Federal budget surplus ‘exciting,’ but also a double-edged sword, say Conservatives

Conservative MPs, buoyed by the federal government’s estimated $6.4-billion surplus, say the surplus is “exciting,” but it’s also a double-edged sword. “It’s an exciting time to be back,” Conservative MP Mike Allen (Tobique-Mactaquac, N.B.) told The Hill Times last week. “It is going to be a challenge and the House Finance Committee—which I’m on as well—we have over 400 submissions that we’re going to be going through, as well as presentations by people. So it’s going to be a challenge to figure out how we do this and how we make sure that we put practices in place and put programs in place and how we use that money smart,” said Mr. Allen, adding that he’s hopeful some of the surplus will be used to pay down the national debt. Canada’s national debt sat at $602.4-billion in March 2013, as indicated by the government’s most recent annual financial report covering 2012-13. Before the global recession, in 2007-2008 the government’s debt sat at $516.3-billion. “I call it a two-sided sword because you do have a challenge, because on some things you’re still going to have to say, ‘no,’” he said. The Conservative government has already projected there will be a $6.4-billion budget surplus on the table for the 2015-16 fiscal year, this after three years of deficit reductions to offset the stimulus spending budgets of 2007-2008 and 2009-10, drafted in light of the global economic recession. By the end of the 2009-10 fiscal year, the budget deficit sat at $55.6-billion. The government reported a $1.6-billion surplus in its most recent fiscal monitor report from June 2014. Meanwhile, this summer saw a series of bad poll results, with the Conservatives consistently ranking second behind the Liberals. In last week’s Nanos Party Power Index, based on a composite of public opinions of the views of 1,000 respondents, the Conservatives slipped to third place, while 58.5 per cent of respondents indicating they would vote Liberal, 45.1 per cent would vote NDP and 40.2 per cent Conservative. Last week, was the first week back on Parliament Hill for MPs for the start of what’s expected to be the last full fall session before the next election set for October 2015. Conservatives MPs, ministers, and staffers, party supporters gathered at the Ottawa Convention Centre on Sept. 15 before Parliament opened for campaign-style rally. Prime Minister Stephen Harper (Calgary Southeast, Alta.) talked about the economy, touting the balanced budget and promising cut taxes. “I look forward to the economic and fiscal update this fall, when we will be taking the first steps in the next part of our Conservative plan for Canadians,” said Mr. Harper in his speech. Mr. Harper said the Conservative government would be using the surplus to provide tax cuts to Canadians and follow through on past campaign commitments, including balancing the budget and introducing income-splitting measures for all Canadians. He also referred to the introduction of new consumer protection measures, such as pick-and-pay cable subscriptions, and said Canadians can expect “more choice” at “better costs.” Conservatives are expected to focus on the economy in the lead up to the 2015 budget and federal election and are touting both the Conservative government’s record as an economic steward and Mr. Harper’s experience as a “trusted” leader. Finance Minister Joe Oliver (Eglinton-Lawrence, Ont.) has already announced a reduction in EI premiums for small businesses, which he said would save small business about $550-million over two years, and also spoke to the Conservative government’s future plans to substantially reduce EI premiums for all Canadians in 2017 when a new, seven-year break-even rate-setting mechanism would be put into effect. On Sept. 15, Conservative MPs also gathered at 24 Sussex Dr. in the evening for the Prime Minister’s annual caucus garden party. Former NHL players Mark Osborne and Mike Gartner were also there, according to a tweet and a photo from Conservative MP Patrick Brown (Barrie, Ont.). “We have a variety of those types of get-togethers throughout the year,” said Mr. Brown in an interview with The Hill Times. “The mood in caucus is very optimistic, we’re very proud of our leader, especially this summer where he showed such leadership on the world stage,” he said. Mr. Brown said Canadians take the economy seriously, and when the writ is dropped it won’t be the polls that matter, it will be about “that success and that track record.” Conservative MP Bob Dechert (Mississauga-Erindale, Ont.) said he’s feeling “very positive” heading into the new session and is “very pleased” a balanced budget was achieved, as promised. Mr. Dechert said he’s hoping some surplus money will be spent on transportation in the Greater Toronto Area, in addition to tax relief measures. “What we ought to do with most of that surplus is give it back to the taxpayers,” said Mr. Dechert. With money on the table for the first time in years, political strategists are expecting this to be the most important and one of the busiest pre-budget processes overseen by this Conservative federal government. Sources told The Hill Times that while MPs from all parties will be jockeying to weigh in on how the surplus should be used, government MPs have a natural inside track and are eager to bend Mr. Oliver’s ear after years of deficit reductions. Tim Powers, vice president at Summa Strategies and a Conservative pundit, said MPs