How many Canadians does it take to change a government? The answer is none; Canadians don't change government. They want the same, orthodox, missionary-style government year in and year out, lest they stand a chance to improve their lot in life, or heaven forbid, have their neighbors improve their lot.
The Conservative government's first budget proves that point in that government spending is increasing at much more than the rate of inflation, while the supposed tax relief is a shell game favoring selected groups in society.
While the punditocracy has been breathlessly reporting that the Conservative government is true to its guiding philosophy of low taxation and small government, you sure could have fooled me. Let's start with the budget. Finance Minister Jim Flaherty said that "The budget is balanced, our spending is focused, and taxes will go down for all Canadians." One of the guiding principles of conservatism is that government operates on a balanced budget. A balanced budget is one that runs neither a deficit nor a surplus. So how could Flaherty talk about a balanced budget if he's still running a surplus?
Then there's program spending, which is increasing at an alarming rate. Over the next two years the Conservatives are planning to spend over $ 8.2 billion more than they are spending this year. This includes new money for everything from infrastructure improvement to the military to policing. While there is no doubt that spending new money on the military is long overdue, one wonders about all the new nanny-state social spending that's also included in the budget. I find it particularly galling that in addition to giving all families with children under the age of six $100 per month per child, the Conservatives are now also planning to stuff "daycare spaces" into their social loot bags.
There is also a subsidy for transit passes, a subsidy for kids' sports, a subsidy for the purchase of work-related clothing and/or gear and financial assistance for students. It's a nice, fuzzy gesture to help students make it through school, but why should we subsidize the education of people who will ultimately graduate and increase their earning power on the taxpayers' dime? A university or college education is not a right, but a privilege, the expense for which rightfully should ultimately be borne by the students and their families, not society at large.
I applaud the fact that the government has followed through on its promise to cut the GST by 1%. As they say in Kansas, "whoop de-doo". Cutting a consumption tax doesn't give nearly the same quality of bang-for-buck as does cutting income taxes. And no matter how economists try to couch this, raising the lowest tax rate from 15% to 15.5% does not constitute a tax cut.
It has been proven time and again that real tax cuts stimulate the economy. In 1961 John F. Kennedy initiated the biggest tax cuts in American history, which, incredible as it may seem, actually resulted in an overall increase in government revenue. Ronald Reagan demonstrated the same principle in 1980, as did Mike Harris in Ontario in the early 1990s. Tax cuts stimulate the economy and result in higher government revenues. While our economy is currently chugging along at a better than satisfactory pace with GDP growth (3.2%) in excess of inflation (2.2%), a low-tax and small government policy will serve to insulate Canadians against the severity of the inevitable cyclical economic downturn that inevitably follows.
I realize that the Conservatives are in a minority government and feel the need to gain consensus from the opposition parties. But my sense is that they will never be in a stronger position during this government than they are right now, as none of the opposition parties will dare risk a snap election just to be contrarians. They do not have the money, nor do they have the leadership to make sufficient gains for an election to be worthwhile.
As a fiscal conservative I am deeply disappointed in what our new Conservative government has put on the table for their first budget.
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