Conservative Fiscal Mismanagement


From Not Quite Unhinged, I learn of this column by Macleans magazine’s Paul Wells delving into some disturbing details about the Conservatives’ most recent budget.

The Conservatives have recently been linked to a Ministry of Finance document listing a number of crown corporations the government of Canada owns, and the possible returns they could receive if they sell these items. Institutions such as the CBC and VIA Rail are among those that could be put up for sale. Some have suggested that this is a move on the part of Stephen Harper to throw red meat at his base, which has always been suspicious of the CBC, and would like nothing more than to get these crown corporations out of their tax hair.

Now, I’m not opposed to the idea of looking into the pros and cons of selling our crown corporations. An examination by the Ontario government of the benefit of keeping the Liquor Control Board of Ontario versus selling it is long overdue, in my opinion. Indeed, we should probably be reviewing the state of all our crown corporations year after year, possibly on a five or ten year cycle, so we can constantly ask ourselves: are tax dollars needed to keep these organizations afloat? Are they doing what we’ve mandated them to do? Can the marketplace meet that same mandate, or is further government intervention required? So long as the review is open and accountable, and its findings not prejudged, this sounds like a good exercise in government accountability.

But that’s not what’s on display here. In Paul Wells’ words:

Paul Dewar, the NDP MP who gets quoted in the Sun story above and has archived it on his website, is right. The feds are not only airily mulling an asset sale in the abstract, they’ve booked revenue from it in this budget year, and in succeeding years, to the tune of many billions of dollars in total sales. When Dewar quizzed Jim Flaherty about it three months ago, Flaherty was nonchalant in acknowledging, broadly, the premise of Dewar’s questions.

There are really only two possibilities. The government can sell billions of dollars worth of stuff, or its deficit can be billions of dollars higher.

In my opinion, when the Liberals go after the Conservatives’ “shocking” $50 billion deficit, or the fact that twice as much debt may be added to our debt load over the next five years, they are barking up the wrong tree. I think many Canadians instinctively understand that we’d still be in deficit even if the Liberals were in power. And indeed, the fiscal stimulus package that put us into this deficit was largely brought forward by the Conservatives who were in a panic because the opposition was united in demanding they do just that.

But items like what Paul Wells describes are where the root of the Conservatives’ fiscal mismanagement problem lies. It is here where you can argue that the Conservatives aren’t playing straight with the Canadian people. After all, the document brought forward by the Ministry of Finance is supposed to be a trial balloon, they tell us — except that they’ve already budgeted for the cash from these sales which have not happened yet to be applied to general revenues.

Even the way their hoping to use their illusionary cash is suspect, which is surprising for a government that supposedly espouses fiscal conservatism. Any accountant would tell you that you do not place the cash you receive for selling capital assets into your operating budget, because the money is not sustainable. If you hope to balance the books the next year, you still have that gap to bridge, and fewer things to sell in order to bridge it. You simply do not sell the fridge in order to put food on the table. It makes no fiscal sense.

And it is a disturbing parallel to what the Harris government did during the lead-up to the 1999 election in Ontario, selling Highway 407 for a fraction of its worth, and using the money received to balance the budget. Not only were Ontarian taxpayers ripped off, receiving very little return for the sale of something they’d spent tens of billions of dollars over the past thirty years investing in, the question of how to balance Ontario’s books had merely been put off rather than addressed. What did Harris and company expect to sell the next year if the ink on the balance books was still red? It is this approach that saddled Ontarians with a surprise $5.6 billion deficit when Eves and Flaherty left office, turfed on their ear by voters who turned to Dalton McGuinty.

Given the track record of some of the Conservative ministers in this government, particularly the Conservative Minister of Finance, Canadians have a right to be concerned that the assets they’ve spent so much of their tax dollars on will simply be let go for fire-sale prices, just so the Conservatives can make a quick buck. This does not serve us well.

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