From the House – John Rafferty MP


OTTAWA – Just over a week ago Jim Flaherty delivered his fall economic update to room of Toronto elites at the Albany Club.   The polite applause he received was probably the reason he chose to deliver that speech to his friends rather than to the democratically elected Members of Parliament in the House of Commons where he would have to face some serious questions about his abilities and the fact that the Bank of Canada is again saying that the economy is slowing under his watch.

Upon reading the Minister’s remarks three things really stood out for me.  Mr. Flaherty is now saying that his deficit last year was officially the largest on record, that this year’s deficit will be larger than he predicted just 6 months ago, and that he will run deficits through 2015 – one year longer than we were told in the March budget.   What’s worse is that the Finance Minister is still refusing to accept any responsibility for the mess we are in.

A deficit is the negative balance that exists between what a government takes in through taxes and the amount it spends on programs and services.  Sometimes these imbalances are caused by governments that overspend, but other times they are caused by governments that excessively cut taxes.  No one will argue that the last recession was global in nature, and that the struggling US economy was a drag on ours, but this Finance Minister manufactured our record deficits by recklessly cutting taxes, and corporate taxes in particular, to the bone.

I think most people will agree that tax cutting is not a bad thing generally speaking, but most would also agree that this should be done only so long as we can afford them in the short, medium, and long term.  However, this government cut corporate taxes by a staggering $60 billion over just 5 years.  The fact that last year’s deficit came in at about $56 billion tells me that this fiscal imbalance would likely not exist, or would have at least been several magnitudes smaller, if it were not for the misguided and reckless corporate tax cuts enacted by this Finance Minister.

Mr. Flaherty’s economic update also acknowledged that this year’s deficit would be larger than he calculated just six short months ago, and that his timetable for the elimination of deficits was being pushed back by one year.  Mr. Flaherty has never been correct about such matters, so that was not so surprising.  What was shocking though was his admission was that the deficit this year is higher than he anticipated because of the transfer payments the Harper Conservatives doled out to Ontario and British Columbia to implement the HST.

That’s right.  Not only did the Conservatives urge the provincial governments to increase our sales tax and give them $6 billion to follow through with it they also had to borrow that $6 billion and are forcing us to pay interest on that money every year moving forward.

So Jim Flaherty can’t see the deepest recession in a generation coming until it actually hits, is running the largest deficits in Canadian history because he has cut corporate taxes to the bone, and is making those record deficits larger still by borrowing money to increase our sales tax.   Does that sound like sound fiscal policy to you?

With the Bank of Canada sounding some alarm bells last week and suggesting that Canada is headed into more ‘uncertain’ economic times my simple advice to the Finance Minister is to pick up the phone and call the New Democrat government of Manitoba to ask them for guidance.  That government has found a responsible way to phase out and eliminate entirely the income tax for small businesses while balancing the books for eleven straight years, and avoiding a recession when Canada and the rest of the world fell into one.   Clearly this is the kind of responsible government we need in Ottawa.

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