The election of a majority government means the return of stability to federal politics. The Conservatives now have an opportunity to enact an ambitious legislative program without the threat of immediate elections hanging over their heads. Their new parliamentary majority means the Tories can start to “think big” and pursue creative solutions to serious challenges facing Canada.
A great place to start would be working to strengthen democratic accountability by clearly distinguishing between policy areas that fall under federal authority and provincial responsibilities. The Mowat Centre for Policy Innovation, a Toronto-based think-tank, recently gave the institutions of Canadian federalism a grade of “D+” for accountability, noting it is almost impossible for citizens to “follow the money” and determine who to hold responsible for inadequate results. Recent federal election campaigns have made the problem worse by focusing on provincial policy areas. The 2006 debate over daycare, the 2008 debate over municipal infrastructure, and the 2011 debate over the proposed “learning passport” for higher education were central elements of recent federal campaigns despite the fact they are not federal issues.
The federal government can start correcting this problem by clearly signalling it will extricate itself from provincial policy areas. They should start by withdrawing from the childcare sector, ending the ineffective $2.6 billion-per-year “choice in childcare allowance” created at the start of their first mandate. More generally, the government should shift appropriate tax room to the provinces, reducing federal taxes and transfers to provincial governments while inviting the provinces to raise their taxes commensurately to fund provincial programs. Such a move should coincide with a clear statement from Ottawa that it will not re-engage in areas of provincial jurisdiction. This would enable citizens to know who deserves credit and blame for results in provincial policy areas.
A related agenda item should be reforming Canada’s equalization program. Equalization burdens taxpayers across the country, and forces residents of some provinces to subsidize levels of government services elsewhere beyond what they themselves receive. It is unfair to force taxpayers from other provinces to subsidize Quebec’s universal daycare, or Manitoba’s rock-bottom university tuition. Furthermore, equalization reduces growth by incenting economic underperformance. These economic effects are matched by toxic political effects, as the inequities of the program breed regional resentments.
Equalization in its present form is a disaster which the Conservative majority should address. The government should immediately expand efforts, currently almost non-existent, to measure and publicly report on the impact of equalization. Within a few years, the government should begin to reduce equalization payments to end the unfair “over-equalization” that currently exists.
On the economy, the Conservatives have enhanced competitiveness by reducing corporate tax rates, but the opportunity now exists for additional pro-growth policies. For example, a major tax reform could improve tax efficiency, enabling the government to collect the same amount of revenue while reducing the impact of taxation on economic growth. Pro-growth tax reform would likely include reductions in corporate, capital gains and personal income tax rates, combined with the elimination of tax loopholes and deductions as well as higher taxes on consumption.
The Conservatives should also enable provincial governments to modernize Canada’s healthcare system. The provinces are currently unclear on what reform options are available to them under the Canada Health Act as they attempt to reduce wait times. The federal government should clarify the situation by stating it will not financially punish provincial governments that experiment with reforms such as the introduction of user fees or alternative service delivery models – so long as all Canadians have access to excellent care regardless of ability to pay. There exist promising reform ideas, which have already been implemented in Europe, that can also reduce wait times in Canada if provinces are allowed to pursue them.
It would be a mistake for the Conservatives to tack sharply to the right. Re-opening contentious social issues or taking a slash-and-burn approach to popular federal programs would lead to defeat in the next election and policy reversals. However, neither should the Conservatives be overly cautious. Scrapping the long-gun registry, eliminating subsidies for political parties and lowering corporate taxes are good ideas – but these commitments do not constitute an agenda worthy of this mandate. The majority Conservative government should be reasonable and pragmatic, but not lethargic. If the Tories, with virtually unchecked legislative authority, do not work to implement solutions to the major policy problems facing Canada, voters will conclude they have no solutions – and turn to a party that does in the next election.