are going to be “pretty determined” in lobbying various ministers, “to push forward their case for what they need.” “I think that’s already started…it never really stops, mind you, but it probably kicks up as you get closer and I think people recognize that this budget document is going to be an election document, so they’ll push for what they can,” said Mr. Powers. “Obviously, the government’s likely more inclined to pay a bit more attention to some of the requests made from government MPs, but all MPs—that’s their job, advocating for things,” he said. The House Finance Committee, chaired by Conservative MP James Rajotte (Edmonton-Leduc, Alta.), is set to begin pre-budget this week and has so far received more than 400 pre-budget submissions. Mr. Allen told The Hill Times that in his experience as an MP, pre-budget input is a two-stage process. “Generally, what we do is we get together as an Atlantic caucus and look to see if there are areas where we can come to an agreement on things across Atlantic Canada that are important to the region, and, in the past, we’ve had a fair amount of success,” said Mr. Allen, pointing to the government’s Knowledge Infrastructure Program as an example. He said the Atlantic caucus was supportive of the program, a $2-billion fund introduced as part of the 2009-10 stimulus-spending budget, because of the number of universities that would benefit in the region. “Also, at the same time you look at your local issues, whether it be agriculture, whether it be small manufacturing and other things and what are some of the challenges that are facing them and then try to write the finance minister a letter in the context of what are the national implications of this,” said Mr. Allen. Speaking to the government’s plans for the surplus, Mr. Allen said tax relief measures would “certainly” be included. “What form that’s going to take, we’ll have to wait and see. But I think that’s exciting, and some of the things that I think that Canadians will be making their voting decision on, I think we’re on the right track,” he said. Mr. Allen said “it’s a small surplus” and it’s important the government makes the right decisions and also takes into account growth rates. “You have to make sure that anything you’re doing reflects a bit of a cushion,” said Mr. Allen. “So you have to be awful careful and there will have to be a lot of good thinking on this.” Mr. Allen has already announced he won’t be running for re-election in 2015, but said, in general, caucus is “feeling quite good” and is “getting geared up for that sprint” to the next election. Chad Rogers, a partner at Crestview Strategies, said the fall economic statement this year is “dramatically more important” than in the past. “There’s a lot of pent up demand for spending on tax relief to Canadians, infrastructure—all kinds, there’s never a shortage of worthy asks,” said Mr. Rogers. Mr. Rogers said while it’s better to be in surplus and it means more “potential” for the government, he said Conservatives aren’t exactly “giddy.” “There’s not so much of a surplus that there won’t be a highly conservative, small ‘c’ fiscal conservative, lens put on the budget. As opposed to an orgy of program spending, the Prime Minister and minister of finance have said the focus is on tax relief, debt retirement and possibly long term investments like infrastructure,” said Mr. Rogers. Mr. Powers said restraint and fiscal prudence were, in some cases, “very popular” moves with certain constituents, but he said Conservative MPs did cop some criticism from constituents as a result of past reductions. “Peter Penashue, for example, when he was the MP for Labrador, prior to resigning and losing the subsequent byelection, was getting criticized about service reductions in Labrador. Certainly other MPs have heard that, but it’s part and parcel of the exercise,” said Mr. Powers. Now with a surplus, Mr. Powers said MPs will be “looking forward” to new investments. “There’s a lot of infrastructure work that’s needed across the country, so getting some of that directed towards their ridings and projects in their ridings will be seen as pleasing to them,” said Mr. Powers. “When people think they have the opportunity to spend something, and that spending could be linked to their potential re-election, they’re probably in a bit more of a buoyant mood than not,” he said. Former Harper Cabinet minister Stockwell Day, who is now a senior strategic adviser at Vancouver-based law firm McMillan LLP, told The Hill Times that pre-budget submissions are a “highly competitive process” for MPs. He said the two “bookends” to MP pre-budget submissions are either to advocate for a fulfillment of past commitments or to advocate for local riding investments and spending on government programs. “They’re going to be the ones that are going to be more nervous, and they’re going to be saying I need more spending, I need more dollars, I might not get re-elected,” said Mr. Day. “It’s a challenging time.” “Most MPs are actually pretty reasonable. They’ll be fervent about their requests, make no bones about it, but when it comes down to the end of the day, if they get told no, most of them will live with it. Some will think that means they literally will not get re-elected,” he said. lryckewaert@hilltimes.com The Hill Times

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Federal budget surplus ‘exciting,’ but also a double-edged sword, say Conservatives

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