Monday, September 07, 2009

And Only 16 Years Too Late

Liberals admit transfer cuts were a mistake

For those Canadians wondering how, precisely, Liberal leader Michael Ignatieff plans to eliminate the deficit without raising taxes, Canadians recently got an idea of how he doesn't plan to do it.

"We will absolutely not reduce transfer payments to the provinces," announced John McCallum, the Liberal party's Finance Critic. "It's true that this is something we have done in the past — but we have learned from our mistakes."

Canadians have been waiting a long time to hear the Liberal party admit that their cuts to provincial transfers were a mistake.

McCallum went on to claim that the Conservative government has blemishes of its own as it pertains to provincial transfers -- that Prime Minister Stephen Harper's government cut billions of dollars in transfers meant to finance a day care program, and cultural funding and general funds for aboriginals.

Some of this money, McCallum reportedly noted, would have gone to provincial infrastructure. Apparently, despite the fact that it was intended to be spent on financing a day care program and on aboriginals.

But then again, as an editorial in the Halifax Chronicle Herald notes, the Liberal party has had a long and not-so-proud history of diverting funds toward ends they weren't intended for.

Some of this even casts doubt on Michael Ignatieff's claim that the Liberals conquered the Mulroney-era deficit (which originated in the Trudeau era) without raising taxes.

As the Herald notes, then-Finance Minister Paul Martin raised government revenues by closing taxation loopholes worth $800 million. While that certainly wasn't an explicit tax increase, the additional billion levied against Canadian corporations the following year certainly was.

Fortunately for Martin and Ignatieff, few people shed crocodile tears for corporations when they're taxed.

Martin also repeatedly raided Employment Insurance funds to general revenue. The Liberals would later perform this act unlawfully. In effect, Paul Martin transformed EI premiums into a proxy tax.

John McCallum's pledge not to slash federal transfers again may have come in the wake of realizations that doing so would effectively be political suicide in the province of Quebec.

"It's clear that there's one thing the government of Canada cannot do: that's to touch federal transfers," said Quebec's Finance Minister, Raymond Bachand. "We recently heard [Prime Minister Stephen] Harper say he wouldn't touch federal transfers to rebalance the budget in Canada. ...I'm certainly expecting the Liberal Party of Canada to make the same guarantee."

Of course, if the Liberal party did break their pledge not to cut provincial transfers, it wouldn't be the first time they broke such a promise. In 1993 the Liberal party promised to abolish the GST, then promptly went back on their promise.

But that's beside the point. Apparently, Canadians can rest assured that the Liberal party learns from its mistakes -- it just takes 16 years for them to admit to them.


  1. Great Post. It is still an accomplishment that the Liberals admitted they made a mistake.

    Do you think they will admit to making other mistakes in the Chretien/Martin period as a means of presenting a new improved Liberal Party?

  2. I don't think that would be a wise decision.

    "Hey, guys. We know you gave us three straight majority governments.

    We fucked up really bad. And we won't fuck up like that again!"

    Heh. It's not how I'd fight an election.


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