Sunday, November 30, 2008

What is going on in Ottawa

I am annoyed by what is happening in Ottawa for a host of reasons and it is making me angry. I do not like the fact that the Liberals and NDP are talking about trying to form a government so close after the last election.

1) The Liberals and NDP have a total of 114 seats in parliament, the Conservatives 143. Both need the support of the Bloc to govern. Clearly the Conservatives have a much, much stronger right to govern. Can the Liberals and NDP govern when they are 30 or so seats smaller than the Conservatives? No. They will be dependent on the Bloc. The governor general would have to see some form of a written agreement between all three parties before allowing a new government. Even then, the Liberals were the national party most rejected in the last election, to allow them to govern is not really following the will of the electorate.

2) The funding of the political parties - as much as the opposition claims their interest is a different approach to economic stimulus, everything came to a head when the government suggested taking part of the taxpayer subsidy away from political parties. I am digusted that any of the parties are in favour of this. Taxes are collected to allow the government to function and do its business. We do not collect taxes to fund closed, exclusionary private clubs. All public funding of political parties is fundamentally undemocratic and unethical. This money does not go towards people running for election as MPs, but to the private structures we have not control over. Cutting the funding to them may be small, but it is $30 000 000 less in taxes that need to be collected.

3) Economic stimulus. The opposition seems to want to have the government spend an extra $30 000 000 000 on subsidiy to industry and on infrastructure building. The first problem with this is that it means an extra $1000 per Canadian in taxes or national debt, the second is that it ignore what the government has already done, and the third problem is the timing of it.

The extra $1000 per Canadian in spending will most likely mean an extra $1000 per person in national debt. Given the time frame it would take to pay this off, the long term cost per Canadian taxpayer will be $150 per person for 12 year, or about $1800. For a family of five this is $9000 between now and 2021. It means any stimulus package needs to have more impact than this to make any sense. At best the package will have a 0.3% boost in GDP 2009, 0.7% in 2010 and 0.5% in 2011. This is less than the cost of the package.

The call for a stimulus package ignores the fact the government has done a lot to improve our situation. The quickest most effective economic stimulus available is to reduce taxes. We have had a falling tax burden in Canada for about eight years now. Our business costs are lower now than in 2000, the amount of money people keep out of their pay cheque is higher. All of this is reflected in the fact that Canada is projected to have the mildest downtuwn of any western world country. This is an amazing given the fact that we are sitting next door to the country going through the worst recession.

If a spending package is moved forward with, it will take a long time to put into place. The federal government moves at a glacial pace. A $30 000 000 000 stimulus package agreed to in the next budget will not see any money spend before 2010. Most of the money will not actually leave Ottawa's coffers till 2011 or 2012. All the projections have Canada out of any downturn by the end of 2009. The money will come too late to deal with a recession and will simply be wasted.
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