These Conservatives Have a Liberal Fiscal Bent

Commentary, Economy, Frontier Centre

Conservatives, gathered in Ottawa at their convention, have every right to feel good about themselves, their party and their leader, Stephen Harper.

They’ve been in office for more than five years and now, courtesy of a majority victory, will remain there for another four years. Unless something quite unexpected happens, they should win re-election, giving their party an unbroken run of about 14 years in power, its longest stretch since the late 19th century.

So Canada would appear to have entered a Conservative era. What’s that shift meant so far, and what might it mean in the years ahead?

It is said, by the Manning Centre among others, that the country wants smaller government and that the Conservatives have delivered it. But, of course, that’s not at all what the party celebrating itself in convention has delivered.

Under the Harper Conservatives, the number of public servants has soared, government spending has skyrocketed, and the deficit has bulged. Some of these results – spending and the deficit – are due to the severe recession, to which the government responded, as did governments throughout the Western world.

But even before the recession, the Harper Conservatives had shown themselves to be big spenders, allowing government spending to rise about 6 per cent yearly. This spending, combined with lower taxes, did away with the large surplus the Liberals had bequeathed the Conservatives.

Indeed, the Harper Conservatives inherited the strongest fiscal position of any Canadian government since Pierre Trudeau arrived in office in 1968. The previous two Progressive Conservative governments – of Joe Clark and Brian Mulroney – faced doleful fiscal news on taking power, and wrestled with a weak fiscal situation through all their months or years in office.

Both of those governments, in contrast to the Harper Conservatives, tried to reduce spending, to their political peril. Mr. Clark’s government died on a restraint budget promising “short-term pain for long-term gain,” whereas Mr. Mulroney chopped at everything from dairy subsidies to Via Rail to regional development in a vain attempt to bring the deficit below $36-billion in absolute terms. (It fell as a share of the total economy.)

Who knows what the Harper Conservatives’ colours might have been had they faced difficult times? As it was, their version of Conservatism has been a form of Liberalism from a spending perspective.

They have acted differently from Liberal governments in only two respects. First, despite letting spending rip, the Conservatives don’t believe in creating new government-run social programs. They prefer to do modest social policy through tax breaks targeted at precise slices of the electorate. Second, they propose a series of “tough on crime” policies that are much vaunted but marginal in their utility, if not demonstrably useless. They make for much better politics than policy.

The Chrétien government, once it licked the deficit, began reducing both personal and corporate taxes, an approach the Conservatives continued, adding a two-point cut to the GST. Although nominally opposed to direct government involvement in the economy, the Conservatives have been just as eager as the Liberals to put government money into industries and regions. Indeed, the Conservatives even created two regional development agencies.

Conservative MPs love spending just as much as Liberals once did, witness to which were the endless announcements they made of local spending that flowed from the Economic Action Plan. Even the Conservatives’ much-vaunted increase in defence spending carried on what Paul Martin’s government had begun. Now the Harper government is targeting defence for cuts to deal with the deficit, although it does intend to proceed with the big-ticket items of buying new fighter jets and new ships.

One doesn’t want to make the Harper Conservatives into ersatz Liberals. Conservatives have demonstrated some differences in policy, and these shouldn’t be neglected in summarizing their first five years and surmising how they’ll proceed. So far, however, they haven’t been path breakers but rather incrementalists – which perhaps is what Canadians are seeking.