Stay-the-Course Budget Drives Wedge Deeper

Tories stay focused on economic overhaul
February 12, 2014 Updated: February 12, 2014

PARLIAMENT HILL—Some people are calling it a “Seinfield budget”—a budget about nothing. Except it’s not. It’s a stay-the-course affair, and that course has some Canadians sharply divided. 

Finance Minister Jim Flaherty is intent on balancing the budget without the spectre of massive front-line program cuts. Instead, he’s been waging a quiet war of attrition, hoping to rein in the federal government’s “in-house spending” amidst a shaky global economy that never regained its footing after the 2008 Great Recession.

“We want to make sure our country is in a position where we can weather a storm if and when it comes. We also don’t want to pass on our bills to the next generation, which is what one does when one runs deficits and accumulates public debt,” said Flaherty on Tuesday.

Flaherty said he is not balancing the budget on the backs of Canadians, and said transfers to the provinces and territories continued to rise “even during the very difficult times we have been through.” 

That’s a critical point and why Canadians aren’t seeing the cuts to provincial healthcare that took place when Paul Martin performed a similar exercise of balancing the budgets for the Liberal government in the 1990s. Both men needed to reduce government’s role in GDP and increase private sector growth.

Flaherty says he’s left the provinces with the cash they need for social services and education, but his freeze on public sector departmental spending has not been painless. According to some of the unions that comprise that sector, it’s their members who have suffered. 

United Angst

The Conservatives have done their best to trim the fat from federal spending, but in doing so critics charge the government is pulling the lynchpin out of the middle class and warn such a move could blow up in the Tories’ face.

That’s because the wages and benefits given to unionized public sector employees force the private sector to up its offering in order to compete for talent. 

The narrative pulls both ways. Private sector think tanks like C.D. Howe say that competition puts a strain on businesses that can’t compete against the federal treasury and therefore hurts private sector growth. Unions say their higher-paid workers keep the private sector from paying less despite often healthy profit margins.

In keeping taxes low and transfers high, Flaherty has continued shrinking the federal government. That means fewer services and programs, and a smaller staff of public servants. Supporters say that will leave money in the pockets of Canadians and get the government out of the way so the private sector can pick up the slack.

Flaherty says that’s already happening.

“Our revenues keep going up, which goes to prove that if you let the economy breathe, it will grow. And we are letting the economy breathe,” he said Wednesday.

‘Very disappointed’

Of course, not everyone agrees. Public Service Alliance of Canada (PSAC) National President Robyn Benson describes the budget as a “missed opportunity” and says if more Canadians voted, the Conservatives would be out of office. 

She sides with those who think the government is well-positioned to spur economic growth and that public servants play an important role in the well-being of Canadians. 

On Wednesday, she didn’t quite pledge to get her members out voting against the Tories, or for specific parties—something PSAC has done in the past. But she did say PSAC’s “highly educated, hard-working” membership would know what to do.

“They can look at the voting records of the MPs in the House, they can look at the programs that have been cut, look at the services that are gone, and they can make up their mind when they cast their ballot, but cast their ballot they must do.”

She also fell short of condemning the government, saying she was “very, very disappointed” rather than angry.

Benson might have been pulling her punches, but Debi Daviau wasn’t. 

“This isn’t just about an attack on the public, it’s about an attack on the middle class, good jobs, and stability,” said Daviau, president and CEO of the Professional Institute of the Public Service of Canada (PIPSC), the public sector union for scientists and professionals.

“If they can stick it to us, then it becomes much easier to stick it to people who are less protected, who are not unionized,” she said.

Daviau thinks Canadians are spoiling for a fight over the direction Flaherty’s budget is taking the country. 

“We won’t be just a bunch of public servants standing alone trying to achieve a fair deal; we’ll be all Canadians standing together trying to achieve a fair middle class for all Canadians.”

Baggage and Controversy

It’s a hard claim to make given Tories even win seats in Ottawa where public servants are at their highest concentration. It’s also a tough claim to make when public sympathy for the public sector is at a low point. Canadians who faced hard times during the downturn seem to have little sympathy for public servants enjoying better wages and benefits thanks to taxpayer dollars. 

And this is where Flaherty’s so-called “do-nothing” budget becomes everything.

The Conservatives have been gearing up to play hardball with unions. They’ve also made a full-court press on resource development as a pathway to Canadian prosperity. Along the way they’ve turned critics into enemies and collected all the baggage and controversy that comes with being in government for eight years.

It’s likely why Flaherty has stayed on as finance minister even when he can barely keep a painful grimace from his face when the cameras turn away. Flaherty has a dermatological condition known as bullous pemphigoid that can cause large, fluid-filled blisters.

Because, at the end of the day, Flaherty’s do-nothing budget holds the course on which the Conservatives have staked their claim to government—jobs, growth, and prosperity. And if the numbers don’t bear that out by election time in 2015, there really won’t be anything Flaherty can do.