Flaherty thought his budget was so good, he delivered it again

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by L. IAN MacDONALD
The Gazette, Wednesday, June 8, 2011

Jim Flaherty liked his budget speech so much, he decided to do it over again.

In golf terms, he took a mulligan.

You remember: Flaherty delivered his sixth consecutive (and, as it turned out, last) budget in a minority House on March 22.

Before it ever came to a vote, the Conservatives were defeated on a Liberal motion censuring them for contempt of Parliament.

That turned out well for Michael Ignatieff, who led the most successful franchise in Canadian politics to its worst showing ever - 18.9 per cent of the vote and 34 seats, reducing the Liberals to thirdparty status in the House for the first time in history.

As for Flaherty, he got to campaign on the budget, primarily in the Greater Toronto Area, for which he is the regional minister, echoing Stephen Harper's call at every stop that it was time for a "national, stable majority Conservative government."

The Conservatives won 30 seats in the GTA, up from 11 in the last House, and those 19 seats delivered their majority - and even offset their loss of six seats in Quebec. Amazingly, the Conservatives are now the GTA party, with the Liberals reduced to a rump of seven seats, down from 32, to go along with their seven Quebec seats, all on the island of Montreal.

Thanks to Iggy, Flaherty doesn't have to buy off any of the other parties. As Jack Layton must realize, he now has much less power as opposition leader in a majority House than he had as leader of the fourth party with the balance of power in a minority House.

Layton has a new mantra about the Tories not listening. But this just in, Jack: they ran on the budget, they won on it, so on Monday they reintroduced it.

Essentially it was a budget update, with the new inserts in blue type rather than black. For example, fiscal visibility has improved because of job creation, as well as increased corporate, consumer and personal tax receipts. The deficit is now several billion dollars lower than forecast in March, and Ottawa now expects to balance the books and even return to a modest surplus by 2015, a year earlier than Flaherty predicted in March.

The sleight of hand is that there's $4 billion per year of program spending cuts that have yet to be identified by an expenditure review to be chaired by Tony Clement in his new role as president of the Treasury Board. What fun! Send your ideas to Tony on his Twitter account!

Then there's a one-time payment of $2.2 billion to Quebec for harmonizing its sales tax with the GST. This is not special treatment for Quebec, but the equivalent per capita of what Ontario and British Columbia have already received for the tax harmonization. But it's a big win, for Jean Charest, who needs positive outcomes in defending Quebec's interests.

A small amount of money, a rounding error in Ottawa terms, is the $30 million in eventual annual savings in phasing out the $2-per-vote yearly subsidy for political parties over four years. It was one thing for Harper to ambush the opposition, as he did in the ill-fated budget update in the fall of 2008, and quite another for him to run on it.

And here we are. This time Harper has a mandate for it, and this campaign promise had broad support in Englishspeaking Canada, where it made voters crazy that their tax dollars were financing the separatist Bloc Québécois.

For the rest, Flaherty could repeat the Canadian narrative of how this country has come through the Great Recession in better shape than any of its G7 partners, with the highest job-recovery rates and lowest deficit-and debt-to-GDP ratios among the industrialized democracies.

Canada's current deficit is 2.4 per cent of output and on its way to zero, compared to 11 per cent in the U.S. Our debt ratio of about 35 per cent of GDP compares to a U.S. debt that is forecast to approach 100 per cent of output next year. "Virtuous Canada," as U.S. Treasury Secretary Tim Geithner has put it.

U.S. Senator John McCain put it another way in a conversation with Flaherty in Washington last month.

"As one conservative to another, congratulations," he told Flaherty. "You managed to get re-elected."

McCain's point was that there wasn't another G7 country where the incumbent party has escaped the recession unscathed and been returned to government in a stronger position. They've either been turfed out, as Gordon Brown and Labour were in Britain, or put on notice, as Barack Obama and the Democrats have been in the U.S. mid-terms.

As a result, Flaherty got a mulligan.

 
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