The Battle for 24 Sussex

By Angus Gillespie

It’s often said the most important election in a country’s history is always the next one. With that being the case, October 19 will be a crucial date. That is when Canadians go to the polls to determine the direction the nation’s leadership for the next five years – assuming a majority government. If we are once again left with a government ruling in minority territory, it’s going to be an even crazier ride on Parliament Hill, and the strong likelihood of returning to the polls yet again within 18 months – if not sooner. Parliamentarians have a long history of not playing nicely together in the sandbox.

Figures released by Statistics Canada on September 1 indicate the country technically reverted into recession, which is described as two consecutive quarters of negative GDP growth. However, it should be noted the downtick in the second quarter was a mere .1%, which in practical terms is virtually undetectable. Additionally, the GDP in June was up .5%, reversing the downward trend, but it wasn’t quite enough to take us completely out of negative territory overall for the second quarter. Economists point out that ‘the sky is falling’ credo definitely does not apply to our current economic situation, and in fact there are strong indicators showing that the uptick in June will continue throughout the entire third quarter.

When Prime Minister Stephen Harper asked Governor General David Johnston to dissolve government on August 2, it set off the longest federal election campaign in more than a century and a battle to see who will reside at 24 Sussex Drive, the official residence of the prime minister.

At dissolution, the ruling Conservatives had 159 House members; the NDP had 95; the Liberals 36; Independents controlled eight seats; while the Green Party, Bloc Quebecois and Strength in Democracy each held two. Four of the seats were vacant.

In what has been the only televised debate amongst the four main party leaders, the actual reach was not from coast to coast. It was televised on regional television leaving much of the country in the dark. It also happened a mere days after the election was called, when a good number of Canadians were likely off somewhere in their summer retreat, caring little about the politics of the day.

In any event, Prime Minister Stephen Harper, Liberal leader Justin Trudeau, NDP leader Tom Mulcair and Green Party leader Elizabeth May stood together and debated the issues. In any election a certain percentage of voters will cast their ballot for one party and one party only. They are dedicated core members. But it’s the many thousands – if not millions – who are on the fence and need to be swayed.

Here is a rundown on each of the leaders and some of the key elements of their party’s platforms heading into the election next month.

Tom Mulcair
Born October 24, 1954
Age: 60

Mulcair graduated from McGill University in 1977 with degrees in common law and civil law. In early 2007, then NDP leader persuaded Mulcair to run for the NDP in Quebec, where the party had no seats. In April of that same year, Mulcair confirmed that he would run for the NDP in the next federal election. Mulcair won his riding in Quebec and was sworn in on October 12, 2007. On March 24, 2012 he was elected as the party’s new federal leader following the death of Layton.

As of our publication date, Mulcair and the NDP party had been leading in virtually every poll that had been conducted in previous weeks. During the course of the campaign he has identified three main pillars in his party’s platform, unveiling promises of tax relief for small business and manufacturers. In announcing that a New Democrat government would cut the tax rate for small businesses to 9% from the current 11% has certainly been noticed. The plan would also extend the accelerated capital cost allowance for machinery or equipment used in manufacturing for another two years, which is a tax break that is scheduled to expire this year.

Mulcair is also looking to create a tax credit to encourage manufacturers to invest in machinery, equipment and property used in research and development.

“With strategic investments and a concrete plan, we can provide the squeezed middle class with a stronger economy and better shock absorbers to ensure they weather the storm in the coming months and years ahead,” Mulcair said during an event at the Economic Club of Canada.

The measures are part of a bid to show that New Democrats have a plan to kick-start the sputtering economy, which all party leaders would agree has been spurred on by plunging global oil prices.

Critics argue that while the measures sound great and look equally as impressive on paper, the problem is that governing in real life tends to be much more complex and so questions are raised about how Mulcair would be able to afford such lavish promises, especially in light of the aforementioned collapse of oil prices, which is stealing billions of dollars from the federal treasury and stunting economic growth.

Economists estimate that a reduction of the small business tax rate to 10% would immediately would cost $600 million a year, with the final drop to 9% coming when finances permit .The innovation tax credit would cost about $40 million a year, while extending the capital cost allowance would cost $1.2 billion over two years.

