Charest blew it

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National Post, Thursday, March 29, 2007

When Jean Charest became premier of Quebec in 2003, no one had ever been better prepared to assume the role of both defender and advocate. None of his predecessors, with the possible exception of Jean Lesage, knew Ottawa as well from having served there. None knew the other provinces as well, either: As environment minister, he negotiated Canada's support of the 1992 Rio accords with the provinces, and from 1993 travelled the country incessantly during five years as Conservative leader. No Quebec premier had generated as much goodwill in the rest of Canada, if only for agreeing to answer the call and assume the province's Liberal leadership in 1998.

In 2003, he successfully proposed the creation of the Council of the Federation. In 2004, he wrung a recognition of asymmetrical federalism when Ottawa agreed that Quebec could keep its own reporting standards on the massive transfers under the Health Accord. And ever since, he has lobbied other provinces for support and Ottawa for recognition of the vertical fiscal imbalance between Ottawa and the provinces.

In last week's budget, Stephen Harper delivered on his campaign promise to redress the fiscal imbalance, just in time, as events would have it, for this week's Quebec election.

Quebec was the big winner, with $2.3- billion in new transfers and equalization payments, including $350-million for meeting Kyoto emission-reduction targets, $200-million more for post-secondary education, funding for health care out of an extra $1-billion under the old equalization formula and $700-million under the new one.

As Yogi Berra famously said: "You get cash and it's as good as money."

First, Charest got the money last Monday, that was his big score. Then he announced what he would do with it last Tuesday, and that's where he blew it.

He announced he would give the $700- million of enhanced equalization money back to the voters in the form of a middleclass tax cut that, bundled with a $250- million tax cut announced in his February budget. That made $950-million, or $750 per family.

He didn't even bother to present the tax cut as part of a larger package to reduce waiting times in health care, increase funding to Quebec's cash-starved universities, or invest in infrastructure or the environment.

Maybe he figured a campaign was no time to be subtle. Maybe he wanted a headline that trumped his opponents. Well, there was nothing subtle about it. And he certainly got headlines, in Quebec and across Canada.

In Quebec, the tax-cut announcement was extremely high-risk in that voters might be reminded of Charest's broken 2003 campaign promise to cut taxes by $1- billion a year. In the rest of the country, there was immediate pushback that $700- million of equalization money was being allocated for a tax cut. It's one thing to bribe the taxpayers with their own money, quite another to bribe them with other people's money.

The Harper government went to extraordinary lengths to bulletproof the equalization announcement with other prebudget announcements, including $1.5-billion in the Greater Toronto Area, precisely because it was worried about a backlash against Quebec as the biggest of the six recipient provinces.

Charest's announcement that he was giving $700-million to the voters is sound enough in constitutional terms -- money can be used to equalize fiscal frameworks as well as services.

But that's not how it's playing in the rest of Canada, which now gets to ask other inconvenient questions, such as whether their tax dollars should go to subsidizing $7-a-day child care or $1,668 university tuition fees in Quebec. Services like that simply don't exist anywhere else in the federation.

After all that, Charest is left with a minority legislature, and no guarantee he can get his tax cut through the National Assembly in which both other parties oppose it. And he better not come back to Ottawa looking for more. The fiscal imbalance file is closed.

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