Justin Trudeau claimed the Liberal Party of Canada leadership in a resounding victory, and if we believe the polls, Canadians are open to supporting their Liberal candidates in the next election. However, there is a lot of work to be done if the Liberals want more than just a temporary splash in the polls. The most important part will be developing a policy platform to meet the challenges facing Canada.
While some were calling on Trudeau to release a full policy platform during the race, consulting with Canadians before crafting a platform rather than placating voters with simplistic policies was a defensible approach. Trudeau stated during the race that he wants to present a vision to Canadians that is neither “left wing” nor “right wing.” The parameters of 21st century policies shouldn’t be informed by 18th century political terms.
Policies that don’t fit into the old left-right spectrum are more complicated than slashing taxes or creating major spending projects. We live in challenging economic times, which requires sophisticated policies. While crafting targeted policies that appeal to every conceivable voting block has become popular in political circles, voters are growing cynical about focus group-tested policies.
Rational fiscal management doesn’t make for a very good campaign slogan, but it has to be at the heart of the Liberal platform if Canadians are going to give the party serious consideration. Canadians don’t respect Jean Chretien because of the idealistic Red Book. They respect him because of the tough choices he made during the program review that rescued Canada’s economy. Canadians are willing to accept tough decisions if they understand they are made in the long term interests of their families and friends.
With that in mind, here are some policy suggestions that don’t fit into the stereotypical “left wing” and “right wing” boxes, and would help meet some of Canada’ long term challenges:
- Simplify the income tax code: Canada’s tax code is a mess. Few people understand all of its provisions, many of which encourage inefficiency. Canadians spend $12.6 billion per year complying with the tax code according to a 2011 report by the Certified General Accountants Association of Canada. Perversely, the complexity of the tax code allows people with better accountants to pay less taxes than others. The myriad of tax expenditures such as those for enrolling one’s children in sports and art programs amount to little more than an inefficient tax cut for upper middle class families and do little to address poverty.
- Expand the Gas Tax Fund: The Gas Tax Fund was created in 2005 to provide funding to municipalities for infrastructure. Currently the fund receives $2 billion of the roughly $5 billion the federal government collects through the gas tax. Since the gas tax is levied specifically to pay for roads, it makes sense to have a dedicated fund. Expanding it to include all gas tax revenue would be a step in the right direction. Ideally, stricter funding criteria would be implemented to ensure that most of the revenue is spent on roads, but expanding it without reform is better than continuing to allow $3 billion of gas taxes to disappear into the abyss of general revenue.
- Remove the exemption of hydro from equalization: The equalization formula does not include hydro revenue, which inflates equalization payments to Manitoba and Quebec. The entire equalization formula will be severely stressed by Ontario’s slide into have not territory. Eliminating the unfair exemption of hydro from equalization is the least difficult reform available. That may not be enough to save the system, which actively rewards poor performing provincial governments, but it would help. More extensive reforms, such as replacing equalization with a transfer of the GST to the provinces should also be considered.
- End supply management: Justin Trudeau criticized the current government for increasing tariffs that are “raising costs on everyday items for an awful lot of people.” However, he’s reluctant to end supply management, which has the same effect. As Martha Hall Findlay pointed out, a family that consumes four liters of milk per week spends roughly $150 extra per year because of supply management. This premium benefits less than 13000 farmers. But it sure hurts single mothers and young people busy paying off student loans. Unlike farmers, they tend not to have several million dollars of assets. Australia and New Zealand both liberalized their dairy industries, and have each succeeded in increasing exports while lowering prices.
- Reduce OAS payments to high income earners: Old age security payments (OAS) aren’t a problem in isolation. But with the ratio of workers to retirees set to increase from 5-1 to 2-1, combined with dramatic escalations in healthcare costs, Canadians will feel the squeeze. Instead of increasing the age of eligibility to 67, a Liberal government could claw back OAS payments to wealthy Canadians. Clawbacks begin at $69,000, and people earning $100,000 still receive some benefit. The program exists to combat poverty. Providing benefits to wealthy retirees who are more likely to spend the proceeds travelling than putting food on the table is ludicrous.
Moving beyond the left/right paradigm is a worthwhile goal, but it requires re-thinking many legacy programs. They were designed for a different era. In order to power a 21st century economy that allows Canada to meet progressive goals, we need to create high performance government programs. Canada is a great place to live, but there is plenty of room for improvement. Hope and audacity are good, but it’s a lot easier for people – especially the young people he seeks to engage – to be hopeful and audacious if they have jobs.
None of these proposals are obvious vote winners, but leadership isn’t about doing what’s easy. It’s about doing what’s right. And Canadians respect politicians who put the wellbeing of the country ahead of political considerations. Liberals have the opportunity to prove to Canadians they’re willing to put good government above smart politics. Let the conversation begin.