Part I Part II
Shortly after the 2005/06 winter election campaign, the Canadian Taxpayers Federation (CTF) issued its Top 20 Policy Priorities for the new Conservative government. The agenda items united longstanding CTF policy prescriptions with Conservative Party campaign promises. Earlier this week the first 10 policies were ranked. The part one ranking is available by Clicking here.
During the 2004 federal election, then-Opposition leader Stephen Harper criticized the general practice of corporate welfare saying it did not serve taxpayers. In a speech to the Toronto Board of Trade, Mr. Harper vowed to cut business subsidies and use the savings to lower business taxes. "I won't lower one without lowering the other. This is what I mean by low-tax solutions rather than high-spending solutions," he said.
Once in government, however, the Conservatives breathed new life into Technology Partnerships Canada (TPC) -- Ottawa's flagship corporate welfare program -- and continued to provide handouts to businesses, particularly in Quebec and Ontario. Recently, Industry Minister Maxime Bernier replaced TPC with the Strategic Aerospace & Defence Initiative (SADI). While this new program has a reduced budget (40 per cent less than TPC), and comes with stricter repayment and accountability conditions, it is still corporate welfare, which the CTF has continuously pointed out is failed 19th century industrial policy and a colossal waste of taxpayers' money.
Grade: D
Again in Opposition, Mr. Harper had plenty to say about high and unfair gas taxes. In August, 2005, he blasted the Liberal government for refusing to reduce gas taxes as prices soared. "There's no reason for the federal government to profiteer when consumers are hurting," he said, urging the former government to give motorists a break. Mr. Harper went further, suggesting the government "could knock the GST off of the excise tax. They could knock the GST off of gas above a certain price level."
In government only six month later, the Conservatives went into full retreat from pledges to cut gas taxes. The Prime Minister now says that high gas prices are here to stay and that paying them is something motorists will just have to "get used to."
Motorists have faired better on the Conservative commitment to spend gas tax revenues on roads and highway infrastructure. The government has dedicated 36 per cent of fuel tax revenue on roads bridges and highways, up from 7 per cent under the Liberals. This is a positive step and one the CTF welcomes.
Grade: C
This is not a Conservative government promise and there is no movement on the file. However, the electoral system chosen in the Conservative government's Senate reform bill is province-wide single transferable vote, which is a form of proportional representation.
Grade: C
Repeal the federal government subsidy that pays political parties $1.75 per vote received in the last general election. Bring charitable tax credits for political parties in line with what is offered for other charitable organizations
On April 4, Elections Canada -- the agency responsible for overseeing federal elections -- released the 2007 first quarter subsidy payments made to Canadian political parties. Every political party that obtains 2 per cent of the national vote or at least 5 per cent of the vote in each riding it ran a candidate gets $1.75 per vote, each year. This amount is linked to inflation so the amount jumped to $1.8725 per vote for the most recent payment. It will be $2.00 this fiscal year, $2.14 in fiscal 2008 and rise again to $2.29 in 2009.
Meanwhile the political parties continue their independent fundraising activities. During the first three months of 2007, the governing Conservatives collected $5.2-million from its supporters. Do the Tories -- and opposition parties -- really need to be digging into the pockets of taxpayers
Grade: F
Whereas the Chrétien Liberals were prepared to engage in quiet diplomacy when dealing with China's abysmal human rights record, Prime Minister Harper has taken a different approach. "I think Canadians want us to promote our trade relations worldwide. We do that, but I don't think Canadians want us to sell out important Canadian values, our belief in democracy, freedom, human rights," he said last year. As such, the federal government has committed $1-billion to Afghanistan over 10 years.
Yet, according to the Canadian Coalition for Democracies, the government has not always directed Canada's foreign aid budget to promote democracy, the rule of law, press freedom, and responsible government. Indeed, China receives $54-million a year from Canadian taxpayers in aid. Other repressive governments also collect foreign aid dollars from Ottawa. Canada's total foreign aid budget is $4.1-billion this year.
Grade: C
Ottawa's employment insurance program has amassed a $51-billion surplus thanks to ongoing over-taxation of workers and employers. Auditor-General Shelia Fraser noted in her 2004 annual report the federal government "has not observed the intent of the Employment Insurance Act." The auditor-general also criticized the fact that the EI surplus is automatically transferred to the government's general revenue because employee and employer premiums are supposed to cover benefits for the unemployed, not pay for other programs.