Mulcair has repeatedly promised to get rid of the Conservatives’ income splitting plan and he’s also promised to reverse the Harper government’s tax cuts for big business, bringing Canada’s corporate tax rate closer to the average of G7 countries — which would mean a hike of as much as 4.5 points from the current 15%.

Mulcair has chided larger corporations for not paying their fair share of the tax load and says it’s the smaller businesses that create 80% of all new jobs in the country.

The NDP leader is also promising to create one million new daycare spaces that can be accessed for no more than $15 per day — at a cost of $5 billion annually to the federal treasury, once fully implemented over eight years. Mulcair has also been vocal about reinstating plans for a $15-per-hour federal minimum wage and to restore the annual 6% increase in health care transfers to the provinces, which could cost upwards of $30 billion over nine years.

Recent figures indicate the federal government could run an overall deficit of $400 million this year if oil prices remain below $50 a barrel.

Both the Conservatives and Liberals say Mulcair’s economic plan is nothing short of being reckless. Conservative Jason Kenney says the NDP’s pledges in their current form would create an $8-billion fiscal gap in the first year, which could only be covered by “massive” tax increases, including a carbon tax.

“Canadians cannot afford the NDP,” says Kenney. “Tax increases to pay for the NDP’s reckless promises would wreck our economy.”

The Liberals were also quick to jump all over Mulcair’s ideas with former bank economist John McCallum stating that the NDP’s spending pledges would add up to a $28-billion shortfall.

Justin Trudeau
Born December 25, 1971
Age: 43

Trudeau is the eldest son of the late Pierre Trudeau, the country’s long-serving former Prime Minister, and Margaret Trudeau. He was elected as the Member of Parliament for the riding of Papineau in 2008, and re-elected three years later. On April 14, 2013, Trudeau was elected leader of the Liberal Party of Canada.

Being the offspring of one of the most charismatic prime ministers in Canadian history has provided both beneficial and detrimental for Trudeau in his efforts to become the next leader of our country. In what has become a desperate attempt to forge his own unique identity, he has at times noticeably distanced himself from his father’s legacy. But the opposition claims that without that legacy, he’d not be where he is today.

In any event, Trudeau has laid out his plan to recapture what was once a strong, proud Liberal party – one that not only challenged the Conservatives, but often formed the country’s government. One of his more effective attack manoeuvres has been to challenge Prime Minister Harper’s penchant for secrecy, which Trudeau feels is undermining the integrity of Canada’s democracy.

“Mr. Harper has broken Ottawa and we need a real plan to fix it,” Trudeau said during a recent speech on the campaign trail. “We need real change.”

Trumpeting that well-known slogan of “real change,” Trudeau has unveiled several initiatives that have touched on everything from open government, to revamping federal institutions, to mail delivery.

If the Liberals take power after the vote next month, Trudeau has declared it would be the last federal election held under the first-past-the-post electoral system. In a winner-take-all system, there are those who say the national results are distorted, making it possible for a party to win a majority of seats in the Commons with only 40% support.

Under a Liberal government, a special, all-party parliamentary committee would be given 18 months to examine proportional representation, ranked ballots and other possible replacements for the first-past-the-post voting system. Trudeau promised to introduce legislation to overhaul Canada’s federal electoral routine based on the committee’s recommendations.

NDP Leader Thomas Mulcair also favours changing the workings of the federal voting system.

“The Harper Conservatives have been in power for a decade,” Trudeau says. “And year after year, they have grown more closed off from Canadians. Stephen Harper promised us principled government. But he has delivered partisanship and petty politics.”

In recent weeks Trudeau has received a boost in support with former Prime Minister Paul Martin riding shotgun. It was Martin who helped eliminate a large federal deficit during his time as finance minister in the 1990s under Prime Minister Jean Chretien. He also drew attention in stating that a Liberal government would invest a total of $2.6 billion in First Nations education over four years and $500 million over three years in infrastructure for First Nations schools.

Restoring door-to-door mail delivery by Canada Post is also a priority for Trudeau.

Elizabeth May
Green Party
Born June 9, 1954
Age: 61

Elizabeth May was elected as leader of The Green Party of Canada on August 26, 2006, winning on the first ballot. On May 2, 2011, she became the first member of the Green Party to be elected as a Member of Parliament.

