New Mr. Nice Guy

Jim Flaherty is making the rounds of the opposition to mend fences and get the Liberals to support his January budget

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The Gazette, Wednesday, December 17, 2008

Jim Flaherty, educated by the Jesuits, is familiar with the notion of penance and redemption. His penance for the Harper government's bungled economic statement is to consult broadly with the opposition parties on next month's budget.

Call it Flaherty's stations of the cross. His first stop was a meeting in Toronto on Monday with Liberal finance critics John McCallum and Scott Brison. Both Flaherty and his Liberal counterparts characterized the meeting as constructive and worthwhile, a message suggesting a Christmas truce.

Flaherty's redemption will occur if and when the budget is passed and the government escapes from its purgatory. Along the way, there will be more stations of the cross. Bring your rosary, Jim.

Flaherty will undoubtedly have meetings with the other opposition parties, but don't expect a meeting of the minds with the NDP or the Bloc Québécois. Jack Layton and Gilles Duceppe are still playing the role of coup plotters. It's the Liberals, under Michael Ignatieff, who want to ditch the opposition coalition, and it's the Liberals with whom Flaherty will be having meaningful discussions.

There's really only one question on the table - what's the number? What's the number in terms of stimulus in the budget, and will it be allocated in a way the Liberals can support it? Then, what's the number in terms of an operating deficit, Canada's first since 1997?

That's what the whole conversation between Flaherty and the Liberals comes down to. Let's say for the sake of discussion that the stimulus number is somewhere between $15 billion and $20 billion. Then, would Ottawa's rescue package for the auto industry be included in the stimulus package, or considered apart?

That's another pertinent question. Industry Minister Tony Clement has been touting a more-than-$3-billion bailout for the Ontario auto industry, or about 20 per cent of what Washington is discussing in terms of bailing out Detroit, roughly Canada's share of North American production. But as we've seen in the last week, Congress couldn't agree on it, and the lame-duck Bush administration has only a month before Barack Obama takes over the file at the White House. Let's not kid ourselves, Ottawa might be prepared to step up before Washington, but nothing will happen in Ontario before it happens in Detroit.

For the rest, the Liberals will be pushing hard for more infrastructure spending, particularly in cities. Why? Because their base is in the big cities, and cities are a big part of the Liberal agenda. That cities are creatures of the provinces is another conversation, a constitutional one. The same Stephen Harper who ran against Paul Martin's cities agenda in 2004, might find himself signing over cheques to the provinces in 2009. Roads and highways are another urgent priority in renewing infrastructure, as we know all too well in Quebec.

Ignatieff might be holding the opposition coalition as a sword over Harper's head, but everyone knows that's just for rhetorical sabre rattling.

The worst thing that could have happened to the Liberals would have been toppling the Conservatives in a constitutionally legal but politically illegitimate coup. The corrosive consequences for the Liberal brand, of an unelected coalition with the socialists and separatists, led by Stéphane Dion, would have been incalculable in English Canada. Just think of the National Energy Program, still talked about in the west a quarter century later, and multiply its effects many times over.

It's in Ignatieff's interest to maintain the Harper government in office, to put the national interest first in the short term, so that his partisan interest can triumph in the longer term. Uniting the party, filling its campaign coffers, making his narrative known to Canadians - that's his job, and he can't do it in six weeks. And a winter election, the only outcome of defeating the government in a budget with no coalition behind it, is unthinkable.

In all the noise of the government's near-death experience over killing funding of political parties and banning strikes in the public sector, the political class lost sight of the more substantive problem in terms of public policy and strategic communications.

And that was the critical breakdown in channels between the two key central agencies - the Prime Minister's Office and Finance. Only five days before Flaherty financial statement, Harper declared in Peru that running a deficit was an historical necessity. Then Flaherty declared in his statement that Canada would have balanced budgets and surpluses through 2012. Nobody believed it then, and no one believes it now.

Now Harper is talking again about the necessity of deficit spending. This time, we can assume Flaherty is in the same loop.

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