Friday, November 21, 2008

Dealing with the current global problems

Canada is coming into this "crisis" better prepared than almost any other developed country in the world.
  • Our government was paying down debt, not adding to it during good times.
  • We have better financial regulations than elsewhere and should not see a collapse of the banking system.
  • The demand for our much of our commodities is not going to drop significantly, though the prices have fallen.
  • We have both a trade surplus and a current account surplus.
  • We have lower interest rates than almost anywhere else
  • We have higher rate of labour force participation than elsewhere

We are in a position to weather the problems but we will have problems. Ontario and Quebec are much too dependent on the car industry and could take a huge hit if things for GM, Ford and Chrysler are as bad as they might be. Our lumber industry is going to continue to suffer because demand in the US is so low.

What can we do? Making life easier for business will be important. We should not do any sort of direct support of any business sector, but instead reduce the costs for all businesses. We need to reduce taxation on business. We need to make sure TILMA expands across the nation. It is insane that provincial government create trade barriers within Canada. TILMA will allow BC and Alberta to function as a much seamless economic unit for businesses.

The federal government also needs to do everything it can to avoid a deficit. If we are to have tough times, that is the time for government to cut all non essential programs. The federal government needs to ask of EVERYTHING it does "Why are we doing this?" "If we were not doing this at the moment, would we start it?" "Can we justify collecting taxes for this program?" "Can the provinces or private sector do this better?"

There are a lot of things we could cut tomorrow and it would not have a dramatic impact on Canadians.

  • The Canadian Forest Service - the provinces already to everything they do, directly support provincial ministries as this would be cheaper to do than the current structure.
  • Canada Health - other than a few accountants to send the cheques to the provinces, there is nothing they do that is not done better by the provinces and territories.
  • All business support programs - the market chooses much better than government what businesses should work and which should go under. The scope and scale of federal economic development programs is staggering
  • National Park Service - all the provinces run parks, they have the expertise and staff to operate the national parks, turn them over to the provinces now.
  • Stopping paying athletes - why are we providing montly payments to athletes in the first place?
  • National Capital Commission - we are paying taxes so that Ottawa/Hull can be nicer and foster Canadian unity????
  • National Farm Products Council - what can I say, it is pointless and repeats what the provinces do.
  • Policy Research Initiative - a seperate body to do what politcal staff, civil servants and others are already doing. Read their mandate, it will stun you.
These are just a few ideas to consider to cut costs. Government can also look at outsourcing a lot more of what it does. There is still more scope for privitization in Canada. Atomic Energy Canada, the Business Development Bank, Canada Post, and Via Rail are a few to mention.

I have avoided mentioning ones that have very strong and vocal support systems.

There is a huge scope to reduce the spending of the federal government. When times are tough, you tighten your belt and you make sure the core things are looked after. I know that many vested interests will scream if the reductions happen, but they must happen.

The best thing the federal government can do is reduce how much money it needs to take from the public and business. If we can reduce the federal tax burden by $30 000 000 000 per year, that is $1000 per Canadian per year. If you can reduce business and personal taxes equally, that is enough money for business to support another 150 000 jobs and to see the average annual family income rise by 3.5%.
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