Conservative opposition MPs called the over-taxation "highway robbery" and a "raid" on the wallets of working Canadians. Their hypocrisy knows no bounds: the governing Conservatives are using the fund just like the Liberals, to pad the federal budget.
The government reduced the EI tax rate on January 1 for both employees and employers but it also raised the income threshold the tax is applied to. (It was the first increase in a decade.) In other words, the Conservatives gave tax relief with one hand and took most of it back with the other. The seesaw tax changes means the tax bite is only 1.3 per cent lower from 2006 levels.
Grade: D
Not a Conservative government campaign priority.
Grade: F
Some progress in the 2006 Budget with the one-point GST cut and implementation of a new employment tax credit. The government also enacted an assortment of targeted tax relief measures that benefit some, but not all taxpayers. Disappointingly, the Conservatives also raised the bottom personal income tax rate by half a percentage point.
On March 19, 2007, Minister Flaherty stated during his second budget speech the taxes Canadians pay is excessive. "I hear it at the hockey arena, I hear it at the coffee shop, I hear it from people on the street, taxes in Canada are way too high," Mr. Flaherty told the House of Commons. Yet tax rates will not be reduced by the Conservative government.
The 2007 Budget failed to deliver the relief Mr. Flaherty had talked about, specifically tax relief for all Canadians. Instead, boutique tax relief was aimed primarily at senior couples, low-income earners, and families with kids. Missing was broad-based income tax relief and the next GST reduction will not happen until January 2011. Moreover, Canada's tax code is more complex and cumbersome thanks to the various targeted tax measures.
Grade: C
The Conservatives are quickly becoming "the Party of Big Spenders." The government's spending restraint melted away as the federal surplus ballooned. Last year, for example, Mr. Flaherty missed his original 2006 budget target of a 5.3 per cent spending increase. Instead it was 7.9 per cent, which is 50 per cent more! Had the Conservative government not embarked on its end of year spending, it is estimated the $9.2-billion surplus would have exceeded $14-billion. As excess money poured into Ottawa, the surplus was "spent down" instead of returned to taxpayers.
Federal government expenditures are rising dramatically. In the 2006 fiscal year -- the first year of Mr. Flaherty's watch -- spending ballooned by $13.8-billion, rising from $175.2-billion to $189.0-billion. This is the second biggest jump since the budget was balanced a decade ago. In other words, several Liberal budgets were more prudent than Mr. Flaherty's work. The outlook is not better this fiscal year with spending set to jump another $10.6-billion, levelling off at $199.6-billion.
The government's two-year binge will total $24.4-billion. That is a 14 per cent increase in the size of government!
Grade: D
The Harper government's biggest legislative accomplishment was enacting the Federal Accountability Act. The anti-corruption bill was signed into law in December 2006. The rules surrounding political party donations, lobbying, appointments, government contracts and advertising are now subject to clear rules and greater transparency. It represents a step forward although some elements are missing.
After the last election, the CTF detailed a "60 Point Accountability Report Card." It combined the 54 pledges from the Conservative Party's platform on accountability with 6 points from Judge John Gomery's recommendations stemming from the sponsorship scandal. Of the 60 points, the government included two thirds of them in its accountability law. The biggest disappointment was stripping the bill of access to information reforms. Access to information -- also called freedom of information -- is the taxpayers' best defence against abuse of tax dollars and secretive government. Other measures were truncated, for example the promise of a procurement officer is at the discretion of cabinet.
Overall the Federal Accountability Act is a step forward. It enforces new transparency laws, meets much of what the Conservatives campaigned on, and provides an accountability framework on which to build and improve.
Grade: B-
The CTF midterm is a snapshot evaluation and will be updated to reflect the Conservative government's improvements or regression. Improved grades might be achieved by limiting the federal spending power in areas of provincial jurisdiction, reducing corporate welfare or cutting gas and EI taxes. On the other hand, failure to reduce the national debt, cut taxes or enact reforms to make reserves more accountable to taxpayers and native band members will reduce the ranking.
Prime Minister Harper has made some progress, but he has also fallen short of his own stated objectives -- particularly on tax and spending policies. The Liberals are not ready for a return to government, but if the Conservatives opt to be "Liberal lite" voters will not be to blame for choosing the real thing. The CTF hopes Mr. Harper will instead return to Parliament in September with an invigorated taxpayer-friendly agenda.
Is Canada Off Track?
Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.
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