Roundup: Not headed for a debt bomb

In light of the fall economic update, and the myriad of concerns about the level of the deficit and lack of a plan to get to balance in the near term, economist Kevin Milligan took us all to school over Twitter yesterday. The main message – that it’s not 1995, and we can’t keep talking about the deficit as though it were.

Later on, Milligan took exception to the notion that the government has backtracked on their tax reform promises and made the situation worse. Not so, he tells us.

So there you have it. Armchair punditry on deficits or tax changes (even from some economists) doesn’t necessarily stack up.

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Senate QP: Jim Carr disputes your questions

With the cancellation of the Energy East pipeline by its proponent still fresh in the minds of many Canadians, it was natural that an appearance by Natural Resources Minister Jim Carr in the Senate would prompt a lot of questions. It did not disappoint. Senator Larry Smith led off, wondering about the “evaporation” of energy projects in Canada while the Americans continued to ramp up their own projects. Carr disputed that there was an evaporation, and spoke about the approval of three projects that would create 27,000 jobs and that while they recognized the need to reform the regulatory process, they were approving more projects than they were rejecting. On a supplemental, Smith asked what could be done to better advance Canadian energy security through things like pipelines, and Carr disputed a bit with how it was worded, and noted that the government has certain responsibilities, and upon seeing some shaking heads across the aisle, Carr laid out conditions that have changed since the Energy East pipeline was first proposed, including the price of oil and new approved pipelines including Keystone XL.

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QP: Morneau’s five new themes

While the prime minister was off meeting with the premiers and Indigenous leaders, it was also a Supply Day where the Conservatives were demanding an extension of the consultation period for the proposed tax changes. Andrew Scheer led off, mini-lectern on desk, and read his concerns about “local businesses” in French, and how tax changes would doom them. Bill Morneau reminded him that they were listening to Canadians and would ensure that their concerns were being heard. Scheer switched to English to demand that the government vote for their opposition motion on extending the consultation period. Morneau instead listed the five things they’ve heard that they plan to address. After another round of the same from Scheer and Morneau, Gérard Deltell got up to ask in French about the verification of the plans, and Morneau reminded him that they were looking for a fairer system that would encourage investment. Deltell railed that the measures would kill small businesses, but Morneau repeated that they were listening to the consultations. Alexandre Boulerice led for the NDP, railing about Netflix and tax avoidance by big corporations and tax havens, and Diane Lebouthillier reminded him that they were indeed going after tax evaders. Boulerice asked again in English, and Morneau deployed his worn tax fairness talking points. Linda Duncan was up next and raised the concerns laid out in the Environment Commissioner’s reports, and Catherine McKenna listed a number of measures that they were taking. Robert Aubin repeated the question in French, and McKenna reiterated her response in French.

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QP: What about Morneau-Shapell?

With it being Wednesday and with the PM out to town, there were a few more empty desks in the Commons, but QP rolled along regardless. Andrew Scheer led off, returning again to the proposed tax changes as an attack on “local businesses.” Jim Carr stood up to instead note that the opposition has been so concerned with women entrepreneurs, then how could they contenance the statements by Gerry Ritz in calling the environment minister “Climate Barbie.” Andrew Scheer didn’t respond, and stuck to his script, and so Carr stood up again, to again demand that the comments be denounced. Scheer again hewed to his script on “local businesses,” and Carr again expressed his disappointment and his expectation of a retraction. Onto Alain Rayes, who read the “local businesses” scripts in French, and this time, Bill Morneau stood up to reiterate that they were trying to make the system fairer for the middle class. They went another round of the same, before Thomas Mulcair rose for the NDP, railing that the PM left the door open to ballistic missile defence. Harjit Sajjan said that they were working actively with the US on NORAD modernisation, but the policy had not changed. Mulcair asked again in French, and Marc Garneau took this one, offering much the same response. Nathan Cullen was up next to rail about tax loopholes, and Diane Lebouthillier assured him they were going after tax avoidance. Alexandre Boulerice asked the same in French, and Bill Morneau gave his pat response on tax fairness.

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Roundup: Preferential tax treatment warranted?

The hits keep on coming when it comes to the rhetoric about the proposed small business tax changes. If you listened to doctors, you would think that the government was outlawing self-incorporation. They’re not. If you listen to the Conservatives, it’s a “massive tax hike” and “hugely complex changes” which also doesn’t quite scan – yes, there is some complexity in how they plan to enforce the changes, but that’s not the same thing.

People also keep insisting that these changes won’t allow them to use their incorporation for savings purposes (whether for a buffer or for a maternity leave), which again, is not the case as the new rules have been outlined.

https://twitter.com/lindsaytedds/status/900542218041044992

Of course, when these facts meet their rhetoric, we have been assaulted with yet more wailing and gnashing of teeth that these preferential tax treatments are a “reward” for the risks that these entrepreneurs take. Which again, doesn’t actually fly with the research. (See Kevin Milligan’s thread starting here, which I won’t reproduce in its entirety).

