An economic plan for Canada?

Last week I suggested that the economic update provided by the Finance Minister might be a major play in the contest that will culminate in the next federal election and it would be worth our while to pay some attention to it.

The “plan� is thoroughly a conservative one, a combination of the Ontario “common sense revolution� and the “Alberta Advantage� strategies of the late 1990s. It favours greater coordination with the economy to the south—what those in the Canadian nationalism movement used to call “continentalism�—and it raises some trial balloons that may animate the next federal election.

The plan falls short of defining a certain course of action. Conservatives will await initial reaction in a variety of interest communities, including us regular citizens, before filling in all the blanks.

There is a commitment to tax relief for companies and individuals, and there’s a hint that this will be directed toward those on the threshold of work/social assistance and those in the highest income tax brackets. There is speculation that one course of greater tax savings would be to increase the amount for income splitting between spouses when one of the spouses’ income is taxed at a significantly higher lever than the other. And there is the hint that capital gains taxes may be lessened for those who reinvest monies within six months, a longstanding intention of the Conservatives.

Tax measures always reveal something of the ideology of their authors, and it’s interesting to read in this light what the Conservatives, without intended irony, are calling the “Canada Advantage.�

One puzzle that the documents fail to solve is that of the “fiscal imbalance�, the current spending capacities of the federal, provincial and municipal governments. The Tories, in the last federal election, promised much more than they were likely willing to deliver once in office.

This trap they laid for themselves looked like it would allow the Bloc to regain seats they lost to the Tories in Quebec and provide Liberals campaigning Ontario municipalities an easy time, showing how the Conservatives had let them down. The Tories escape hatch appears to be a clever one, but perhaps not clever enough.

It is, it appears, not to satisfy any province on the promise of fiscal rebalancing, instead spending federal surpluses on debt reduction. To placate Quebec, they have given Les Quebecois the symbolic standing of a “nation�, while the rest of us will have to be satisfied with an updated equalization formula and greater post-secondary education spending. The First Nations peoples have been left out in the cold again.

Conservatives are promising to pull back from areas where they don’t think the feds should be spending, a move that will lead to further cuts in federal programs while increasing spending in their preferred areas of jurisdiction: the military, post-secondary education, health, and security.

The most recent example of this effort to redesign the role of the federal government was to close down three-quarters of the regional offices of the Status of Women Canada. This sort of reduction of federal outreach — in part justified by one reading of the Constitutional Act, 1867 — represents a clear attempt to set back the traditional social and rights agenda of previous federal governments. And it will lead sooner than later to a successful non-confidence motion.

The economic plan of the Conservatives seeks to enhance our “competitiveness�, which in code means more integration with the tax regimes of the United States while providing an economic context for greater returns for investors. Business and business-leaning newspapers will endorse this move and may well provide the Tories their best engine in the next election.

The most surprising trial balloon was not in the documents, but in discussion surrounding them. It has been suggested that Tories may decide to extend to a degree the income splitting provisions that they’re currently securing, in separate legislation, for those on pension income.

Such income splitting - under a claim of fairness - rewards families in which one spouse gave/gives up the opportunity to be employed in a pension-conferring career in favour of a life of work in the household. This sort of tax measure is indeed revealing of underlying conservative (traditional family) values, and it will refire the gender gap in party competition while deepening an ideological division between women in Canada.