May recently delivered a keynote speech to delegates at the Annual Conference of the Federation of Canadian Municipalities (FCM) in Edmonton. Following the Party Leader’s statement, FCM president Brad Woodside released the following statement.

“Earlier this year FCM called for a new approach, a new era of cooperation between all orders of government focused on our country’s most pressing challenges: jobs, the economy and our quality of life. It’s very encouraging to see all federal parties eager to pitch their platforms to Municipal leaders. It signals they are ready to work with municipalities as partners. This is a real win for Canadians.

This was evident in Ms. May’s strong expression of support for the critical role municipalities play in building a stronger country. Her plan to commit 1 point of the GST to municipal priorities could provide a significant new source of revenue to build better roads, safer bridges and cleaner water. We look forward to further details on this.”

As proof the Party is gaining respect and moving closer to mainstream consciousness, it received almost one million votes in the 2008 federal election. Added to that, a recent poll indicated that 31% of the people surveyed said they would consider voting Green in next year’s federal election. So what would it take to actually get the vote, and not just consider it?

“First and foremost people need to know we’re not a one-issue party and not a one-person party,” May firmly states.

May doesn’t believe it’s a matter Canada needing to put in more safeguards against another possible economic downturn, but concurs with the philosophy espoused by some of other G8 leaders who opine it’s time for transaction taxes on the banks and time to make sure they and large corporations maintain funds so that they’ll have their own cash reserves in a time of a global economic meltdown. In other words, bailouts should not be the responsibility of federal governments but rather the individual companies themselves.

“It’s time for the companies that create the problems to have to maintain funds so that they can bail themselves out,” May bluntly states. “We used to have the IMF set currency rates but since that stopped it’s opened the door to speculation around currencies. The Green Party favours bringing in the notion that the late Nobel Prize winning economist James Tobin suggested a minute tax on currency transaction in the order of 0.5%.

“Canadians want a healthy economy, secure long-term healthcare and a sustainable environment,” May says.
The Green Party leader has stated that the country’s debt has increased by about $150 billion under Prime Minister Harper’s watch.

“We’re reducing the debt faster than the Conservatives would,” she says.

The Green Party has fought hard to be taken seriously as the fourth major federal party in Canada, and the persistence seems to be paying off. The Greens now have a growing membership base, which has seen the party’s war chest expand to more than $5 million.

Stephen Harper
Born April 30, 1959
Age: 56

Stephen Harper became prime minister in 2006, forming a minority government. He is the first prime minister to come from the newly reconstituted Conservative Party, which formed after a merger of the Conservatives and the Canadian Alliance.

Harper has been adamant that the drastic decline in global oil prices won’t dissuade his government from balancing the budget while following through on promises of creating tax benefits for families with children. Within that mandate is a $2.4-billion-per-year income splitting plan, which some critics say would benefit about 10% of the wealthiest families.

Recently, Harper and the Conservatives have introduced a “family tax cut” that allows couples with children under age 18 to split up to $50,000 of income; caps non-refundable benefit at $2,000. The government has also increased the annual contribution limit for tax-free savings accounts (TFSAs) to $10,000, up from $5,500. Additionally, they’ve increased the Universal Child Care Benefit to $160 a month for children under age six, up from $100; added new monthly benefit of $60 for children age six to 17; committed to reducing the small-business tax rate to 9% from current 11% by 2019; and have reduced corporate tax rate from 22% to 15%.

The passing of Bill C-51 has created a great deal of discussion and dissention. The Bill grants sweeping new powers to the Canadian Security Intelligence Service (CSIS) to expand surveillance and actively disrupt threats to national security. The bill makes it illegal to promote terrorism; lowers the legal threshold required for police to arrest and detain suspected extremists without charge; and allows more than 100 government entities to exchange Canadians’ confidential information if it is “relevant” to a potential or suspected national security threat.

Harper has repeatedly warned that only a Conservative government is prepared to confront the Islamic State, which threatens peace everywhere.

“ISIS, left to its own devices, will create millions, tens of millions of refugees and victims on a monthly basis,” Harper says.

If his government is re-elected, Harper has pledged that the Conservatives would spend $9 million for a three-year program to help religious minorities being persecuted by ISIS along with accepting an additional 10,000 refugees from Iraq and Syria over the next four years.

