Friday, September 21, 2018Canada's Leading Online Business Magazine

The Man Who Could Be Our Next Prime Minister

By Angus Gillespie

As of the latest public opinion polls it seems as if Prime Minister Justin Trudeau and the ruling federal Liberals have a lot of work to do if they want to have a second-term in office.

Federal Conservative Party of Canada Leader Andrew Scheer wants to court Liberal voters disaffected by the governing party’s perceived shift further to the left and also the growing deficit.

Scheer, who turns 39 next month, took over the reins of the Conservative Party on May 27, 2017 when he narrowly defeated Maxime Bernier on the 13th and final ballot of the leadership convention. Scheer succeeded former leader and Prime Minister Stephen Harper who stepped down after losing the federal election to Justin Trudeau and the Liberal party.

For many people Scheer is still very much an unknown commodity, but if the current trends continue he could well be Canada’s next prime minister.

Scheer, who was born in Ottawa but now resides in Regina with his wife Jill Ryan, was elected Speaker of the House of Commons at age 32, making him the youngest Speaker in the chamber’s history. Scheer and his wife have five children and he is an active member of the Knights of Columbus.

During the Conservative leadership race, Scheer stated that he would balance the federal budget within two years of forming government. At the time his statement was made there wasn’t much attention drawn to it, likely because Trudeau’s Liberals were still riding a relatively high level of public support at the time. But that’s changed significantly, and now there may in fact be an opening wide enough for Scheer to manoeuvre into.

Earlier this year Scheer delivered a keynote address to members of the Toronto Region Board of Trade. It was an opportunity for CBJ to see the man up close and personal.

As the old saying goes, you want to strike while the iron is hot and Trudeau has found himself holding that hot iron while standing in scalding hot water. Most recently there was the infamous gaffe-filled international excursion which culminated in several embarrassing incidents while visiting India. If Trudeau has a fashion consultant, it would be advisable for that individual to find another job.

Most polls seem to have Scheer and the Conservatives with about 38% of voter support compared with 33% for Trudeau and the Liberals with the NDP following up in third with 22% and the Green Party has 5% support. The other two per cent are undecided.

About 54% of those polled now disapprove of the performance of the Liberal government under Trudeau while 46% are standing behind the government.

“We believe the Liberal budget failed Canadians, and we give it an F,” says Scheer.

“They say in politics that ‘talk is cheap’. The finance minister spoke for 40 minutes and in that time the national debt increased by $1.5 million, so when it comes to the Liberals, talk is not cheap,” he says.

A Spiraling Deficit

It’s true the government has added more than $18 billion to the deficit this year alone. The promise during the election campaign was that the deficit for this year would be $6 billion. They’ve now abandoned all plans in trying to stick to their targets and the deficit is actually 300% higher than what was initially promised. Now there is an $18 billion deficit and future deficits for as far as the eye can see.

“I always like to be the positive guy and have been told I need to smile a little bit less,” jokes Scheer. “But when the government racks up this kind of debt it removes their ability to be flexible and address any type of economic downturn and it means they are borrowing more.”

When the Conservative government made the commitment to getting back to balanced budgets without raising taxes and without cutting transfer payments to the provinces for important social services it required a tremendous amount of fiscal discipline. Some would argue it created hardships, but at the end of the day there is a need to be fiscally responsible and not spend money the country doesn’t have. By having restraint it also sends out a very clear message out to all ministerial departments that if new ideas to spend money had better have a solid business case and proof there will be a benefit to Canadians. But when the message goes out that deficits and debt don’t matter, it leads to a plethora of wasteful spending being approved.

“I believe Canadians expect fiscal responsibility. For Conservatives there’s a bit of an extra challenge because we have to connect the dots between the negative consequences of deficits to the impact on individuals,” says Scheer.

When spending plans are approved and deficits go up – and naturally, so do taxes.

“There was a Twitter account being managed for $100,000 for the health minister and the $200,000 front cover for last year’s budget, although I think the Liberals learned their lesson because I’m told this year’s only cost $600, which is still more than it would cost you at Staples but at least it’s an improvement,” says Scheer.

The Finance department of the federal government must get extra money from somewhere and there’s really only one proven way to do it each time, and that’s by raising taxes on Canadians.

“Last July the finance minister launched an unprecedented attack on small business,” notes Scheer. “We saw the ability for businesses to be passed on within the same family being threatened. We saw money being saved in a passive investment account somehow being deemed dead money. What does that mean? To have money saved away for either a self-funded maternity leave, or a retirement fund for a business owner, or the ability to expand to a second location – Bill Morneau thought that was dead money. We know that when money is invested that way it is actually going out into the economy. It’s being lent to other businesses or entrepreneurs and creates growth in other ways.”

Scheer says that it was Finance Minister Bill Morneau’s idea to take out the defibrillators of 73% tax rates and shock that dead money back to life by double taxation and increasing revenue for the government.

Running a deficit also puts a strain on future generations’ abilities to be prosperous and this is a topic that Scheer noticeably gets passionate about.

