Columns

Visions of sugarplums

As Ottawa’s surplus grows, so does the Liberal temptation to use it to smother political fires

Bruce Wallace January 18 1999
Columns

Visions of sugarplums

As Ottawa’s surplus grows, so does the Liberal temptation to use it to smother political fires

Bruce Wallace January 18 1999

Visions of sugarplums

Columns

As Ottawa’s surplus grows, so does the Liberal temptation to use it to smother political fires

Bruce Wallace

Neither side will elaborate on the details of what was said, other than to mumble that the discussion was “frank.” So you can bet the talk got a little testy one night last November when Allan Rock and Paul Martin gathered with their deputy ministers and top political aides in an Ottawa restaurant to discuss money. Specifically, Health Minister Rock wanted to know just how much new federal cash was going to be available in the 1999 budget, which the Liberals have repeatedly promised will be remembered as the moment they shored up medicare.

At the time, the federal treasury seemed to be gushing money. The finance department’s own reports put the surplus at $10 billion in the first half of this fiscal year, and Martin was having an ever harder time convincing his cabinet colleagues to snap out of their sugarplum reveries of how to spend it. Money is still tight, he even told dubious emissaries from the Prime Minister’s Office who wondered why Martin continued to cry poor. And who knows what impact all those tottering Indonesias and Russias will have on us?

That’s what Rock heard from Martin, too: health budget or not, lower your expectations.

Rock has always worried he would be seen to get only crumbs for health care from Martin, and his alarm must have deepened over the following weeks as the Liberals announced two new policies that reduced the available money even more. The first was Martin’s cut in Employment Insurance premiums by 15 cents, a seemingly innocuous amount that will still cost the government $1.1 billion a year in foregone revenue. The other was the creation of a nearly $900-million income support program for farmers hurt by the drop in prices for commodities like hogs. Both decisions shared one thing: they were designed to snuff out a growing political problem, signs the Liberals are becoming more willing to set aside fiscal prudence at any hint of trouble.

Take the El cut. Martin has never believed—in fact has argued forcefully against—the theory that Canadian payroll taxes are an obstacle to job creation. His aides never grow bored of recounting the

time he asked a room full of East Coast business people for a show of hands from those who would hire new workers if Ottawa cut El premiums. Not a pinkie went up, and Martin remains convinced there is far more benefit in a straight personal income tax cut than in lowering less visible taxes.

But as the El account swelled to $20 billion last fall, opposition parties and some premiers started accusing Martin of “stealing” money from Canadian workers, not a slur he liked. By December, all that was left to decide was how big the El cut should be: not so great that it would take a big chunk of the surplus, yet large enough to force critics to stop calling him a thief. Martin settled on 15 cents, which seems to have bought him some peace for now.

Then came trouble on the farm. Nothing scares politicians as much as the wails of farmers claiming they are about to go broke. Hogs were being shot or gassed by owners who apparently could not afford to feed them until they could be properly butchered for a profit, and it didn’t help that video of the same pile of dead hogs was being aired on TV newscasts with the same frequency as RCMP pepper-spraying technique. Chrétien agreed to the support package with a speed his ministers could only marvel at.

Rock has since been told roughly how much money to look forward to in February’s budget, and seems satisfied that he won’t be seen to have failed. But the preChristmas indication of how the Liberals plan to govern in the post-deficit era is unsettling, especially at a time when they want to change federal accounting rules to get their hands on any surplus money at year’s end. Currently, any money left over must be used to pay down the federal debt, and the Liberals can think of far more pleasant ways to deal with a windfall. It’s crazy, they argue, to be paying down debt when Canadians are crying out for health spending or tax cuts.

Sounds reasonable. But the danger is that governments are not always noble in their spending choices. Future surpluses could easily become a sort of slush fund, available to smother newly emerged political problems. Like, for example, when there is a loud chorus calling the finance minister a thief.