Meanwhile on the economic front, the department of finance’s monthly Fiscal Monitor reported a $5-billion surplus for the April-to-June period this year, but about 40% of the gain can be attributed to the government’s one-time sale of General Motors shares in April. Harper says the Conservatives’ approach to low taxes while balancing the budget helps families keep more of their money, in contrast to what the other parties are proposing.

Harper says the forecasts for the Canadian economy “are very good.”

“These are temporary effects,” he said at a recent campaign stop. “We all knew with lower oil prices, lower resource prices, there’s going to be some temporary effects in some sectors of the economy. Analysts are predicting good growth for the country into the future as long we stay on track.”

Despite Harper’s positive outlook, the Canadian economy recently recorded its fifth consecutive monthly contraction in gross domestic product.

High Tax Rates

According to a report by The Fraser Institute, the average Canadian family spends more on taxes than on food, clothing and shelter combined.

“Over the past five decades, the tax bill for the average Canadian family has ballooned, and now the amount of money going to taxes is greater than what’s spent on life’s basic necessities,” said Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of the Canadian Consumer Tax Index, which tracks the total tax bill of the average Canadian family from 1961 to 2014.

In 2014, the average Canadian family (including unattached Canadians) earned $79,010 and paid $33,272 in total taxes compared to $28,887 on food, clothing and shelter combined.

In other words, 42.1% of income went to taxes while 36.6% went to basic necessities. This represents a marked shift since 1961, when the average family spent 33.5% on taxes and 56.5% on food, clothing and shelter.

“With growth in the total tax bill outpacing the cost of basic necessities, taxes now eat up more family income, so families have less money available to spend, save or pay down household debt,” Lammam said.

Even after accounting for changes in overall prices (inflation) over the 54-year period, the tax bill shot up 149.2%.

Interest Rates

Leaders of the opposition parties were quick to pounce after Stephen Harper’s phone call to the governor of the Bank of Canada Stephen Poloz, saying that it was an admission by the prime minister that he is not properly dealing with the management of the economy. However, Harper quickly shot back that it is in fact his job to keep a close watch on the economy and if his opponents have a problem with that, they shouldn’t be running for the prime minister’s job.

For 2015, the Bank of Canada is forecasting growth of 1.1%, down from its earlier forecast of 1.9%, while 2016 is expected to see growth of 2.3%, down from 2.5%.

“The facts have changed quite quickly actually in the last two to three months,” Poloz says. He points to several factors regarding a return to growth in the third quarter.

“Exports are projected to return to solid growth, supported by continued improvements in U.S. demand and a rebound in automotive exports following temporary shutdowns for retooling at the beginning of the year,” he says. “Business investment will remain a source of drag, however, as the energy sector continues to adjust to low oil prices.”

The International Monetary Fund recently downgraded its forecast for Canada to just 1.5% compared with its earlier prediction of 2.2%.

The U.S. economy, meanwhile, will grow 2.5% this year, the IMF predicts, though that’s down from its previous estimate of 3.1%. Growth will then reach 3.0% in 2016, it says.

The IMF report noted the debt crisis in Greece, but said that development had not changed its outlook for the global economy.

“Developments in Greece have, so far, not resulted in any significant contagion,” it said. “Timely policy action should help to manage such risks if they were to materialize.”

Meanwhile, the Conference Board of Canada now predicts the national economy will grow by 1.6% this year, Canada’s worst showing since 2009. In May, it forecast growth of 1.9%. The economy grew by 2.4% in 2014.

Finance Minister Joe Oliver responded to the IMF report by stating that the “global economy is fragile” and that Canada “must stay the course” with the Conservatives’ plan for jobs and growth.

“As the IMF said, the Canadian economy will grow this year. But with greater global economic instability at our shores, Canada must continue with our plan to growth,” Oliver says.

To keep things in proper perspective with respect to the dreaded “R” word – the Canadian economy shrank a miniscule 0.15% in the first quarter of 2015. The smallest movement that can be measured is 0.10%, so while it did retract, the amount was virtually undetectable. But by the letter of the law, it was technically a decline. A recession is defined as two consecutive economic quarters of decline. At the very least, it’s safe to say the national economy has been stalled for the better part of 2015.

Canadians have a lot to ponder when they go to the polls on October 19. The result of the election will have a direct impact on the path the country takes both nationally and internationally for the next five years.