“The Liberals are reaching into the future and taking that prosperity and spending it today. It means leaving our kids with a massive credit card bill,” he says.

“The Liberals will say times are good and we should spend money. They also said the same thing during the 2008 global economic crisis, so I’d like to know when they think the time is appropriate to have balanced budgets,” ponders Scheer.

Commodity prices have gone up, which is not a result of domestic policy but rather other economies growing. Oil prices have doubled in the past year, but at the same time the Canadian dollar has remained relatively low, trading in and around the 78-cent U.S. level and interest rates are still at an all-time low. But any one of those elements can change and are completely beyond the government’s control, which is the troubling part for Scheer.

“If we have an $18 billion deficit when economic growth is dependent upon three major factors beyond the government’s control, what will happen when any of those change? How big will the deficit be then?”

International Trade

The Canada-U.S. trading relationship accounts for one-fifth of our economic activity. There was nothing in the budget that spoke to NAFTA. There was no signal to the business community that the government had a plan to deal with the possibility of a trade disruption with our largest trading partner. That in itself sends a huge negative signal to the investment community.

In addition to trade uncertainties, infrastructure spending was cut by more than $2 billion. But there is an inherent need to make our large Canadian cities more vibrant and attractive with a great quality of life for people living in those municipalities that generate so much economic activity.

“Today’s top talent, graduating from universities around the world, don’t just look at the salary but they also look at the kinds of cities they’ll be living in. Cities like Toronto, Montreal and Vancouver need to be competitive not only with things like tax rates but the livability factor. When infrastructure spending is cut it makes it hard for our cities to keep up,” remarks Scheer.

Average household debt is now higher in Canada than it was in the U.S. in 2008. In fact, when you combine all three levels of debt – individual, corporate and government – Canada’s debt load is three times the size of our current economy. While the government can certainly take its fair share of blame, it is also up to each individual Canadian to ensure their finances are in order. It’s important to spend within your means. It’s a message Scheer understood from a young age.

“I got my start working in Ottawa, waiting on tables to pay my way through university. I didn’t inherit a family fortune. My parents were very good to me when I was in school. They gave me a free place to live and bought me my bus pass every month. They said the rest I could figure out on my own,” he smiles.

“There were lots of times when I’d be leaving the restaurant to catch a ride with one of my friends and I’d hear the owner on the phone and most often he was talking to one of his suppliers trying to get a couple more weeks of credit because maybe that month had been a bit slow. There’s a lot of stress that goes into those types of phone calls. Other times he’d stay late at night to file his GST or had to participate in one of those StatsCan surveys for small business that I know small business owners love so much,” chuckles Scheer.

Upon moving to Regina during his university days, Scheer didn’t have any experience in the insurance sector but managed to find employment with a small business that paid for his training. It was a husband and wife team who had literally sold the farm a few years before Scheer’s arrival.

“They hired me and got my accreditation. That business today hires dozens of brokers and some of them go on to open their own business. That’s the type of things Conservatives recognize – that prosperity is contagious,” says Scheer. “When we get the fundamentals right it improves the quality of life for everyone. Government should help to support that.”

Canada First

Billions of dollars in the capital investment markets has left Canada and that’s just in our natural resources sector alone. Many thousands of jobs in Canada are linked to the natural resource sector, including manufacturing and the reciprocal supply chain.

There are difficult stories of how some companies have had to cut their production schedule from five days a week down to four due to high energy prices. Meanwhile, foreign investment into Canada has plummeted in the past year. Scheer is annoyed by the lack of action taken by the government to address the issue.

“Prime Minister Trudeau went to a fancy ski resort in Davos and announced he was not going to even try to stay competitive on the world stage and actually bragged about it. What a negative signal to those who are choosing where to invest and provide opportunities,” says Scheer.

The big-ticket item in the federal budget was the consultation process for the much talked-about new national Pharmacare program. But that leaves Scheer feeling no more optimistic than any of the other Liberal initiatives.

“You’ll have to pardon me for not having confidence in one of Kathleen Wynne’s ministers (Eric Hoskins) to deliver anything at the federal level,” says Scheer.

“This government has chosen to spend $500 million in the Asian Infrastructure Investment Bank. We talk about infrastructure needs here at home – clean water in our cities and on reserves. This spending will build projects in other countries. That is something the Conservative party would redirect back home,” promises Scheer.

In the private sector, risk and reward always go together. Scheer maintains that the Conservatives champion the idea of public-private partnerships so that infrastructure projects can be built with private-sector participation. The reward for projects going well means a profit for the investors who risked their capital.

The Infrastructure Bank flips everything around. It puts all the risk on Canadian taxpayers and all the rewards go to the billionaire investors from around the world.

“That is certainly not putting the Canadian taxpayer first. And by the way, we’re almost three years into the mandate and there still is no CEO for the Infrastructure Bank,” notes Scheer.

“I’ve been in the House of Commons several years now and I’ve seen a lot of budgets, but in all my years I have never seen a government spend so much to achieve so little.”

The 43rd Canadian federal election is scheduled to take place on or before October 21, 2019.

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