Crawl Across the Ocean

Saturday, April 15, 2006

Scale of Economies

I'm not going to cover any new ground in this post, but I just wanted to put a couple of things in perspective, based on a comment Stephen Harper recently made.

Item #1: The Conservative government introduced their 'Accountability Act' last week. The Accountability Act is the Roy Halladay of the Conservatives' 5 policy starting rotation (i.e. the ace) and should get lots of run support in the House of Commons.

I note that, as predicted by Maclean's a while back, the government has separated out some of the increased Access to Information which it had promised into a separate act. An act which, if you could bet on whether bills will get passed or not, would likely pay much higher odds than the primary Accountability Act, bill C-2.

Also, it seems like there are some fairly big loopholes in some of the lobbying provisions, but in the end, none of this concerns me a whole lot. As I recall, the motive behind this accountability act was the sponsorship scandal. For example, from the Conservative party website, John Baird, the Minister who introduced the act says, "Today is about putting the legacy of political scandal behind us and restoring Canadians' trust in government."

From the CBC in-depth coverage here, we see that a high-end estimate of the money lost via the sponsorship scandal was $100 million dollars. Or, given that the Liberals were in power for 12 years, roughly $8.5 million/year was lost to this example of corruption that the Accountability Act is intended to put behind us.

------
Item #2, Laura Turner, from Liberalism Without Cynicism, picks up on the following passage in the Globe, referring to an address Stephen Harper made to the Board of Trade in St. John's last Wednesday,
"Mr. Harper also accused the previous government of racking up massive surpluses on the backs of Canadians.

'Billions upon billions were taken from Canadians,' he said. 'Talk about surpluses. They were taken from Canadians through over-taxation.

Nothing more, nothing less.'


It seems fair to assume that, if this is how Harper feels about surplusses, he wouldn't have run any if he had been Prime Minister instead of Chretien/Martin. According to the Annual Financial Report (2004-2005), the Liberals reduced the debt by $63 billion from it's peak ($562.9 billion). The annual report also tells us that the government paid 2.6% of GDP in debt service costs on a debt which was 38.7% of GDP. This suggests that the government is paying an average rate of 6.7% on the federal debt. If we conservatively just use 6%, then 6% of $63 billion is $3.78 billion.

----
So what's my point? Well, with great fanfare we have changed governments in order to clean up government and their first Act is a bill to improve accountability. All in response to a scandal which cost us roughly $8.5 million / year.

Meanwhile, Harper is telling us that the previous Liberal policy of running surplusses was all wrong. But that policy now saves us $3.78 billion / year - 445 times more than what the Accountability Act will save us, even if (which seems unlikely to me) it brings a complete end to government scandals.

So, sure, bring us accountability and create employment in Ottawa by hiring a hundred auditors or a thousand auditors or whatever, most of what is proposed in the Accountability Act seems reasonable to me and the rest will likely die in committee or just lead to bureaucratic workarounds, and I like clean government as much as the next person, but let's keep our eye on the scale of things. And the scale of savings from fiscally responsible government dwarfs the amounts to be saved by tinkering with the procedural rules on parliament hill. And when Harper starts spouting what Laura rightly calls tax-populism, I get nervous.

Of course cutting all funding for climate change programs might help balance the budget, but that is just trading one deficit for another, and is a topic for another post.

6 Comments:

  • Nice job putting things into perspective.

    By Anonymous Famousringo, at 6:56 PM  

  • Harper is cynical enough to know how quickly the public forgets. He will get more points by "giving money back to the taxpayer" than paying down the debt. His immediate goal is a majority govt; his long-term goal is to strip the federal government of the fiscal ability to act without the consent and collaboration of provinces.

    By Anonymous richard, at 6:19 AM  

  • Perspective my ass!

    The problem with the sponsorship scandal wasn't the absolute amount of money lost - it was the destination of the lost funds: a registered political party which was supposedly subject to campaign financing laws. Some of the funds came back as donations, but most were returned to the party as off-the-books cash transactions, donated time or expertise, or special below-market deals on services that were offset by special above-market pricing on government contracts. In their best year, the Liberal Party of Canada gets ~$12M in donations; and you think that $8.5M annually isn't a big deal? That is enough money to absolutely overwhelm any other party's attempt to get its message out. The whole adscam process was an attempt to undermine the basis of our democracy, and the "it wasn't so much money" idea is peddled by shills like Kinsella who have a vested interest in covering up the impact and continuing the system.

    Frankly, Declan, I expected better.

    By Blogger deaner, at 8:33 AM  

  • To me the value of suppressing corruption is self-evident - as I said, I'm all for clean government and I'm glad that the Liberals suffered for their actions, although I fear that the lesson politicians will take is to cover up if caught rather than calling an inquiry.

    I'm just pointing out that, in terms of dollars and cents, the amount of money involved in the sponsorship scandal is small potatoes.

    I take your point that when it comes to party financing, the scale is different (smaller), but then not all of the $100 million ended up in the Liberal party, probably no more than a tiny fraction of it.

    By Blogger Declan, at 6:08 PM  

  • "...but then not all of the $100 million ended up in the Liberal party, probably no more than a tiny fraction of it."

    We'll never know, will we? We also won't know how much of the same kind of stuff went on in other departments - say, like Finance, where PMPM used the department as an emloyment fund for Earnscliffe, whose real duties were to run a covert take-over of the Liberal Party of Canada. I find it difficult to give the benefit of the doubt to an organization that used the RCMP to intimidate and harass those who tried to follow the law when it was inconvenient or embarassing for the Party - as they did with Francois Beaudoin and the APEC protesters; others seem more tolerant on that score.

    By Blogger deaner, at 7:05 PM  

  • Fair enough Dean - certainly I was very unimpressed with the whoel APEC affair. But, as George Bush would say, we've had our accountability moment, we've changed governments, we have this new Act which should pass through parliament.

    What I'm saying is that starting from here, we need to stay focussed on big issues like fiscal responsibility. Getting tied up in arguments over which pieces are left in or out of the Act is just a distraction at this point.

    But you were right to criticize me for making a purely monetary comparison in my post and not acknowledging that it was important (for non-monetary reasons) to get this far in terms of holding the government accountable.

    By Blogger Declan, at 12:11 AM  

Post a Comment

<< Home