives launched into outright falsehoods about the proposed tax changes, Morneau didn’t fight back – he mouthed the same platitudes and shovelled more pabulum in our faces, and the myths metastasised until he was playing defensive when there was no reason for him to. That the CRA bungled their release of the folio on employee discounts just fed into this same problem, and again, the government couldn’t communicate their way out of a wet paper bag there either, sticking to the pabulum lines of not taxing the middle class rather than actually explaining that no, these are very specific circumstances that won’t actually capture retail workers. And given the current questions around his holdings, there are certainly better ways that he could have communicated decisions that were made (including why a blind trust would not have made sense, for example), or why the various conspiracy theories about how legislation or tax changes he’s proposing are apparently for the benefit of his company are patently absurd (because hey, attacking the messenger is always the sign that you’re on the winning side of the argument). But nope. Pabulum. And you would hope that maybe, just maybe, the government will learn that this is not the way to go about communicating, but I doubt it. They’ll probably hold tight and weather this manufactured outrage for another week or so until something else distracts the opposition, and the outrage cycle will start up again over something else, for which the government’s solution will be yet more pabulum. It’s tiresome from all sides. But this is what politics has devolved into.

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Meanwhile, Andrew Coyne castigates Morneau for his poor judgment, while Colby Cosh thinks of him fondly as a great quasi-Albertan for using a numbered company registered in that province, paying taxes there and giving back to the province’s economy.

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Roundup: Unleashing the two-year markers

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With it being the two-year mark since the 2015 election, we’re going to start seeing a wave of thinkpieces and columns over the next few days (I suspect there will be a glut of weekend columns of dubious quality on the topic), but Paul Wells got things off to a good start yesterday with his piece on the matter. And he makes some pretty good points about how the complaints that this government hasn’t done anything are off the mark, because I do believe there are a number of things that we forget with our short attention spans, but there are also things that we don’t see obvious signs of, where the government has reformed a lot of the processes by which things get done – and this is a particularly big issue when it comes to trying to move the various Indigenous files forward. While it looks like there has been halting progress, people ignore that many of the problems are capacity-related, so if the government is moving to address those fundamental issues, it leads to better outcomes later than simply throwing money at problems only to make them worse in the long run – which happens all too often.

But Wells also acknowledges the bad, and just like with any government, there’s a lot of that too – the appointments process is a notable example, and Wells points to the bottleneck in the PMO, which goes along with the glut of rookie ministers (unavoidable with so few experienced MPs in caucus), and the problem with messaging. As I wrote about earlier this week, there is a real problem with the way this government shovels pabulum at everyone, but I’m not sure it’s any worse than under the previous government, when you were treated to non sequiturs rather than vague answers that resembled the topics you were asking about. And it’s this inability to have forthright communications that created much of this tax mess as well (but I will also lay some blame on bad and lazy reporting that was too quick to lean on opposition talking points as examples of accountability rather than reaching out to experts and then using that to push back against the tidal wave of misinformation that came out). And most especially the fact that this government was unwilling to actually fight back against the misinformation is why this mess of their own making has been compounded even more so.

“But it’s hard to be entirely saddened by Trudeau’s current discomfort, which if nothing else might shake his team out of the towering sanctimony that characterizes too much of its action and rhetoric,” Wells writes, and I fully agree. In fact, it’s the moments in the past couple of weeks where Trudeau and his ministers have dropped their pabulum-like talking points and been punchier and more authentic in their fighting back against their attackers that I’ve seen a spike in public responses to my own reporting of those instances. Hopefully they’re seeing that too, and it’ll prompt them to take more risks and to stop being so gods damned scripted. But this is also politics in 2017, and we’ve killed off spontaneity or the ability to debate, so I fear that my hopes for honest communications are doomed.

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Roundup: Those amended tax proposals

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Bill Morneau unveiled his latest tweaks to his tax change proposals in New Brunswick today, and it looks like a pretty serious attempt to continue to close the avenues for tax avoidance by means of using Canadian-Controlled Private Corporations, while at the same time trying not to completely dissuade the use of those corporations to help businesses save for rainy days or mat leaves, etcetera – in other words, that he’s taken the concerns seriously. So here are economists Lindsay Tedds and Kevin Milligan to break down the new proposals.

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Roundup: Holding companies and crying wolf

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The fixation on Bill Morneau and his family wealth is becoming mind-numbing, with new conspiracy theories and allegations of conflicts of interest arriving daily. While the Conservatives made him the subject of their Supply Day motion, demanding he produce all documents he shared with the Ethics Commissioner while continuing to promulgate the absurd conspiracy theory that he was pushing through the private corporation tax changes for the benefit of his company, while the NDP crowed about more alleged “appearances” of conflicts with his tabling a pension reform bill that his family company could, in theory, benefit from. And the subject of whether or not he still controls shares in said family company went through the media cycle like a tornado, with confirmation from the Ethics Commissioner in committee testimony that she didn’t tell Morneau to place his shares into a blind trust – because, as it turns out, he doesn’t control them, having already offloaded them into a holding company that he doesn’t control (apparently his wife does), and none of this is subject to current rules under the Conflict of Interest Act. In response to it all, Morneau sent a letter to the Commissioner requesting a meeting to see if there’s anything else he can do to further comply with the rules that he’s already complying with per her advice.

Two things here – one is that the Commissioner has raised this exception to the Act in the past, and when the Act last came up for review in 2014, she flagged it then and it wasn’t acted upon. Guess who was in power then? The Conservatives, who also pushed through all of those changes to various accountability legislation in 2009, along with the NDP. The second point is that we have constantly been bombarded with constant baseless accusations about the “appearance” of a conflict of interest for everything under the sun. And with these various conspiracy theories being put forward, even Occam’s Razor will tell you that the idea that these changes being put forward, either to pensions or private corporation taxation, for the benefit of Morneau’s company are absurd on the face of it. Pension reforms have long been debated, and there are reams of data about the problems that these private corporations are being used for reasons they were not intended to be by wealthy individuals in order to avoid taxation. Trying to use Morneau as an excuse to make the government back off on either is absurd and shows just how debased our ability to debate is in this country if debate is being replaced by personal attack. Never mind the fact that there has been a whole lot of crying wolf. If everything is a conflict, then nothing is a conflict. Sooner or later a wolf will come, and nobody will care anymore, having been completely numbed by the constant cries beforehand.

(Incidentally, Dawson also called on the government to amend their fundraising bill to include parliamentary secretaries as those who must report, for what it’s worth).

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