Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Tuesday, November 12, 2013

Why the Conservatives are in no rush to end the deficit early

When Jim Flaherty delivers his fiscal update in Edmonton Tuesday, we can expect him to make the usual reference to not being “out of the woods” yet.

We have been stuck in these deep, dark woods for years but the Conservatives say they can see daylight. The years of post-recession deficits are coming to an end and the budget will be balanced by 2015.

Nothing will say Canada is finally out of the woods like a budget surplus. It will be the Conservative Party’s main pitch to voters at the next election — proof, they will say, that they remain safe hands on the economic tiller, unlike their unschooled and untested rivals.

As always, the economic picture is clouded by politics.

Mr. Flaherty is showing no signs of recovering from the skin condition that has been plaguing him for the past year. He is said to remain adamant that he will balance the budget before he steps down but his health is giving his friends cause for concern.

He is also sending off all the signals of a man who doesn’t care much for the niceties of internal party discipline any more — twice in the past week or so, he made statements at odds with the official Tory line (on the Senate and due process for three former Conservative senators).

It may be that the Prime Minister’s Office would be as happy for Mr. Flaherty to step away from his position early, as would the man himself.

But that hinges entirely on balancing the books first. Could the Finance Minister be setting the stage for a surprise return to surplus in the next budget?

When asked about the possibility last month after their meeting with Mr. Flaherty, a number of Bay Street economists said it is “mathematically possible.”

The deficit is forecast to be $18.7-billion this year but that number should be taken with a sack full of salt — the budget said the 2012/13 shortfall would be $25.9-million, yet that number was reduced by $7-billion by the time the books were closed, thanks to higher than expected revenues and lower program costs. That trend is continuing as tax revenues keep rising and government departments spend less than forecast.

The March budget forecast a $6.6-billion deficit in the coming 2014/15 financial year.

“[Balance] is not impossible at all,” Robert Kavcic, senior economist at BMO Capital Markets, told my Financial Post colleague Gord Isfeld.

Sources suggest it would take something “extraordinary” to move the economy into the black in 2014/15. Yet, there are plenty of exceptional items out there that could juice the numbers, if the government were minded to take advantage of them.

To start with, there is $3-billion in the contingency “rainy day” fund that could be used to offset the deficit. Then there is the $700-million in book profit the government will claim on the sale of 30 million General Motors shares. Ottawa still holds shares in GM worth more than $4-billion that could be sold at any time.

In addition, the recent Throne Speech renewed the pledge to sell Crown assets now that prices have recovered post recession. The government has already said it will auction the Ridley Terminals coal export facility in Prince Rupert, a facility media reports estimate could bring in as much as $2-billion.

There are also rumours that Ottawa may at long last sell its 8.5% stake in the Hibernia oil field, which could net $1.4-billion.

It’s enough to say the Conservatives could have fun with numbers and wipe out the deficit one year ahead of schedule if they were of a mind.

So why wouldn’t they?

For one thing, it would clearly be politically motivated. Hibernia brings in dividends north of $120-million a year, while GM shares need to reach $50 each before the government breaks even on the money it injected during the recession. There is no imperative to sell either, beyond Mr. Flaherty’s desire to walk away as the deficit slayer.

For another thing, a key plank of the Conservative pitch for the past seven years has been that Liberals and the NDP couldn’t run a lemonade stand. But if the budget is balanced in 2014 — 18 months ahead of the election — a good times narrative threatens to undermine the warning to voters that the others aren’t worth the risk.

When voters feel they can afford to gamble, they tend to do just that.

Canadians may already sense that there is more light and they are surrounded by fewer trees. But it may not be in the Harper government’s interests to point out we’re out of the woods just yet.

Original Article
Source: fullcomment.nationalpost.com
Author: John Ivison

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