The government won't fall over this budget

About 6,000 words, four main points

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The Gazette, Sunday, March 7, 2010

It's exceptional, if not unprecedented, for a throne speech to be delivered one day, and a budget the next, as was the case in Ottawa last Wednesday and Thursday.

The throne speech was necessitated by the government's unnecessary prorogation to "recalibrate" its program. How do you say recalibrate? In about 6,000 words, the longest speech from the throne in memory. Perhaps it was Stephen Harper's revenge on MichaŽlle Jean for keeping him at Rideau Hall for two hours at his previous prorogation, which aborted the 2008 parliamentary crisis. In the normal course of events, this would have been her last throne speech, as her five-year term expires by constitutional convention in September. After Wednesday's epic - Castro-length without the harangue, it's one aspect of her role she won't miss.

This throne speech was what's known in the speechwriting trade as a Christmas tree, full of trinkets. And setting aside the requisite governor-generalities, the writing, such as it was, was a mish-mash, clearly a committee effort. For example: "Our government will continue to strengthen Canada's food safety system."

Then: "Our government will take steps to support communities in their efforts to tackle local challenges."

You get the idea. It's a wonder she didn't nod off.

Continuing with the community theme: "To recognize the enormous contribution volunteers make to Canada, our government will also establish a prime ministerial award for volunteerism."

Actually, this is outside convention. The prime minister heads the executive, and runs the country. The governor-general represents the crown, and hands out awards, including her own.

There was no shortage of red meat for the Conservative base - nearly two pages of the speech were devoted to the government's crackdown on crime, which got an amazing eight bullet points, with another paragraph on the dubious value of the long-gun registry. "Our government will continue to support legislation to repeal the wasteful and ineffective long-gun registry that targets law-abiding hunters and farmers, not criminals."

Tell us what you really think.

There was real substance in the speech on climate change, mentioned three times, as opposed to only once in Barack Obama's State of the Union address.

There's a linguistic divide between Ottawa and Washington on this. The Americans have developed a new euphemism for climate change - they call it clean energy, not that Obama's going to get a bill passed by the U.S. Senate any time this year.

The heart of the speech, four full pages, was on building the economy of tomorrow, through free trade, deregulation, innovation, investment incentives, and not least, skilled human resources.

This country already enjoys a comparative advantage in investment in that Canada has the lowest corporate tax rates in the G7, as well as the lowest tax rates on new investments. When fully implemented in 2012, corporate taxes on investment will have been cut in half since the Tories took office in 2006, and will be half the rate of U.S. corporate taxes on investments.

There are really only four main points in this budget, Flaherty's fifth. First, the deficit. Second, no new taxes. Third, capping the growth of program spending and transfers to the provinces at the projected growth rate of the economy, around the three per cent. Fourth, a freeze in parliamentary salaries and ministers' office budgets as a symbolic kickoff to a full expenditure review.

Flaherty's five-year chart sees the deficit shrinking from $54 billion in the current fiscal year to $1.8 billion in 2015, from 3.5 per cent of GDP, to one-10th of one per cent of projected GDP in five years. Mission accomplished. Flaherty wins the argument that the deficit is cyclical, not structural, provided his growth projections hold.

His growth assumptions aren't wishful thinking by finance, but a consensus forecast by financial institutions and banks consulted by the government. And Flaherty caught a huge break last week with the announcement that the Canadian economy grew by five per cent in the fourth quarter of last year.

If program spending growth is held to three per cent, that will be a first for this government, which has presided over average spending growth of six per cent even before the recession inspired $60 billion of infrastructure spending over the last two years. That's phasing out, and will be the biggest draw down on the deficit. Transfers to the provinces will continue to grow at the same rate, rather than being gutted as they were by the Liberals in the 1990s, which is one of the ways they balanced the books.

The salary freeze for politicians and the spending freeze for their staffs is by way of leading by example.

And there will be no election out of this budget.

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