In fact, you can make a number of arguments about whether the government should be subsidising the risk of entrepreneurs. Also, the it should be restated that preferential tax rates are not the reward for becoming an entrepreneur – there are other rewards inherent in the role.

Instead, we come back to the government’s argument about tax fairness, and why those who choose to self-incorporate and have families to split/sprinkle their income with should be the only ones to enjoys such privileges. Nobody seems to be able to answer that question. Funnily enough. Instead, it’s more disingenuous rhetoric and outright falsehoods about what’s being proposed here, that benefits only the very wealthy few for whom this kind of tax “planning” makes sense.

Meanwhile, Andrew Coyne takes on the notion that small businesses should get preferential tax rates for risk-taking, while taking down the critics of his arguments, who similarly are building cases on false premises.

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QP: Woe be Vegreville

With the PM away and Rona Ambrose already gone, the Conservatives surprisingly led with Shannon Stubbs, who railed about the plans to close the Vegreville immigration processing centre, in light of revelations of costs associated. Ralph Goodall took this one, noting the difficulty in filling current vacancies in the centre, and that the new centre in Edmonton would double its capacity. Stubbs angrily insisted that the government had lied about the costs, but Goodale insisted that the issue was capacity. Stubbs accused the government of punishing a small town with a Conservative MP in favour of moving it to a Liberal riding, but Goodale stood firm. Gérard Deltell got up next and railed about the government cutting tax credits, to which Scott Brison reminded him that their tax measures helped those who needed it the most. Deltell tried again, railing about the transit tax credit loss (seriously, it was bad policy no matter which way you slice it), and Brison listed the good economic news since the Liberals took power. Thomas Mulcair was up next, and in French, concerned trolled that Bardish Chagger wasn’t up to picking a new Ethics Commissioner. Chagger reminded him of the open and transparent process in place. Mulcair switched to English and wondered what the Liberals would think if Stephen Harper called on Paul Calandra to choose a new Commissioner, but Chagger repeated her answer. Mulcair then turned to the issue of the Official Languages Commissioner, and wondered in what role Gerald Butts communicated with Madeleine Meilleur before her appointment. Joly noted that candidates were vetted and interviewed after a rigorous process and that she spoke with other parties who agreed that she had credentials. Mulcair tried again in French, and got the same answer.

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QP: Bell Island conspiracies

With Justin Trudeau on his way to the Microsoft conference in Washington State, and Rona Ambrose bowing out, there were only two leaders present for QP today. Candice Bergen led off, railing about the PM’s Xmas vacation — again — using the reach of a story about the island’s ownership to raise doubts. Bardish Chagger gave the usual reply. Bergen used this as a hook for a question to accuse Chagger of being the wrong person to be in charge of finding a new Ethics Commissioner, and Chagger reminded her that the process is open and anyone can apply. Bergen insisted that the government was simply looking for Liberal donors, citing Madeleine Meilleur’s nomination as Official Languages Commissioner. Diane Lebouthillier took this one, praising Meilleur’s record. Gérard Deltell was up next, worrying about the Infrastructure Bank and the search for a board despite the fact that it had not been created yet. Amarjeet Sohi reminded him of the value of the Bank, and that they wanted to gave board members ready to be appointed when the Bank’s creation was authorised by Parliament. On a second go from Deltell, François-Philippe Champagne took the opportunity to tout the Invest in Canada Agency that they were also looking for appointees for. Thomas Mulcair was up next, spinning a conspiracy about the tentacles of KPMG infiltrating everywhere, and Lebouthillier got up to note all of the measures they were taking to combat tax evasion. Mulcair asked again in French, and got the same answer. Mulcair then took a swipe at Meilleur’s appointment at Languages Commissioner, and Lebouthillier repeated her lines about Meilleur’s record. Mulcair demanded that Chagger recuse herself from the selection of the Ethics Commissioner, and Chagger reminded him of the open process.

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QP: Rona Ambrose’s swan song

With the news that Rona Ambrose was stepping down now confirmed, and Justin Trudeau present for what was likely the only day this week, QP was off and running. Ambrose led off, asking about the report calling to scrap and replace the National Energy Board. Trudeau noted that they have been consulting, and reiterated that they are serious about ensuring that the economy and the environment go together. Ambrose took exception to the report recommendation that its headquarters be moved to Ottawa from Calgary, and Trudeau took a few shots at the previous government politicising the Board while he was working to restore trust in the process. Ambrose worried that Trudeau was trying to choke out the oilsands in red tape, but Trudeau insisted that a responsible approach would mean growing the economy. Ambrose switched to French to demand that the House appoint a new Ethics Commissioner without any Liberal interference. Trudeau jabbed back about political appointments the Conservatives made while touting his own merit-based process. Ambrose noted that the last question would likely be her final one as leader of the opposition, and said she would call off her attack dogs if he answered how many times he met with the Ethics Commissioner. Trudeau reminded her that she asks them not to talk about investigations and he has met with her several times over his time as an MP, and was going to pay Ambrose a compliment before he was drowned out. Thomas Mulcair was up next, raising the reach of a CBC news story about the ownership of the Aga Khan’s island. Trudeau retreated to the talking point that it was a private family vacation. Mulcair railed about the helicopter ride, but Trudeau noted that he would answer any questions the Ethics Commissioner may have. Mulcair then moved onto the story about someone from KPMG working for the Liberal Party, in the context of a committee study of the firm being voted down, and Trudeau noted that the committee is independent. Mulcair pressed, and Trudeau launched into a spiel about ethics and openness.

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Roundup: The curious PCO-PBO turf war

There is an interesting piece out from Kathryn May on iPolitics about the turf war going on between the Privy Council Office and the Parliamentary Budget Officer, and how that is playing out in the provisions of the budget implementation bill that would create an independent PBO. The PBO blames senior bureaucrats for trying to hobble its future role, and much of it seems to be down to an existential difference of opinion, between whether or not the PBO should exist to give advice to parliamentarians, or to be a watchdog of the government. PCO takes the view that the PBO was designed to offer advice and independent analysis, while the first PBO, Kevin Page, was certainly taking the latter view, which his successor has largely followed suit with. One of the other interesting notes was that the public service would rather the PBO act in more of a fashion like the Auditor General, where he goes back to departments with his figures to check for factual errors, and that it gives them a chance to respond to the report, rather than feeling like they are being constantly “ambushed.”

I am of the view that we run the risk of creating bigger problems if we continue to give the PBO too broad of a mandate, while being unaccountable and only able to be terminated for cause, meaning seven year terms by which they can self-initiate all manner of investigations with no constraints. That will be a problem, given that we already have at least one Independent Officer of Parliament who is going about making problematic declarations and giving reports of dubious quality without anyone calling him to task on it (and by this I mean the Auditor General). And I do think that PCO has a point in that the intent of the PBO was to give independent analysis, particularly of economic forecasts, and I do think that there is some merit to the criticisms that Kevin Page had become something of a showboat and was far exceeding his mandate before his term was not renewed. We have a serious problem in our parliament where we are handing too much power to these independent officers (and other appointed bodies for that matter) while MPs are doing less and less actual work – especially the work that they’re supposed to be doing.

While PCO says that the provisions in the budget bill were to try to “strike a balance” with the role of the PBO, I fear that he’s already become too popular with the media – and by extension the general public – to try and constrain his role, and the government will be forced to back down. Because We The Media are too keen to be deferential to watchdogs (like the Auditor General) and not call them out when they go wrong (like the AG did with the Senate report), I fear that the pattern will repeat itself with the PBO, as it already is with the demands from the pundit class that he be given overly broad powers with his new office. Because why let Parliament do the job it’s supposed to do when we can have Independent Officers do it for them?

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Roundup: A two-fingered fix for fundraising

After months now of interminable questions about the perfectly legal fundraising practices of the Liberals, it was let known that they will be a tabling a bill in the near future to…do something about it. Not really clamp down. Not really stop. Just add more disclosure, and ensure that events don’t happen in private homes, which many people argue is not really the point, but I think is more of the government giving two fingers to their critics and making some cosmetic changes to shut people up.

Kady O’Malley rather astutely observes that this is really setting a trap for opposition parties, particularly with the proposed provisions around party leaders and leadership candidates being subject to the same new rules, waiting for them to oppose it so that they can be accused of hypocrisy. I would add that there’s an element of payback in here for the way in which the Conservatives and NDP got together in 2006 to screw the Liberals in the middle of their leadership contest by changing the fundraising rules right in the middle of it, meaning that some of those candidates were unable to raise enough money to pay back debts that they would have had little problem doing beforehand.

Of course, it all goes back to the fact that this whole story has been overblown from the very start. These fundraisers were never really “cash for access” as they were billed – they were only termed so because the journalists at the centre of this were trying to piggyback on the kind of mess that was happening in Ontario where cabinet ministers were largely blackmailing companies that were trying to lobby them for tens of thousands of dollars in order to get a hearing, which is absolutely not what was happening in this context, nor, and this bears repeating again and again, can you buy meaningful influence for $1500. And even if you get your five minutes with the PM and want to give your pitch to him, do you honestly think that it would really sway his opinion when he’s got people who want pitch him all the time? I’m not convinced. And, as they’ve said (and as this “listening tour” has again demonstrated), they’ve shown a remarkable degree of openness to regular Canadians and are constantly consulting. It’s not like the only time you can see them is at a fundraiser. But ooh, scary Chinese businessmen! Anyway, I’ll let Howard Anglin take it from here.

Oh, and one more reminder about how overblown this has all been: Transparency International has us as one of the cleanest, least corrupt countries in the world. Given the pearl-clutching you hear from our commentariat, you wouldn’t actually know that.

Incidentally, the Conservatives are already howling at the moon about this, and the NDP’s Alexandre Boulerice says it’s not enough and he’ll table his own bill – except that’s an empty threat since he’s so far down the Order of Precedence that it will never see the light of day.

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